ABB loses $45 million in 1Q03; selling two divisions

ABB Ltd. recently reported that its net income dropped $45 million in the first quarter of 2003 (1Q03) due mainly to managing its more than $8.1-billion debt and paying related restructuring costs. This result compares to ABB's positive net income of $155 million for 1Q02.

06/01/2003


ABB Ltd. recently reported that its net income dropped $45 million in the first quarter of 2003 (1Q03) due mainly to managing its more than $8.1-billion debt and paying related restructuring costs. This result compares to ABB's positive net income of $155 million for 1Q02.

To reduce its debt, ABB is looking to sell its Oil, Gas and Petrochemicals division and its Building Systems division for approximately $2 billion combined. In fact, Downer EDI Ltd. (Sydney, Australia) has reportedly agreed to pay $5 million for those portions of ABB's building systems businesses in Hong Kong and Australia, including existing contracts and about 400 employees. Downer EDI is an engineering services firm. ABB sold most of its Structured Finance business to GE Commercial Finance in September, 2002, for about $2.3 billion in cash, including equity and debt.

ABB's total debt amounted to $8.156 billion in 1Q02, compared to $7.952 billion three months earlier in 4Q02. This gross debt included a drawdown of $747 million on the company's $1.5-billion revolving credit facility negotiated in December 2002.

In another restructuring move, ABB will seek to decrease its employees to about 100,000 by the middle of 2004, according to Ronald Kurtz, ABB's U.S. media relations director. This means it will have to divest or layoff about 35,000 people from its present level of 135,000. Many of these staffers will not necessarily lose their jobs, but would instead become employees of whatever companies purchase the Oil, Gas and Petrochemicals and Building Systems divisions. Mr. Kurtz added that ABB has already terminated about 4,000 employees, shrinking from 139,000 to 135,000 staffers, in the four-to-five months ending in March 2003.





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