Shares in Swiss-Swedish industrial engineering group ABB have taken a hammering on the Swiss stock exchange, following a disappointing set of results for last year.
In the past 12 months ABB's shares have fallen some 21 per cent, under-performing the broader Swiss market by 30 per cent. Its rivals, such as United States groups, General Electric and Ingersoll Rand, have done much better - their shares have improved between two to three per cent over the same period.
Dealers were disappointed by a lower-than-expected six per cent rise in net profit at the company, which came in at SFr2.4 billion ($1.4 billion). Sales also upset market sentiment as they actually fell back by six per cent over the year at SFr38 billion.
Jörgen Centerman, who replaced Goran Lindahl as chief executive at the start of this year, explained: "Revenue development is still well below our potential. We are now aggressively targeting new ways to deliver more value to customers and are confident we will generate better top-line and bottom-line performance."
Centerman also told swissinfo that he wasn't surprised by the downshift in share prices.
"Well I think its rather obvious if you look at our numbers of today, we produced lower numbers than expected so of course we'll have a slight hit going onwards."
ABB has been going through a restructuring phase to shed its image as an old-style heavy machinery conglomerate.
The transition was started under Centerman's predecessor, Goran Lindahl.
But as the group has concentrated more on information technology, its stock has been punished by the recent new economy share sell-off.
Looking to the future Centerman has promised to improve revenue and cash flow, while continuing to improve the group's profit margin.
He plans to do part of this through a refocusing of the business on customer service, stressing it's a "transition not a restructuring". He intends to get rid of the country-by-country, product-by-product system under which ABB has been doing its business so far.
"It will make it substantially easier for customers to do business with us, making it easier for us to enjoy growth in profits, sales and cash flow," explained Centerman.
He also assured journalists at the press conference in Zurich that the change in focus would have no adverse impact on the company's large Swiss business.
"It's not the end of any country, nothing dramatic from that perspective is happening," he said. "The only thing we're changing is that we won't consolidate numbers on a country basis but instead on a customer basis - the Swiss organisation still has an important role to play."
Certainly ABB has faced up to some major changes in the way it is doing its business and in the type of business it does. It is also currently preparing for a launch on the US stock market, which comes in the second quarter of this year.
These results released in Zurich were the first to comply with US accounting standards, causing an apparent scaling back in profit margin forecasts. The company said it was targeting 12 per cent growth in operating profit growth by 2005. Previously it had been aiming for the same level by 2003.
However Centerman stressed that despite the new accounting system the company had not reduced its targets, the change in numbers was due simply to the change in accounting systems.
by Tom O'Brien