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EDITIONS
Thursday, 24 October, 2002, 19:34 GMT 20:34 UK
ABB battles to defy doomsters
ABB Swiss staff
Troubled ABB employs 150,000 staff around the world
ABB, Europe's biggest engineering firm has promised a fresh round of cost cutting as it struggles to regain the confidence of investors.


From what we know, other ABB companies are not threatened by (asbestos claims in the US)

ABB chief executive Juergen Dormann

On Thursday, ABB said it would axe about $800m in costs as it reorganised around three divisions, from the current five.

The company unveiled the retrenchment plans as it announced an $82m loss for the first nine months of the year.

News of the cost-cutting strategy helped to prop up ABB's plummeting share price, which has now fallen by about 75% since the start of the week.

Stormclouds gather

The company has been under a cloud since Monday, when it warned that would miss its financial targets, and said that its US subsidiary Combustion Engineering was facing potentially ruinous asbestos liabilities.

The news triggered concerns that the asbestos liabilities could rebound on the parent company despite ongoing attempts to 'ring-fence' Combustion Engineering's finances.

ABB chief executive Juergen Dormann on Thursday tried to soothe investors' fears.

"This is a running company, it's a profitable company, it's a growing company, even if we have had two weak quarters" he told the BBC's World Business Report.

He added that the firm's non-US businesses would not be dragged into the asbestos case.

"From what we know, other ABB companies are not threatened by that."

It might have an indirect influence, but that's minor," he said.

Debt fears

ABB's shares climbed 18% on Thursday, partially recouping its hefty losses earlier this week.

But the company's debt burden, which rose from $4.1bn at the end of 2001 to $5.5bn at the end of September, remains a worry.

Many observers doubt whether ABB will be able to deliver on a commitment to reduce debts to $2.6bn by the end of this year

It is not yet clear how many jobs are at stake as a result of the latest cuts package, but 12,000 - 8% of the workforce - have already gone in $500m of cutbacks.

ABB said its latest shake-up would also see its oil and gas services unit lined up for sale.

That sale, with other disposals, should keep its debt repayments covered into 2003, the company said.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Martin Webber
"ABB was formed at the end of the 1980s"
ABB's chief executive Juergen Dormann
"This asbestos issue is pending... but we can't solve it overnight"
See also:

23 Oct 02 | Business
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30 Jan 02 | Business
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