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Sept. 9 (Bloomberg) -- ABB Ltd., the world’s biggest maker of power grids, announced a $4 billion share buyback as Chief Executive Officer Ulrich Spiesshofer seeks to boost shareholder returns.

“The company intends to allocate approximately three quarters of the program for a reduction of share capital and the remainder to support its employee share plans globally,” the Swiss maker of robots and power transformers said today.

Spiesshofer, who replaced Joe Hogan in September 2013, aims to make the company more profitable and reverse a share decline this year that was worse than at German rival Siemens AG amid charges for project delays. Joe Kaeser, CEO of Siemens, has pledged to focus on electrification and automation, challenging ABB where the Swiss company is traditionally strong. Meanwhile, U.S. rival General Electric Co.’s takeover of Alstom SA’s energy assets creates a stronger No. 3 competitor in electrical transmission.

Zurich-based ABB today also set new long-term targets, saying it plans to grow operational earnings per share by 10 to 15 percent on a compound annual basis over the 2015 to 2020 period. It targets to boost like-for-like sales by 4-7 percent per year.

Spiesshofer has spent his first year as chief crafting a strategy for the company as well as pruning the portfolio of smaller peripheral units. The sale of businesses including tubular steel structures for electricity transmission and industrial heaters and ventilators has raised about $1 billion in the last year, helping to fund the share buyback.

ABB’s Power Systems unit has been grappling with delays to complex renewable energy projects that have weighed on earnings. Spiesshofer has pledged to return the division, which links offshore wind farms to the grid, to profitability and hired consultants Alix Partners Ltd. to help with the turnaround.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel

Bloomberg