ABB today launched Stage 3 of its Next Level strategy. The core elements of this include: shaping ABB’s divisions into four market-leading units, including continuing to transform the Power Grids division under ABB’s ownership, accelerating momentum in operational excellence.
ABB CEO Ulrich Spiesshofer said, “Over the last two years, ABB has become faster, leaner and more efficient. We have continuously improved margins and further strengthened our cash generation. In Stage 3 of our Next Level strategy, we are building on our successful transformation momentum and strengthening our position as a pioneering technology leader and global digital champion. With our four simplified, market-leading, entrepreneurial businesses, combined with “ABB Ability”, we address customers’ needs in the Energy and Fourth Industrial Revolutions in a more focused and agile way.”
Yet, the revenue, operating income, profits, and assets have gone down over the past 3 years. The company is clearly trying its best to show potential but the real numbers are not all that great. Being a company of $41 billion turnover in 2013 with aspirations to become a $60 billion company, ABB now is down to $35 billion turnover and struggling to keep investors/shareholders happy. Divesting is a trend in the company that is continuing under the pressure of its shareholders and although the savings may look good, the revenues are behind and profits are shrinking.
A key element of ABB’s ongoing transformation is the de-risking of the business model and tapping of growth opportunities through two strategic partnerships announced today – with Fluor for large electrical substations, and Aibel for offshore wind connections. Both partnerships combine ABB’s market leadership in power technologies with the respective partner’s expertise – Fluor’s in managing large engineering, procurement and construction (EPC) projects, and Aibel’s in offshore wind projects.
The company’s white-collar productivity savings program has outperformed expectations since its launch last year. As a result, ABB has increased the program’s cost reduction target by 30% to $1.3 billion. ABB will achieve these additional savings within the initially announced time-frame and with unchanged restructuring and implementation costs. ABB is continuing its regular cost-savings programs, leveraging operational excellence and world-class supply chain management to achieve savings equivalent to 3-5% of cost of sales each year.
