Swiss engineering giant ABB said on Tuesday that it would no longer bid for solar engineering, procurement and construction (EPC) projects as it revamps its poorly performing Power Systems division and divests non-essential businesses.
The company has sold off its Thomas & Betts HVAC and Power-One Power Solutions units, a move CEO Ulrich Spiesshofer described as good progress in our portfolio pruning efforts.
We are disappointed with the continued poor performance in Power Systems and are rigorously executing actions that go well beyond the previously announced strategic realignment, Spiesshofer said.
After a thorough review, the new leadership has initiated a step change program and already taken a number of corrective decisions. These include the discontinuation of bidding for solar EPC projects and further management changes.
The chief exec said the transformation of the Power Systems division would take longer than originally expected, but we remain confident that the outcome will be a strong and competitive business.
Announcing its first-quarter figures, ABB reported stable top line results between January and March, saying it benefited from its broad presence in early-cycle industrial sectors and its well-balanced geographic scope.
Orders of $10.4 billion were close to last years level despite continued slow large order intake from utilities and late-cycle industries.
The companys first-quarter revenues reached $9.5 billion, down just 3% as automation revenues increased and power revenues declined, the latter reflecting the lower opening order backlog in power compared to the same quarter in 2013. Net profit dropped 18% to $544 million.
Weak operational performance in Power Systems and charges related mainly to large engineering, procurement and construction (EPC) projects in offshore wind and solar power generation adversely affected the groups operational profit (before interest, tax, depreciation and amortization) and margin, resulting in a loss in Power Systems in the quarter.
We remain on track in four divisions which combined to deliver higher early-cycle orders, steady earnings and stronger cash flow in the first quarter, Spiesshofer said.
Euroope remained ABBs biggest market with $3.86 billion in orders, followed by the Americas with $2.76 billion, Asia with $2.73 billion and the Middle East and Africa with $1 billion.