ABB which competes with Rockwell ROK

ABB, which competes with Rockwell (ROK.N) and Schneider(SCHN.PA), said it was now aiming to cut costs by $2 billion bythe end of 2010, compared with $1.3 billion announced earlier. ABB has already slashed 3,000 jobs, which includedtemporary, contract and permanent workers, and Chief ExecutiveJoe Hogan told reporters on a conference call more job cutswould be necessary if base orders continued to fall. “Revenue and EBIT were slightly below expectations whileorder intake was better than estimated,” Jyske analyst Lars TerpPaulsen said. “(It is) good news that they are expanding the cost cutprogramme. Still very limited visibility but small signs ofimprovement in March,” he said.

ABB’s results contrast with those at rival GeneralElectric’s (GE.N) Energy Infrastructure unit, which posted a 19percent rise in profit to $1.27 billion. [IDn:N17446745] The group confirmed its targets for the 2007-2011 period,excluding its Robotics unit, which needs further restructuring. ABB is aiming for revenue growth of between 8 percent and 11percent and for an earnings before interest and tax (EBIT)margin of between 11 percent and 16 percent in the mid-term. However, JP Morgan analyst Andreas Willi said ABB wouldlikely struggle to achieve its growth targets. ORDERS BEAT FORECASTS Orders at the group fell 16 percent to $9.15 billion, aheadof the average estimate of $8.21 billion forecast in the Reuterspoll. Sales missed expectations with a 9 percent drop to $7.21billion.

“The limited availability of financing for large powerprojects, especially in the private sector, and the uncertaintyover raw material prices and other project costs continued todelay the award of new projects,” ABB said. ABB saw a first-quarter 18 percent drop in its smallerorders, which make up the bulk of sales and are more profitablethan larger contracts as customers cut back on investments inproducts like robots as well as drives, motors and generators. The group’s operating profit margin fell to 12 percent inthe first quarter, from 17 percent a year earlier. Longer-term, ABB is well positioned to benefit as Europe andthe United States replace ageing power systems, while heavyinvestment in China and India in power infrastructure shouldalso boost the group. The group, which had net cash of $4.8 billion at the end ofthe first quarter, down from $5.4 billion at end-2008, is stillon the look out for bolt-on acquisitions, Hogan said He addedABB’s first priority would be to keep cash.