On the eve of a record earnings report, the Swiss company cited “irreconcilable differences about how to lead the company” as the reason for Chief Executive Officer Fred Kindle’s departure.
ABB Ltd., the Zurich, Switzerland-based provider of power and automation technologies, announced on Feb. 13 that Chief Executive Officer Fred Kindle is leaving the company due to “irreconcilable differences about how to lead the company.” The Board of Directors named Chief Financial Officer Michel Demaré as interim CEO. ABB provided no additional details on the reason for Kindle’s departure.The announcement came a day before ABB reported record results for 2007. On Feb. 14, ABB said that net income increased to a record $3.8 billion in 2007 from $1.4 billion a year earlier, as markets remained strong and further operational improvements were made. In addition, a gain on the sale of ABB Lummus Global and a tax benefit together contributed approximately $1 billion to the 2007 net income, the company said.Kindle joined ABB in September 2004 and took over as President and CEO in January 2005. He oversaw a period of strong organic growth and a return to profitability at ABB. The Board fully supports the strategic targets announced in September 2007 and is confident in the Executive Committee’s ability to drive the strategy forward, ABB said. The Board will immediately begin the search for a successor.“The Board is very thankful to Fred Kindle for driving the company to the extraordinary level of performance it achieved over the last three years,” Chairman Hubertus von Grünberg said. “He successfully streamlined and strengthened the company’s operations around the world. Under his leadership, ABB today is a leading company in respect of growth, profitability and business ethics.”Financial resultsIn its earnings report, ABB said that full-year earnings before interest and taxes (EBIT) grew 57 percent in 2007 to $4 billion on a 25 percent increase in revenues to $29.2 billion. Orders were 27 percent higher, leading to an order backlog of $22.7 billion at the end of 2007, an increase of 44 percent vs. the end of 2006.Orders, revenues and EBIT grew in all divisions and regions as global demand remained strong for technology to increase power grid reliability, industrial productivity and energy efficiency. Strong demand, strategic measures and operational improvements, such as more sourcing from emerging economies, helped lift the EBIT margin to 13.8 percent from 11.0 percent in 2006. Cash flow from operating activities increased 58 percent to $3 billion, reflecting both higher EBIT and improvements in working capital management.“2007 was a great year for ABB,” said Demaré. “Demand remained strong around the globe for the products and services at the heart of our business—to increase energy efficiency, deliver power more reliably, and improve industrial productivity. We also profited again from our improved operational performance and expansion in emerging markets. This puts us in a strong position heading into 2008.”ABB Ltd.www.abb.com
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