Swiss-Swedish engineering giant ABB on Wednesday revised down its sales growth target for the next five years and unveiled a cost-cutting programme to rake in $1.0 billion in savings.
Zurich: Swiss-Swedish engineering giant ABB on Wednesday revised down its sales growth target for the next five years and unveiled a cost-cutting programme to rake in $1.0 billion in savings.
ABB announced it now expects sales to swell between three and six percent between 2015 and 2020, down from its previous estimate of between four- and seven-percent.
The group explained its sales target had been "aligned to new market realities," pointing to "the expected continuation of lower oil prices, signs of slowing industrial production growth and forecasted emerging market growth below the levels expected in 2014."
ABB is already undertaking a vast restructuring programme, but company chief Ulrich Spiesshofer said Wednesday it was accelerating its efforts.
"We are actively shifting the centre of gravity of this business with a focus on higher growth," he told reporters.
Among other things, ABB plans to cut the number of divisions from five to four, combining power and automation into a single unit dedicated to power grids.
The group, which employs some 140,000 people worldwide, said it intended to push through $1.0 billion in savings by the end of 2017 by increasing the productivity of its white-collar staff.
That comes on top of its ongoing programme to slash costs equivalent to three to five percent of cost of sales every year.
ABB said the cost of its white-collar productivity programme was expected to cost it $1.2 billion mainly in restructuring costs.
Spiesshofer said it was too early to say if any job cuts would be required.
At the same time, the company said it planned to free up $2.0 billion in cash by the end of 2017 to allow it to pursue more acquisitions.
Baader Helvea analyst Stefan Gaechter voiced skepticism at the wisdom of ABB`s apparent plan "to become more aggressive on the side of external growth."
He also said the downward revision of ABB`s sales target did not come as a surprise, but warned "the high end of the new guidance is still rather optimistic."
Following the announcement, ABB saw its share price rise 0.86 percent in midday trading to 18.70 Swiss francs as the Swiss stock exchange`s main SMI index rose 1.95 percent.