ABB's new CEO says company has work to do after mixed Q3 numbers
CEO targets higher top line growth
More M&A, capex will be part of strategy
CFO says ABB has at least $1 billion for acquisitions
R&D spending will also increase
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By John Revill
ZURICH, Oct 17 (Reuters) -ABB's ABBN.S new Chief Executive Morten Wierod wants to speed up sales growth at the Swiss engineering company, he said on Thursday, ramping up spending on deals as well as research and development.
The company, whose robots and components are used to electrify factories and buildings, said it had at least $1 billion for acquisitions.
While ABB, whose fortunes give an insight into the health of industry, will focus on small and medium-sized deals, large purchases could not be ruled out, Wierod said.
"In my view ABB is not yet firing on all cylinders," he told reporters after ABB reported mixed third-quarter results.
"What we will focus on more strongly is profitable growth, that's a priority for me."
Key to the strategy will be more spending on M&A, an area less in focus after ABB concentrated on internal reorganisation and raising its profitability under Wierod's predecessor Bjorn Rosengren, who stepped down at the end of July.
While profit margins have reached a record level of 19%, the company is falling short of its mid-term aim for annual sales increases of 5-7%, increasing by 3% in the first nine months of 2024.
Wierod, who previously led ABB's electrification division, declined to give a figure for the number of deals ABB would pursue, but said he wanted to add another 1 to 2 percentage points per year of revenue from acquisitions.
"It's fair to say that we have not allocated that much capital on acquisitions during the last few years, but we would expect that to go up," Chief Financial Officer Timo Ihamuotila said.
"We clearly have that today, at least a billion to spend on M&A or acquisitions," he added.
Spending on new factories and equipment will also increase from the current level of $700-800 million to $850 million per year, with more funds going to businesses doing well.
ABB will also increase its spending on developing new products and services from 4% of revenue at present to 4.5% to 5% in future.
The company has already spent $110 million more in the first nine months of 2024 on R&D than a year earlier, taking its level this year to 4.4%.
Reporting by John Revill; Editing by Emelia Sithole-Matarise
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