ABB warns of weakening market conditions
ABB warned in mid-December 2008 that its fourth quarter and full year results, due on Feb. 12, 2009, will include pre-tax provisions of approximately $850 million against potential costs related to the previously disclosed investigations by the U.S. and European authorities into suspect payments and alleged anti-competitive practices. They will also include an amount for the anticipated impact of a pending tax dispute, asset write downs and restructuring charges relating to the weaker business environment. The company said that order intake in October and November 2008 reflects weakening market conditions, driven in part by a lack of affordable financing, uncertain commodity prices and deferral of customer investment decisions. While the operational performance of the group remains broadly at the level of the first nine months of 2008, the volatility of major commodity prices and exchange rates is expected to have a negative impact.
The company also said that it will reveal further details and the restructuring cost implications of its program to reduce the current cost base by more than $1 billion when it reports on full-year earnings in February. However, it remains confident that it will meet its 2008 growth targets of 15% to 20% in power and more than 10% in automation. CEO Joe Hogan described the economic environment as “currently quite challenging” but said that “ABB remains in a very solid financial position, with a strong order backlog and, over the long term, fundamentally sound demand for infrastructure investment and measures to improve energy efficiency.”