News Digest

ABB worsens: ABB’s fourth quarter earning were sharply down with losses rising to a record $787m. The Swiss engineering group has managed to cut its $8bn gross debt burden but will not pay a dividend until 2005.

Capstone losses: Microturbine manufacturer Capstone Turbine Corporation suffered a poor 2002 with sales down $16.5m at $19.5m and warranty and impairment adjustments contributing to a loss of $74.4 m compared with a $46.9m deficit for 2001.

Ebara partners: Ebara Corp. has reached an agreement with wind turbine maker Pfleiderer Wind Energy GmbH to manufacture and market under licence, the German firm’s alternative energy source in Japan and the rest of Asia.

Edison targets: Italian energy group Edison expects earnings to rise 70 per cent and revenues increase 64 per cent under its five-year industrial plan. Under the plan, Edison aims to conquer 20 per cent of Italy’s liberalizing electricity and gas markets.

E.ON gets Ruhrgas: E.ON completed the acquisition of the 40 per cent interest in Ruhrgas held by ExxonMobil, Shell and Preussag at a cost of X4.1bn ($4.4bn). E.ON now owns 100 per cent of Ruhrgas.

Fluor adds units: Fluor Corporation has acquired five speciality operations and maintenance business groups from Philip Services Corporation. These strengthen its O & M services to domestic industrial facilities, particularly in the oil & gas, refining, chemicals, petrochemicals and power generation industries.

International Power sags: Write-downs at UK power stations and a technical default on US debts saw International Power’s profit’s fall £9m to £195m ($307m) for 2002. Shareholders have called for a share buy back to boost the share price.

Kvaerner Power named: Aker Kvaerner has announced that its global boiler, evaporator and environmental systems business will in future operate under the name of Kvaerner Power.

OMZ expands: Russian engineering giant, United Heavy Machinery (OMZ), has purchased stakes in two nuclear power engineering companies. It acquired an 18 per cent stake in Atomenergoexport and has taken a controlling interest in Zarubezhenergoproekt.

Thomassen re-emerges: Calpine Corporation has renamed the turbine services company it acquired from Babcock Borsig Power, Thomassen Turbine Systems. The business was originally known as Thomassen International.

Alstom set to sell T & D division

Engineering and transport group Alstom has unveiled plans to sell its profitable Transmission and Distribution (T & D) business as part of a new phase of restructuring aimed at reducing the company’s huge debt burden.

The T & D unit is estimated to be worth up to $1.84bn and will join Alstom’s industrial turbine division in the shop window. Additional cost savings of X500m ($538m), including job cuts, were also announced.

Analysts have suggested likely suitors would be General Electric Co., Siemens AG and Schneider Electric SA, although market speculation also suggests Mitsubishi Corp. and Toshiba Corp. could be intererested.

Alstom admitted that problems linked to its GT24/26 heavy-duty gas turbines had cost it X1bn and the company is expecting to post a net loss of X1.3-1.4bn in the fiscal year ending April 2003. Alstom CEO, Patrick Kron said the restructuring plan had the full support of the company’s banks. Kron said the credit lines would allow him to restructure the company and sell assets without pressure.

Debt rising at RWE

Results for 2002 from German multi-utility RWE revealed a sharp rise in debt from X1.1bn to X15.5bn ($1.2-16.7bn) as a result of an acquisition spree in the UK, US, Czech republic and Germany.

New RWE chairman, Harry Roels, pledged to tighten cost controls and limit new acquisitions to those that could be financed from the proceeds of asset sales.

Rating agency Standard & Poor’s cited increased business risk and limited headroom as the prime motivator for putting RWE on credit watch and also pointed to the lack of progress in divesting its remaining non-care assets.

RWE’s results did contain a solid operating performance from core operations with 2002 profits up 15 per cent to X4.5bn. Revenues eased 7.4 per cent to X46.63bn from X50.37bn.

Roels said that integration of Innogy, Thames Water and American Water Works would be speeded up and said he would overhaul RWE’s outdated corporate structure to account for the new units.

Iberdrola faces bid by Gas Natural

Gas Natural, the Spanish gas group, has launched a hostile takeover bid for Iberdrola, valuing the power group, which accounts for 40 per cent of the Spanish market, at X14bn ($15bn). Iberdrola has called on its major shareholders to reject the terms of the deal, which has the potential for creating the world’s fifth largest electricity company by market capitalization.

Gas Natural said a successful takeover would eliminate the need for X4bn worth of investment the two firms are planning separately, although a Spanish energy official said that the deal must not result in reduced investment in the firms. He suggested that a combined group might have to cede certain planned combined cycle power plant projects.

German energy giant E.ON has been approached as a potential white knight for Iberdrola. Although it is known that E.ON would like to gain a fooothold in the Iberian market, no counter bid has been made for Iberdrola. E.ON’s appetite for further acquisitions may have been dulled by its recent takeovers.

Enprima energy consultancy emerges

Fortum Engineering has moved away from providing turnkey power plant projects and, along with Pohjolan Voima, has established Enprima Ltd, a new company specialising in planning and consultancy. This new Finnish-based independent player in the energy market will purchase the shares of Fortum Engineering and Empower Engineering.

Staff and contracts from Fortum Engineering and Empower Engineering have all transferred to Enprima, giving a substantial engineering services and consultancy company with approximately 500 staff, most of whom are based in Finland. Fortum and Pohjolan Voima International each retain 40 per cent shareholdings in the new company.

Oil baron eyes Russian power sector

Russian oil and metals baron Viktor Vekselberg has entered the Russian electricity industry by using one of his privately held companies to take stakes of an undisclosed size in several partially privatized units of state-controlled power monopoly UES. A spokesman for Complex Energy Systems, the vehicle for the holdings, said that the company was planning to work in generation, marketing and distribution of electricity and heat. Vekselberg’s oil company TNK has recently established a joint venture with BP.

Germany’s E.ON has also boosted its role in the Russian electricity sector by signing a memorandum of understanding with UES under which the two firms have agreed areas of co-operation.