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ABB shares jump as new CEO raises turnaround hopes

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08/12/2019 | 06:02am EDT
FILE PHOTO: Logo of Swiss power technology and automation group ABB is seen at the Swiss Economic Forum conference in Interlaken

ZURICH (Reuters) - ABB shares jumped more than 4% on Monday as investors welcomed news the Swiss engineering group had poached Bjorn Rosengren from Swedish mining equipment firm Sandvik to be its next chief executive.

The 60-year-old Swede will join the Zurich-based maker of industrial drives and robots in February and take over as CEO in March, the company said on Sunday.

ABB, whose previous CEO Ulrich Spiesshofer left suddenly in April, is in the middle of overhauling its business following years of lacklustre profit and bungled acquisitions.

Chairman Peter Voser, who has taken on CEO functions on an interim basis, said on Monday he was confident he had got the right man.

"He has a great track record of empowering businesses in a decentralised way, that is what he has done at Sandvik and at his earlier businesses as well," Voser said.

"He is focused on driving performance," added the former CEO of oil major Royal Dutch Shell who will revert back to his chairman role when Rosengren takes charge.

During his four years at Sandvik, Rosengren revamped the metal-cutting tools and mining gear maker and sold off underperforming businesses.


Voser said Rosengren would follow ABB's strategy of reducing its corporate centre and giving more power to its four business units - industrial automation, electrification, motion and robotics and discrete automation.

"Over the last few months ... the company has outlined a strategy and we are following through on that," Voser said.

"But a strategy will not be cast in stone for five years."

ABB, whose shares have lost 14% over the last five years, is selling its power grids business to Hitachi and last month announced a deal to quit the solar energy inverters business.

Voser has launched a review of businesses which generate $3 billion (£2.49 billion) of revenue, or 11% of ABB's total, which could be improved or sold.

"With the appointment of Rosengren, ABB will have a CEO with a proven track record and a strong reputation in the capital markets for delivering operational improvement," said Bank of America Merrill Lynch analyst Alexander Virgo.

"In our view, his success at Sandvik in implementing a decentralised business model should make him a good match for ABB."

ABB's largest shareholder Investor AB also welcomed the appointment of Rosengren, who before Sandvik was CEO of Wartsila, which makes and services power sources for the marine and energy markets.

"From his previous leading roles in several companies, he has a proven track record in driving a decentralised culture, improving performance and delivering value," said Johan Forssell, CEO of Investor, which holds 11.2% of ABB.

Sandvik's shares have increased by 78% with Rosengren in charge, as margins improved, while Wartsila's share price increased 83% on his watch.

Activist investor Cevian Capital, ABB's second-biggest shareholder with a 5.3% stake, said ABB shares could almost double in value if Rosengren could lift margins and valuations to match rivals.

"If these gaps are closed, ABB should be worth more than 35 CHF (Swiss francs). That is Bjorn's main task," said Cevian managing partner Christer Gardell.

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

(Reporting by John Revill; Additional reporting by Simon Johnson in Stockholm; Editing by David Holmes and Mark Potter)

By John Revill

Stocks treated in this article : Wärtsilä, Sandvik AB, Investor AB, ABB Ltd, Atlas Copco
Stocks mentioned in the article
ChangeLast1st jan.
ABB LTD -0.05% 20.14 Delayed Quote.7.84%
ATLAS COPCO -0.06% 314.5 Delayed Quote.48.08%
INVESTOR AB 0.95% 476.4 Delayed Quote.24.60%
SANDVIK AB 1.14% 160.3 Delayed Quote.25.45%
WÄRTSILÄ 0.99% 10.15 Delayed Quote.-17.27%
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Financials (USD)
Sales 2019 28 621 M
EBIT 2019 1 737 M
Net income 2019 1 272 M
Debt 2019 6 285 M
Yield 2019 4,06%
P/E ratio 2019 35,8x
P/E ratio 2020 16,2x
EV / Sales2019 1,73x
EV / Sales2020 1,56x
Capitalization 43 097 M
Duration : Period :
ABB Ltd Technical Analysis Chart | MarketScreener
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Technical analysis trends ABB LTD
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 19
Average target price 22,07  $
Last Close Price 20,21  $
Spread / Highest target 48,7%
Spread / Average Target 9,25%
Spread / Lowest Target -19,2%
EPS Revisions
Ulrich Spiesshofer President & Chief Executive Officer
Peter R. Voser Chairman
Timo J. Ihamuotila Chief Financial Officer
Jacob Wallenberg Vice Chairman
Matti Juhani Alahuhta Independent Non-Executive Director
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