ABB: a mixed outlook

ABB’s liquidity crisis proved to be “avoidable but resolvable”, and there is now optimism in the market over the company’s debt reduction prospects. Asbestos liabilities are still the unknown quantity. ABN Amro

We were critical of Moody’s and S&P’s double-A ratings last year but on fundamentals we regard Moody’s latest ‘Baa2’ rating as a step too far. We support ABB’s forecast 4%-5% underlying Ebitda margins for 2002 (approximately Ebitda of $1.8 billion) and although the issues of cash expenditure against restructuring and asbestos provisions remain an issue, we are optimistic about ABB’s debt reduction prospects for the $4.1 billion of net debt.

ABB’s liquidity crisis was avoidable but is resolvable