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CEO Kindle quits suddenly as ABB posts record results

20 February, 2008

ABB’s chief executive Fred Kindle (shown below) has left the company unexpectedly as a result of "irreconcilable differences" with ABB’s board. Some reports suggest that Kindle, who had been CEO since 2005, fell out with ABB chairman Hubertus von Grünberg over the slow pace of ABB’s expansion. ABB has not made any major acquisitions since 2001, despite sitting on a cash pile worth $5.4bn.

Fred Kindle

Other reports quoted Kindle’s interim successor, Michel Demare, as saying that Kindle’s departure was due to differences in personality rather than disagreements over strategy. Demare pointed out that if ABB had made a large acquisition last year, it would probably have paid too much on the basis of current valuations.

Demare told the Swiss newspaper Sonntag that ABB’s acquisition priorities would be for products rather than systems, and that the focus would be on the automation sector rather than the energy sector where any acquisitions could run into problems with the competition authorities because of ABB’s existing strength in this area.

Kindle’s departure came as ABB posted record results with net income rising to $3.8bn in 2007, compared to $1.7bn a year before. Full-year orders increased by 27%, while EBIT (earnings before interest and taxes) grew 57% to $4bn on a 25% increase in revenues to $29.2bn.

Orders for ABB’s automation products rose by 21% last year to reach $9.3bn, while revenues climbed 26% to $8.6bn. EBIT grew by 40% to $1.47bn.

ABB predicts that the automation market will remain attractive in emerging economies during 2008, driven by high commodity prices, and the need for greater energy efficiency and process quality. However, in the mature economies, it foresees a reduction in demand from some countries because of the economic slowdown. ABB expects its automation activities to grow by about 10% during 2008.

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