Board-Ansicht
Mix-Ansicht- Nochmal ABB (E) - Popeye, 25.10.2002, 16:14
Nochmal ABB (E)
-->ABB in crisis
All over?
Oct 24th 2002 | PARIS
From The Economist print edition
Europe's second biggest engineering group is
dangerously close to collapse
JURGEN DORMANN
was supposedly a safe
pair of hands, a
sensible manager who
could steer his way
through a crisis. That
is why in September
he was made chief
executive (he was
already chairman) of
ABB, a stricken
engineering group that
was once Europe's
answer to GE, but has
been struggling for
months with a severe financial and operational crisis.
Don't worry, he said as he took up his post, ABB
would meet its targets for improving earnings and
reducing its $5.2 billion of debt.
Imagine the stockmarket's horror, then, when Mr
Dormann revealed that on his brief watch things had
become far worse. On October 21st he issued a
profits warning, three days before releasing dismal
third-quarter results. He said that poor internal
reporting had led senior managers, and consequently
him, to be complacent. Targets have now been
abandoned, but it is a mystery why so experienced a
manager ever trusted the original numbers or
presided over so slack an internal culture.
Mr Dormann also revealed that ABB's liabilities for
asbestos-related legal claims threaten to spiral out
of control. Combustion Engineering (CE), acquired in
America over a decade ago, might enter bankruptcy in
a last-ditch effort to protect its European parent from
further claims. ABB said that the liabilities now
exceeded CE's $812m of assets. Analysts have long
argued that ABB was underestimating its asbestos
liabilities, which some put at $2 billion-3 billion. They
were not pleased to be vindicated.
This double piece of bad news proved more than the
markets could bear. On October 22nd, ABB's already
feeble shares fell by more than 60% (they fell further
the next day) and its bonds traded at half their face
value. Credit-rating agencies cut ABB's rating to
near-junk status. Mr Dormann was left to utter
reassurances that he does not expect ABB to fail and
that he will find out how much of the firm's previous
optimism was wishful thinking. The problem is that
nobody in the markets trusts him, nor are they likely
to anytime soon.
Break up or bankruptcy are now real possibilities for
ABB. It finds itself on a danger list with other
troubled European groups such as Fiat and Vivendi
Universal. Saddled with too much debt, their efforts
to work their way out of a financial crunch have been
hampered by poor economic conditions and weak
customer demand. Selling assets looks the obvious
way out of trouble, but this is a buyer's market and
prices are disappointing. On October 24th, ABB
announced that it would dispose of its oil, gas and
petrochemicals business, and also cut costs by
$800m.
ABB has added to its woes by its mishandling of its
asbestos liability. Last month it lost an appeal
designed to stop a court in West Virginia from
hearing a case lumping together 250 separate cases
involving 8,000 claimants from all over America. ABB
has now chosen to settle the cascade of cases,
hoping to limit the damage by placing CE into
bankruptcy. Even if that route, which will take time to
navigate, proves feasible (many lawyers think it
doubtful), the tactic will require ABB to inject cash
into the defunct entity to match the asbestos
liability. That would probably force it to make a rights
issue or another emergency disposal of its assets.
Assuming it is still around, that is.
Quelle: Economist (nur Abo)
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