ABB Hires Spiesshofer as CEO as Hogan Makes Gradual Exit
ABB Ltd. (ABBN), the world’s largest supplier of power grids, said Ulrich Spiesshofer will become chief executive officer, an internal promotion of a manager who integrated the Swiss company’s largest acquisition.
Spiesshofer will replace Joe Hogan, who last month said he’ll step down for private reasons after five years at the helm of the Swiss company. Hogan will continue as adviser and Spiesshofer will take over on Sept. 15., Zurich-based ABB said today in a statement.
The new CEO needs to integrate $10 billion worth of acquisitions in the U.S. made under Hogan and market new offerings through ABB’s global operations with 145,000 employees. Hogan added motors and low-voltage gear products in his three-year acquisition spree and Spiesshofer oversaw the integration of Baldor Electric Co., an Arkansas-based maker of industrial motors and drives.
“We expect the appointment of an internal candidate to signify continuity of the current strategy, at least for now,” said James Stettler, an analyst with Canaccord Genuity Ltd. in London. “For investors expecting a more dramatic change in strategy, more patience may be required.”
The stock rose 1.2 percent to 20.43 francs as of 9:07 a.m. in Swiss trading, valuing the company at 47.3 billion francs ($51.2 billion). ABB shares had gained 7.7 percent this year before today. Siemens AG (SIE), a competitor in factory robots and automation, declined 3.5 percent in the same period.
Spiesshofer, 49, is a former management consultant from A.T. Kearney. The German citizen has a PhD in economics from the University of Stuttgart and was previously head of corporate development at ABB before being appointed head of discrete automation and motion in 2009. He providing the foundations for a $3 billion cost-cutting drive at ABB that started during the financial crisis in 2008.
Spiesshofer’s ascension to the top job is timed with an estimated 18 percent increase in earnings before interest, taxes, depreciation and amortization this year to 6.27 billion francs, according to the average of 31 analysts estimate compiled by Bloomberg.
“I am extremely pleased that the new CEO comes from within the company, and brings a solid track record and deep knowledge of the portfolio,” Chairman Hubertus von Gruenberg said in the statement. “The integration of Baldor stands out as a benchmark.”
Spiesshofer also oversaw a $1 billion deal to buy California-based Power-One Inc. (PWER), Hogan’s most recent purchase.
Power-One will give ABB inverters that allow solar power to be fed into grids and the deal is an example of how Hogan has been bringing new technology to the Swiss company. 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.
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 while sales increased by 9 percent to $9.7 billion, the company said April 24. Thomas & Betts power fittings, connectors and switches contributed 7 percent to operating earnings.
A week later, German rival Siemens cut its full-year forecast after quarterly earnings missed analyst estimates and revenue fell 6.7 percent to 18 billion euros ($24 billion).
Canaccord’s Stettler has said that Hogan’s successor also needs to continue a revamp of the power systems unit. ABB faces lower orders from China State Grid Corp., its largest customer, as local rivals make technological advances and make inroads into the Swiss company’s market share, he said.
Power Systems should extend the restructuring of its engineering, procurement and construction businesses announced in December to contracts for high-voltage power connections, which depend on China, the analyst has said.
ABB said it will name a new head for the discrete automation and motion unit, which Spiesshofer leads, “in due course.” Hogan, who was the first American to lead the Zurich-based company, will stay on as an adviser for some months after stepping down to ease the transition phase, the company said.
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