ABB Unveils Five-year Growth Targets, Organizational Changes

Management layer to be removed, in line with enhanced focus on business execution and value creation.

Dinesh Paliwal
Dinesh Paliwal

ABB Group, the Zurich, Switzerland-based provider of power and automation products, has announced new growth targets for the five-year period from 2005 to 2009, as well as a strategy for achieving those goals that includes organizational changes.

ABB’s financial targets include compound annual revenue growth of more than 5 percent during the period. The company is also aiming to achieve margins on earnings before interest and taxes (EBIT) of more than 10 percent, along with net margins of more than 5 percent.

Effective Jan. 1, 2006, one layer of management will be removed, ABB said. The company’s two current core divisions—Power Technologies and Automation Technologies—will be eliminated and replaced by their respective five business areas. The five new divisions will be Power Products, Power Systems and Automation Products, all to be based in Zurich; Process Automation, to be based in Norwalk, Conn.; and Robotics, to be based in Shanghai, China. The heads of each of the five new divisions will become new members of ABB Group’s executive committee, effective Jan. 1.

A new function at the group level, Global Markets and Technology, will also be established to help drive execution of the strategy across national and regional borders, ABB said. Dinesh Paliwal, currently head of the Automation Technologies Division, will assume a new role as president of Global Markets and Technology, and will also continue as country manager in the United States and as regional manager in North America.

ABB said the strategy is designed to emphasize improved business execution and a broader approach to value creation, including a focus on growth, operating margin, use of capital and cash generation. “This is an evolution of our strategy, not a revolution,” noted Fred Kindle, ABB president and chief executive officer, who added that the company continues to focus on core businesses in power and automation.

“ABB today is in a strong position and we can look forward to sustainable and profitable growth,” Kindle said. “The targets and actions we are announcing are designed to build on our strength and secure our competitive success over the next five years and beyond.”

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