Hitachi grids will hit 2025 target after green revolution

Hitachi grids will hit 2025 target after green revolution
The power grid business Hitachi bought is involved in projects like connecting the world’s largest offshore wind farm in the North Sea to Britain. (Shutterstock)
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Updated 26 September 2020

Hitachi grids will hit 2025 target after green revolution

Hitachi grids will hit 2025 target after green revolution
  • Demand for wind and solar power growing because of pandemic, says CEO

ZURICH: The power grids business Hitachi bought from ABB for $11 billion is likely to hit the upper end of its 2025 targets despite the effects of a coronavirus downturn over the next two years, CEO Claudio Facchin has said.

Hitachi ABB Power Grids, whose products connect power stations to homes and factories, expects a recovery as countries launch stimulus packages and the electricity industry switches to greener technologies.
The company which competes with Siemens, General Electric and Hyundai, is due to give an update on its financial targets in October.
“We see the pandemic as having a temporary effect and we’re optimistic about the future,” Facchin told Reuters.
“COVID-19 has a negative impact on us in 2020 and 2021, but by 2023 and 2024 we should not see any more effect. We expect an actual positive swing when the recovery and stimulus packages kick in,” he said.
Although global electricity demand is set to fall 6 percent this year, demand for wind and solar is rising 5 percent, the International Energy Agency estimates.
“The pandemic has accelerated the conversion from fossil fuels to renewable sources of energy like wind and solar,” said Facchin, 55, who also led the business when ABB was its owner.

FASTFACT

The global power grid market is worth $100 billion.

“We are helping customers master the additional complexity of variable renewable energy sources and combining information technology and operational technology to improve efficiency.”
Projects at Zurich-based Hitachi ABB Power Grids, whose annual orders of $10 billion are equivalent to 10 percent of Hitachi’s revenue, include connecting the world’s largest offshore wind farm in the North Sea to Britain’s power grid.
In China it is delivering some of the world’s longest powerlines, including a 1,700 km link to transmit hydro-generated electricity from Sichuan province to Jiangxi province.
Facchin said he was confident the business could beat the 2 to 3 percent growth annual growth rate for the $100 billion global power grid market.
The company, which employs 36,000, will tap Hitachi’s expertise in IT and digital technology to enable predictive maintenance of power grids, for example.
It will use Hitachi’s financing arm will to help clients fund projects, and increase its service business, Facchin said.
The Italian executive was confident he could raise profitability, which investors saw as a problem when ABB owned it.
It is targeting operational EBITA margins of 8 to 12 percent, up from 6.5 percent expected in the year to March 2021.
“We are going to be at the upper end of this corridor by 2025,” Facchin said.


American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties

American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties
Updated 19 January 2021

American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties

American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties
  • New US leader may adopt more pragmatic approach, but trade relations will remain strong

JEDDAH: While some analysts are predicting a change in Saudi-US relations following Joe Biden’s inauguration on Wednesday, the new chairman of the American Chamber of Commerce (AmCham) in the Kingdom of Saudi Arabia said he believes the change in the White House will not have any significant impact on relations between the two allies.

“The US has been a partner of Saudi Arabia since the 1940s and I think that goes very deep. We think that the Biden administration and presidential election victory will usher in new foreign policy changes. That’s a given when there’s any change in administration and especially in party,” Tarik Solomon, chairman of AmChamKSA, told Arab News.

AmCham recently launched its first chamber in Saudi Arabia. It is part of the United States Chamber of Commerce umbrella that has hundreds of branches around the world. In the region, there are already branches in Dubai and Abu Dhabi, as well as in Egypt and Lebanon.

The US and Saudi Arabia enjoy a robust economic relationship. According to the US Department of State, the US is Saudi Arabia’s second-largest trading partner, while Saudi Arabia is one of the US’ largest trading partners in the Middle East and its third-leading source of imported oil.

Solomon said he expects a different communication style when it comes to the US-Saudi relationship going forward. “We will likely see a return to standard official communication procedures under Biden, rather than the decree by tweet policy of Trump,” he said.

However, the US-Saudi relationship is longstanding and is characterized by its pragmatism, Solomon said.

“Biden may request some concessions and will probably put stronger conditions on support. However, when you look at trade and investment, we’re committed to working tirelessly to elevate this relationship,” he added.

According to Solomon, AmCham’s aim is to strive for increased cooperation between the two countries in terms of trade and investment, to diversify the Saudi economy away from a dependence on hydrocarbons and to help raise the Kingdom’s profile in the US.

In 2019, Saudi Arabia was the US’ 27th-largest goods and service market, with a total value of $39 billion, focusing on military, energy, aluminum, fertilizers and petrochemicals.

“Those are extremely high figures when you look at, for example, military vehicles — that’s $2 billion on its own,” said Solomon. “There’s a lot of trade going on between the KSA and US and there’s a lot of room for growth.”

However, the chairman hopes to push more US companies into new sectors that have high potential and are pillars of the Saudi government’s Visions 2030 goals. Of the promising investment sectors in the Kingdom, Solomon highlighted manufacturing, tourism, entertainment, sports and technology.

“What we are looking at right now is the manufacturing sector. This is where work towards localizing renewable energy and industrial equipment is growing. We’re looking at sports, tourism and leisure,” said Solomon.

In addition to manufacturing, the technology sector is another promising industry with high potential, but Solomon said that there is a slight lag in US investment in technology and the digital economy, which he wants to push forward while it remains a greenfield space in the country, especially as the government increases investment in the sector.

Solomon highlighted the significance of Saudi Crown Prince Mohammed bin Salman’s visit to the US under the Trump Administration. “Crown Prince Mohammed bin Salman signed a significant amount of memorandums of understanding between the Saudi Arabian government and US entities, and some of those included Aramco and SABIC. We see this as an opening to new opportunities for US investment in a market that was traditionally heavily protected.”

Solomon believes that strategic dialogue in the trade and investment field will be the key to success and enhancing investment opportunities between the two countries.

“We need to remember what kind of a friend Saudi Arabia is and that they’ve always been there for us. We’ve always had a strong relationship,” he said. “Saudi Arabia has choices. Our goal is to be its first choice as a trusted partner.”