ABB shares bounce as new CEO raises turnaround hopes


ZURICH (Reuters) – ABB (ABBN.S) shares jumped greater than 4% on Monday as buyers welcomed information the Swiss engineering group had poached Bjorn Rosengren from Swedish mining tools agency Sandvik (SAND.ST) to be its subsequent chief government.

FILE PHOTO: The brand of Swiss energy expertise and automation group ABB is seen on the Swiss Financial Discussion board (SEF) convention in Interlaken, Switzerland Might 24, 2019. REUTERS/Arnd Wiegmann/File Photograph

The 60-year-old Swede will be part of the Zurich-based maker of business drives and robots in February and take over as CEO in March, the corporate stated on Sunday.

ABB, whose earlier CEO Ulrich Spiesshofer left out of the blue in April, is in the course of overhauling its enterprise following years of lackluster revenue and bungled acquisitions.

Chairman Peter Voser, who has taken on CEO features on an interim foundation, stated on Monday he was assured he had obtained the proper man.

“He has an amazing monitor document of empowering companies in a decentralized method, that’s what he has performed at Sandvik and at his earlier companies as properly,” Voser stated.

“He’s centered on driving efficiency,” added the previous CEO of oil main Royal Dutch Shell (RDSa.L) who will revert again to his chairman function when Rosengren takes cost.

Throughout his 4 years at Sandvik, Rosengren revamped the metal-cutting instruments and mining gear maker and bought off underperforming companies.

TRACK RECORD

Voser stated Rosengren would comply with ABB’s technique of decreasing its company heart and giving extra energy to its 4 enterprise models – industrial automation, electrification, movement and robotics and discrete automation.

“Over the previous couple of months … the corporate has outlined a method and we’re following via on that,” Voser stated.

“However a method won’t be forged in stone for 5 years.”

ABB, whose shares have misplaced 14% over the past 5 years, is promoting its energy grids enterprise to Hitachi and final month introduced a deal to give up the photo voltaic power inverters enterprise.

Voser has launched a overview of companies which generate $Three billion of income, or 11% of ABB’s complete, which could possibly be improved or bought.

“With the appointment of Rosengren, ABB may have a CEO with a confirmed monitor document and a robust repute within the capital markets for delivering operational enchancment,” stated Financial institution of America Merrill Lynch analyst Alexander Virgo.

“In our view, his success at Sandvik in implementing a decentralized enterprise mannequin ought to make him an excellent match for ABB.”

ABB’s largest shareholder Investor AB (INVEb.ST) additionally welcomed the appointment of Rosengren, who earlier than Sandvik was CEO of Wartsila (WRT1V.HE), which makes and providers energy sources for the marine and power markets.

“From his earlier main roles in a number of firms, he has a confirmed monitor document in driving a decentralized tradition, enhancing efficiency and delivering worth,” stated Johan Forssell, CEO of Investor, which holds 11.2% of ABB.

Sandvik’s shares have elevated by 78% with Rosengren in cost, as margins improved, whereas Wartsila’s share value elevated 83% on his watch.

FILE PHOTO: Chairman Peter Voser of Swiss energy expertise and automation group ABB addresses the corporate's annual shareholder assembly in Zurich, Switzerland, March 29, 2018. REUTERS/Arnd Wiegmann/File Photograph

Activist investor Cevian Capital, ABB’s second-biggest shareholder with a 5.3% stake, stated ABB shares might nearly double in worth if Rosengren might raise margins and valuations to match rivals.

“If these gaps are closed, ABB ought to be price greater than 35 CHF (Swiss francs). That’s Bjorn’s predominant process,” stated Cevian managing accomplice Christer Gardell.

At 0940 GMT, ABB shares have been up 4.3% at 18.29 francs

Reporting by John Revill; Further reporting by Simon Johnson in Stockholm; Modifying by David Holmes and Mark Potter

Author: Maxwell C.

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