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Home / switzerland / ABB converts more in Q4 and raises dividends – issuance of securities | 28/2/19

ABB converts more in Q4 and raises dividends – issuance of securities | 28/2/19

ABB confirmed and clarified the details of the future strategy of December last year.

At the same time, a software association for digital industries has been announced with Dassault Systèmes.

This global association affects four of the new divisions of ABB as of April 2019, the company said on Thursday. Along with Dassault, a portfolio of digital solutions integrated in combination with the Ability digital platform will be offered. ABB has already partnered with Microsoft, HPE and IBM.

ABB looks like a technology leader focused on digital industries in the future.

The restart of ABB involves three fundamental steps. In addition to the sale of the electricity grid announced in December, the second step is the simplification of the business model through the dissolution of the previous matrix structure. The third step is the reorganization in four divisions, two of which are new, namely, Robotics & Manufacturing Automation and Drive Technology. The above are products of electrification and industrial automation.

Obtain goals for individual areas

A new objective scope has already been formulated for the EBITA margin for these divisions. Specifically, it is expected that the Robotics and Production Automation Division reach a margin in the range of 13 to 17 percent, the Power Transmission Division from 14 to 18 percent, the Electrification Division from 15 to 19 percent and the Division Industrial Automation from 12 to 16 percent.

The Group's objectives for the EBITA margin (13-16%), sales growth (3-6%) and the ROCE employee capital performance (15-20%) were formulated in December.

On the one hand, reorientation will lead to restructuring costs of $ 500 million and, on the other hand, it will also save costs up to 2021. ABB also confirmed the information as of December. Of the planned savings of $ 500 million in 2021, it is expected that between 150 and 200 million will be made in 2019. In total, some 300 million will come from the individual business units and around 200 million from the headquarters of the Group.

New operating model "ABB-OS"

Linked to realignment is the introduction by stages of a new operating model called "ABB-OS" by 2020. It is intended to facilitate customer orientation and increase its agility and profitability. This system is connected to the dissolution of the previous matrix structure of the group. The new organization assigns to each business unit the total corporate responsibility of the operations, functions, research and regions.

The corporate headquarters should be more streamlined. At the same time, existing structures in the country and in the region, including the executive functions of the regional Group, are dissolved after the completion of the operation.

After a positive opening on Thursday morning, ABB's shares dropped sharply and have been expanding ever since. At 3.50 in the afternoon, the shares are 2.71 percent lower at 19.71 Swiss francs. Meanwhile, they had reached their daily loss of 19.61 francs.

The market can not really explain the relatively strong price loss. At best, merchants generally see a certain degree of moderation after the peaks reached in the most recent market.

The results of the fourth quarter of ABB are well received by most analysts. Both sales and orders were above expectations, but not too high, so the tenor. The result emphasizes the situation of good demand in the field of industrial activities, for example in Vontobel.

In line with the expectations is the increase of the dividend of 80 cents.

For certain frontal wrinkles, the view is quite restricted. ABB continues to be cautious about macroeconomic uncertainties, writes ZKB, for example. Jeffries highlights Europe in particular.

The most critical is Morgan Stanley. The first impression was not very positive with respect to the result in the fourth quarter nor with respect to the strategic update. For example, for North American experts, the new goals set for the four divisions are not "sufficiently ambitious."

CF / era / pre

Zurich (awp)

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