ABB shares fail to recover amid worries over asbestos claims
Shares in Swiss-Swedish technology group, ABB, are trading at a 26-month low, after the company revealed the extent of asbestos injury lawsuits it is facing in the United States.
Shares in the group failed to recover on Tuesday after plummeting nearly 16 per cent the day before, following the company’s admission that it was facing around 66,000 personal-injury claims for its asbestos-related activities.
In its annual report, ABB said it did not know what the ultimate cost of settling the claims could be, but that it might “be required to make expenditures in excess of established reserves”.
ABB this week revealed it had made net provision of $430 million for claims from Combustion Engineering, a US boilermaker it acquired in 1990.
Although it has since sold the business, it remains liable for claims stemming from asbestos-related activities before the 1980s, according to a company spokesman.
He added that the number of outstanding claims might need to be adjusted.
ABB shares took a hammering on Monday, falling 16 per cent to SFr106. They fell slightly further on Tuesday, closing at SFr105.
Analysts say the markets dumped ABB shares on news that US specialty chemicals maker, WR Grace, had filed for Chapter 11 bankruptcy protection because of a rising number of asbestos injury claims.
WR Grace is the fifth US corporation to file for bankruptcy protection over asbestos-related claims since the beginning of 2000.
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