The embattled Swiss-Swedish engineering group, ABB, has announced new cost cutting measures, as the company sinks deeper into the red.This content was published on October 24, 2002 - 08:37
The firm reported a net loss of $82 million for the first nine months and said it planned to save an additional $800 million by merging some of its core businesses.
In a conference call with journalists on Thursday morning, chairman and CEO, Jörgen Dormann, said the group would likely sell of its oil, gas and petrochemicals division within 12 months.
The company's nine-month loss compares with a profit of $289 million for the same period last year.
The third quarter was particularly bad - ABB posted a loss of $183 million - a plunge in net income of 64 per cent compared with the 2001 period.
The news comes after ABB warned on Monday that it saw no prospect of a market recovery before the third quarter of 2003, and said its US subsidiary - overwhelmed by asbestos-related claims - may file for bankruptcy.
Announcing a series of measures to cut costs further, chairman and CEO, Jörgen Dormann said: "It is clear that our overall cost base is still much too high, and that the benefits from our restructuring programme have been slower than expected".
ABB is to combine its core businesses - power and automation technologies - into two divisions, which will be the focus of its activities, while the processes division will be "dissolved", and the oil, gas and petrochemicals division likely sold off.
The company said the measures would cut costs by around four per cent of revenues, or $800 million, within 18 months. The cuts would be on top of the $500 million it already hopes to save by the middle of next year.
Dormann said ABB was on track to reduce its net debt by $1.5 billion by year end from $4.1 billion at the end of 2001.
swissinfo with agencies
More details to follow
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