ABB aims to win Saudi projects in order surge

Visitors watch a 3-D presentation of the Neom project at a conference in Riyadh. ABB is targeting orders from the project. (Reuters)
Updated 27 October 2017
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ABB aims to win Saudi projects in order surge

ZURICH: ABB is confident of winning a slice of the $500 billion mega-city project in Saudi Arabia, as the Swiss engineering group on Thursday posted its strongest growth in new orders for more than two and-a-half years.
CEO Ulrich Spiesshofer returned from meeting members of the Saudi royal family to present ABB’s third-quarter earnings, which came in slightly ahead of analysts’ forecasts.
During his trip, Spiesshofer discussed Saudi Arabia’s plan to create a business and industrial zone, named Neom, extending across its borders into Jordan and Egypt, the biggest project yet in a series of efforts to free the Kingdom of its dependence on oil exports.
ABB, with three factories and a long history in Saudi Arabia, is well positioned to provide automation and power to high-tech industries setting up in the country, Spiesshofer told reporters, declining to quantify the value of projects ABB could bid for.
“There’s a wide range of opportunities and we will do our best to participate in that in the appropriate way,” Spiesshofer said.
He was speaking after ABB reported results slightly ahead of expectations and brightened its outlook for the global economy.
The power transmission and automation company said net profit rose 1 percent to $571 million, beating analyst estimates of $553 million in a Reuters poll.
Sales rose 6 percent to $8.72 billion, beating estimates of $8.52 billion, while new orders — a signal of future growth — were up 8 percent, in line with expectations at $8.16 billion and the fastest growth rate since the first quarter of 2015.
Analysts from Morgan Stanley described the results as encouraging, although Barclays said investors may have been hoping for more in light of the easy comparisons with last year when orders dropped 14 percent.
ABB’s stock reacted positively to the earnings update, gaining 3 percent in early trade, and was one of the top performing stocks on the Euro Stoxx industrial goods and services index. The stock is trading at its highest level since September 2008.
Spiesshofer acknowledged the easier comparison base, but said ABB was gaining momentum with small orders worth under $15 million rising in all regions and in all business areas.
“That means the ship of ABB is really going into a growth mode altogether,” Spiesshofer said. “Our many initiatives are paying off.”
The improvements showed the strategy of focusing on higher-growth areas such as digital technology, robotics and food and beverage markets, was working, he added.
“Going into 2018 with the slightly more favorable market development that we are witnessing,” he said, “I am confident that our ambition to accelerate growth momentum will pay off.”


French state-owned bank drops plan to aid trade with Iran

Updated 24 September 2018
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French state-owned bank drops plan to aid trade with Iran

PARIS: French state-owned bank Bpifrance has abandoned its plan to set up a mechanism to aid French companies trading with Iran, in the face of US sanctions against Tehran.
Earlier this year, the bank had said it was working on a project to finance French companies that wished to export goods to Iran despite US sanctions.
“It’s put on hold,” said Nicolas Dufourcq, Bpifrance’s chief executive. “Conditions are not met (...) Sanctions are punitive for companies.”
Bpifrance was working on establishing euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through vehicles without any US link, Bpifrance thought it was possible to avoid the extraterritorial reach of US legislation.
Dufourcq’s latest comments show how the scope of the sanctions is making trade with Iran increasingly difficult for European companies.
The United States is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4.
Even though several European countries have said they are seeking to protect their companies from the sanctions, several major companies including oil company Total, Air France-KLM and British Airways have announced they would suspend activities in Iran.
German officials have in recent weeks advocated for the creation of an independent system for cross-border payments to make trade with Iran possible even with the US sanctions.
European Union diplomats have said US President Donald Trump’s positions on trade and on Iran were fueling a rethink about the EU’s dependency on the US financial system.
However, European countries appear to be struggling to find or agree on effective options to tackle the issue.