ABB faces soaring asbestos claims

The financial impact of the asbestos claims could be dramatic for ABB Keystone

The embattled technology group, ABB, is facing asbestos-related lawsuits of up to SFr5 billion ($3 billion), according to a new report.

The report, published by the investment bank BNP Paribas, estimates that asbestos-related claims in the United States are set to rise tenfold over the next decade to 660,000, with dramatic consequences for ABB.

“The final cost to ABB of pending and future asbestos claims could be substantial compared to the $595 million sum currently provisioned in its balance sheet,” said the lead author of the report, Thomas Ringvist.

The Swiss-Swedish business’s exposure to asbestos-related lawsuits dates back to its acquisition in 1989 of a US power generation company, Combustion Engineering.

Claims rising

An ABB spokesman, Thomas Schmidt, told the BBC, which obtained the report, that the claims had been rather small at the outset, but that they had been rising, particularly since the late 1990s.

Schmidt added that the $595 million set aside to cover the claims had been deemed adequate at the time of the takeover, and he described the BNP Paribas report as “one of a very wide range of analyst opinions of our asbestos exposure… It is really an opinion.”

However, analysts from other investment banks, including Schroder Salomon Smith Barney, Credit Suisse First Boston and Züricher Kantonalbank, have in the past warned that ABB may need further provisions to cover asbestos claims.

But Schmidt said that the last version of provisions, published in the company’s annual report last February, had earned the approval of accountants, lawyers and the US stock market watchdog, the Securities and Exchanges Commission.

An update will be published next month when ABB releases its 2001 figures.

swissinfo