ABB chairman begins to unveil new strategy

Dormann transformed Hoechst swissinfo.ch

The new chairman of the electrical engineering group, ABB, has hinted that the company is considering further asset sales to restore its tarnished reputation.

“We must focus on the future direction of the various units within the company,” said Jürgen Dormann in an interview with the Swedish financial newspaper “Dagens Industri”. “Today’s synergies between many areas are not enough.”

Dormann was appointed chairman on Wednesday after the surprise resignation of Percy Barnevik, the man who created Europe’s largest electrical engineering concern out of the 1988 merger of Sweden’s Asea and Switzerland’s Brown Boveri.

Barnevik’s vision was to create a company with a truly global reach but the firm has suffered an image problem among investors. Last month, it had to deny rumours that it faced a cash squeeze.

Massive job cuts were already announced earlier this year in a bid to restore the company’s fortunes. Some 12,000 positions are to go worldwide.

The share price has plunged from a high of SFr54.50 in February last year to as low as SFr9 in October. Initial reaction to Dormann’s appointment, however, has been positive and ABB was the leading gainer on the blue-chip SMI on Thursday, climbing to SFr19.

Dormann has a reputation as one of Germany’s most radical managers.

In less than six years he completely dismantled Hoechst, the leading German chemical company, and then created a new company, Aventis, through a series of mergers and acquisitions.

Aventis has a third of the staff of Hoechst but a market capitalisation that is eight times bigger.

German critics call him “Mr Shareholder Value”.

Dormann says ABB’s core activity will remain in power and automation technologies. He has not said if the company will shed its low-margin oil, gas and petrochemicals units.

The future of its building technology businesses are also uncertain. They account for 40 per cent of the firm’s workforce.

The day-to-day running of ABB will remain in the hands of Jörgen Centerman who took over as chief executive at the beginning of the year with the departure of Goran Lindahl.

One of Dormann’s first tasks will be to rejuvenate ABB’s board. Recent resignations have decreased the traditional dominance of Swedes and the Swiss presently hold a majority.

But analysts say it is now probable that Dormann will look outside the two countries for new blood.

swissinfo with agencies