Asbestos turns ABB profit into loss
Swiss-based engineering group ABB has gone into the red following the settlement of asbestos-related claims in the United States.
ABB announced on Friday that it had revised its 2004 annual report to show a loss of $35 million (SFr41 million) instead of the previously stated profit of $201 million (SFr238 million).
The company said last month that it had clinched a deal to settle all outstanding asbestos-related claims. But it warned that it would have to restate its 2004 results to take account of the additional costs.
ABB chief executive Fred Kindle said at the time that all major parties had agreed to the deal, under which ABB would pay a further $232 million on top of the $1.2 billion already offered.
The group also restated its fourth-quarter income to show a net loss of $223 million compared with the $13-million profit it had reported earlier.
It said the change in the annual report would have no impact on net debt or total cash from operations.
Legal wrangling
ABB hopes the settlement will allow it to put the asbestos issue behind it after years of legal wrangling. It should also put a ceiling on its exposure to asbestos-related health claims from former workers in the US.
The problems date back to 1990 when the company acquired its Combustion Engineering subsidiary, which made industrial boilers lined with asbestos. Two other divisions in the US also made products containing asbestos.
The asbestos issue has been seen as one of the last remaining obstacles to the completion of ABB’s financial turnaround following a restructuring drive.
The profit initially reported for 2004 was the company’s first in three years. In 2003 it reported a loss of $767 million.
On Friday, ABB also gave details of its senior executive and board compensation for 2004.
Jürgen Dormann was paid SFr1 million for his position as chairman of the board and a further SFr4.17 million (including a SFr800,000 bonus) for his duties as CEO.
Dormann, who retains the chairman's position, has been replaced as CEO by Fred Kindle, who joined the company last September.
Kindle was paid a total of SFr633,336 (including a bonus of SFr200,000) for his first four months with ABB.
swissinfo with agencies
In brief
Amount previously offered to asbestos claimants: $1.2 billion (SFr1.4 billion).
Additional agreed contribution: $232 million (SFr270 million).
ABB net loss, 2004: $35 million (SFr41 million).
Loss in 2003: $779 million (SFr914 million).
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