International electrical engineering group ABB announced first quarter results yesterday, in which it reaffirmed its growth forecasts and said it will have completed its organizational restructuring by mid-year 2001.
The results, announced in Zurich, showed revenues up two per cent despite deteriorating world economic conditions. Earnings were up six per cent although orders were down by five per cent for the period. ABB confirmed that its expectations for the full year results remained unchanged with revenues expected to increase compared to 2000. Exceptional items would result in slower growth in the first six months with the second half of the year producing better comparative figures.
The radical reorganization of ABB, which began in mid-January, is proceeding according to plan and the dedicated ‘Transformation Team’ which has been established to oversee this change will now report on progress quarterly. ABB intends to evolve into a customer focused, rather than product focused business with the intention of boosting growth.
ABB is to restructure its organization around four customer segments: Utilities, Process Industries, Manufacturing and Consumer Industries, and Oil, Gas and Petrochemicals. In addition, two product segments, Power Technology Products and Automation Products and Automation Technology will serve all of the new business units alongside the Financial Services Group, which remains unchanged. ABB said it would begin to report its financial results according to its new organizational structure by the third quarter of this year.
Following his appointment in January 2001, incoming CEO and Chairman, Jorgen Centermann, announced the radical restructuring.
Some commentators have expressed concern that the major transformation process will prove to be a greater distraction for management than ABB intended and that the disruption caused will add to the challenge of achieving targets. ABB believes that front-line management will be able to fully focus on serving the needs of its customers with the change process being managed by its Transformation Team.