ABB Ltd. (ABBN), the world’s biggest supplier of power grids, said Chief Executive Officer Joe Hogan will step down for “private reasons” after five years at the helm of the Swiss company.
Hogan, 56, will continue in the role until a replacement is appointed and the former General Electric Co. (GE) executive is “committed to a smooth transition,” ABB said in a statement today. He didn’t resign because of ill health and there was no conflict with the board or chairman, spokesman Antonio Ligi said, declining to give further details.
The surprise exit of Hogan, who joined ABB in 2008 and was the first American to lead the Zurich-based company in its 120-year history, comes after he spent $20 billion on investments and acquisitions to broaden its reach and portfolio. He also started an efficiency drive to rein in costs as clients cut spending on power gear amid the global economic crisis.
“Hogan’s track record of cutting costs and protecting margins is exemplary in the industry,” said Panagiotis Spiliopoulos, an analyst at Bank Vontobel. “Several larger acquisitions to fill technology white spots and expand the company’s presence in North America were highly successful. We regret the departure.”
ABB dropped as much as 1.8 percent to 21.15 francs in Zurich trading and was down 0.6 percent as of 1:15 p.m., valuing the company at 49 billion francs ($51 billion). Before today, ABB shares had gained 34 percent in the past 12 months, while General Electric rose 20 percent, Germany’s Siemens AG (SIE) added 22 percent and France’s Schneider Electric SA (SU) increased 32 percent.
“This has been a difficult decision as I leave behind a strong and talented executive committee and a cohesive board whose support I could always count on,” Hogan said.
The company said it will be looking internally and externally for a new chief.
ABB’s margin based on earnings before interest, taxes, amortization and depreciation rose by 1.1 percentage points to 15 percent in the first quarter, the company said April 24. Operational improvements such as lower travel expenses and the sourcing of materials at lower prices saved $260 million in the quarter, compensating for less profitable orders. Sales increased by 9 percent to $9.7 billion.
A week later, German rival Siemens cut its full-year forecast after quarterly earnings missed analyst estimates and said revenue fell 6.7 percent to 18 billion euros.
Hogan’s most recent acquisition was the $1 billion takeover of Power-One Inc. (PWER), a California-based maker of solar inverters. The deal gives ABB, the world’s biggest electricity-networks builder, inverters that allow solar power to be fed into grids. ABB is looking to tap a market forecast to grow by more than 10 percent annually, driven by a need for affordable energy and declining costs of producing solar power.
The Power-One purchase is an example of how Hogan has been bringing new technology to the Swiss company’s portfolio. Solar inverters convert the direct current generated by solar panels into the alternating current needed to run appliances on power grids.
Hogan, who holds a bachelor of science degree in business administration from Geneva College and an MBA from Robert Morris University, also orchestrated the purchase of drives maker Baldor Electric Co. and low-voltage products maker Thomas & Betts Corp.
ABB exceeded a savings target last year and Hogan said last month he would be cautious about investment until spending by customers picks up.
The February appointment of Eric Elzvik to the role of chief financial officer, after a career of almost three decades at the company, may lend a degree of stability to management as Hogan is replaced.
Hogan was working alongside Chairman Hubertus von Gruenberg, who clashed with Hogan’s predecessor Fred Kindle.
The board “sincerely regrets” Hogan’s departure, von Gruenberg said in the release today.
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