ABB to Decide on Power Grids Future in 2016
ABB will likely decide next year what to do with its new Power Grids division, Chief Executive Ulrich Spiesshofer told a Swiss newspaper, reiterating that all options were open for the business.
ABB this week announced a strategic review of its low-margin power projects business in what could be a step towards a sale of assets by the Swiss engineering company.
The new Power Grids division has 39,000 employees and $12.6 billion in sales, but an operating profit margin of just 4.7 percent, less than a third of ABB's most profitable divisions.
"I think we will be through the process in 2016. But we are not under time pressure. The division is making money. In 2016 we will reach the lower end of the EBITA (margin) target range of 8-12 percent," Spiesshofer told Finanz und Wirtschaft.
Last year, the Swiss company said it was aiming overall for an EBITA (earnings before interest, tax and amortisation) margin of 11-16 percent during the 2015-2020 period.
In the interview released on Friday, he also said ABB was looking for acquisitions to strengthen areas such as measuring technology and sensors; electrification and building automation outside the German-speaking region; and applied software.
Asked how big deals could be, he said: "Our investment grade (rating) should not be lost so we will not spend double-digit-billion sums on acquisitions, but we could do something in the mid-sized range. We also need to consider when acquiring that we need funds for dividends and share buybacks.
"If I have to decide between a takeover and paying a dividend I will decide for the latter. You can count on that."
(Reporting by Michael Shields)
