ABB Continues to Secure Orders Despite Uncertainty in Key Demand Drivers

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading power and automation technology group, ABB Limited (NYSE:ABB) (Zurich, Switzerland) has received a $170 million order from Bahrain's Electricity and Water Authority to expand four existing substations and design, install, and commission 11 new gas-insulated switchgear (GIS) substations by the end of the 2011 fiscal year. The project is part of Bahrain's plans to meet Bahrain's increasing electricity demand and support the economic development of the nation.

Under the contract, ABB will supply medium-voltage switchgear, high-voltage switchgear including GIS, cables, and substation automation that satisfies all the criteria under the IEC 61850 international standard for communication and data handling. An IEC 61850-compliant system would be able to interoperate between various electronic substation devices. Since GIS substations are compact, they are ideal for locations where space is limited. According to Peter Leupp, Head of the Power Systems Division of ABB, the new substations will ensure greater efficiency and reliability in the supply of power to the area and the grid in general. The new project would be ABB's fourth such substation project for the Electricity and Water Authority.

ABB received a similar order from one of India's state-owned power transmission utility companies, Power Transmission Corporation of Uttarakhand Limited (Dehradun, Uttarakhand). The $34 million order involves the development of three substations in an effort to fortify northern India's transmission grid using hydropower. ABB will design, supply, install and commission the three substations rated, which are individually rated at 132 kilovolts (kV), 220 kV and 400 kV. ABB will also supply and install transformers and other power equipment. The project is scheduled to be completed in 2011 and is expected to help the government meet the growing demand for power with hydropower, which is a sustainable power source. The Srinagar substation will be one of the biggest in the area.

According to Biplab Majumdar, Vice Chairman and Managing Director of ABB India Limited (BSE:500002) (Bangalore, Karnataka), the new substations will improve the reliability and capacity of the transmission and distribution network in northern India. An improved and stronger grid will play an important role in the region's economic development by meeting the power requirements of the rapidly expanding industrial belts.

The Asian Development Bank (Manila, Philippines) has extended a loan to India to help meet the expenses of implementing the Uttarakhand Power Sector Investment Program, which intends to boost power generation and expand the associated transmission network.

ABB's first-quarter 2009 revenues increased 3% based on the execution of backlog orders. This offset the decrease in sales of standard products in comparison to the same period in 2008. Orders in the first quarter fell 16% to $9.2 billion in comparison to the previous year. Even the large orders in the power, oil and gas sectors worth more than $15 million each could not compensate for the lower base orders across all the divisions of ABB. The decrease in the costs of raw materials is also reflected in the declining order book. While the demand for new and advanced power infrastructure remained constant in most markets, the demand for the company's industrial systems and products declined as industrial production across the world continued to fall and the construction sector fell even further. The performance of ABB for the remainder of the year remains unpredictable, as there is still considerable uncertainty about the key sectors that drive the demand for the company's systems and products.

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