ZURICH: ABB will reshape its engineering, procurement and construction (EPC) business — including its biggest but least profitable power grids division — by spinning off and winding down some operations, triggering fourth-quarter charges totalling $225 million.
In the Industrial Automation division, ABB’s oil & gas EPC business will be transferred into a previously announced joint venture controlled by Saudi-based Arkad Engineering and Construction in a deal now expected to close this month.
CEO Ulrich Spiesshofer described the reshaping of its business as ABB’s final step in a year of transition that would lead into a 2018 when it would benefit from a strengthening economy.
“We will always run the business in a way that we are responsibly managing capacity in line with market development,” he told reporters on a call, but noted economic conditions were likely to be brighter next year than in 2017.
Last month, ABB said it would revamp its global power grids operations as it responds to the division’s sluggish profitability and falling orders.
The move came as ABB sought to justify its decision last year to reject calls from Cevian Capital, its second-largest shareholder, to spin off power grids, which has suffered a 9 percent drop in orders in 2017.
In the Power Grids division, which also makes electrical substations, ABB will form a joint venture with SNC-Lavalin for electrical substation EPC projects, the Swiss technology group said on Wednesday.
Canadian-based SNC-Lavalin will have the controlling interest in the venture, it said.
In the Robotics and Motion division, ABB is winding down its turnkey full train retrofit business.
“The fourth quarter 2017 results of Power Grids and Robotics and Motion are each expected to be impacted by approximately $75 million on operational EBITA. The transfer of the turnkey oil & gas EPC business into the JV with Arkad is expected to result in a non-operational pre-tax charge to net income of approximately $75 million,” the company said.
Spiesshofer said he did not expect negative impact on jobs.
ABB is trying to shift its focus to higher-margin services.
Its four divisions cover electrification products, robotics, industrial automation and power grids. Power grids accounted for around 30 percent of 2016 sales, electrification products 28 percent, robotics 23 percent and industrial automation 19 percent.
ABB shares fell 0.4 percent in early trading, while the Stoxx European industry sector index was little changed.
“We believe that the indicated completion of the (EPC) business model change will be supportive for sales growth rates as well as profitability,” Baader Helvea analyst Guenter Hollfelder, who rates the stock “hold,” said in a note.
ABB will report these businesses as a non-core operating unit which will manage its backlog of existing business. The new unit will report to finance chief Timo Ihamuotila from the start of next year.
ABB to transfer energy EPC business to Saudi contractor
ABB to transfer energy EPC business to Saudi contractor
PIF-backed AviLease achieves revenue of $664m and 19% growth in 2025
RIYADH: Saudi Arabia’s Public Investment Fund-backed AviLease achieved exceptional performance and sustainable business growth during 2025, supported by the strategic expansion of its global platform.
According to its financial results for 2025, AviLease recorded total revenues of $664 million, an annual increase of 19 percent, driven by disciplined growth in its asset portfolio and strong performance in aircraft remarketing amid sustained global demand for modern, fuel-efficient aircraft, the Saudi Press Agency reported.
Profit before tax doubled compared to the previous year, reaching $122 million. The year witnessed an expansion in AviLease’s portfolio, reaching 202 owned and managed aircraft, leased to over 50 airline companies in more than 30 countries.
The total value of the company’s assets stabilized at $9.3 billion. AviLease maintained a 100 percent fleet utilization rate, reflecting the resilience of its business model, the efficiency of its asset management, and the strength of its strategic relationships with airlines around the world.
AviLease concluded purchase agreements for aircraft from Airbus, including the A320neo family and A350F, and Boeing 737 aircraft, aiming to enhance its future asset portfolio with modern, fuel-efficient aircraft. This step will contribute to supporting future growth and meeting increasing customer demand for the latest aircraft, aligning with the Kingdom’s ambitions to become a leading global aviation hub.
AviLease strengthened its prestigious credit standing by obtaining a strong Baa2 credit ratings from Moody’s and BBB from Fitch, reflecting its financial solidity, managerial discipline, and efficiency in managing leverage. The company also successfully issued senior unsecured bonds worth $850 million last November under Regulation 144A/RegS. This issuance contributed to diversifying its funding sources and enhancing its financial flexibility.
Commenting on the results, AviLease CEO Edward O’Byrne said: “This exceptional performance reflects the quality of the company’s investment portfolio, the strength of its partnerships with airlines, and its strategic focus on responsibly deploying capital into highly sought-after, efficient, modern aircraft assets.”
He added: “As aviation markets continue to grow, AviLease is strategically positioned to continue its expansion plans and deliver sustainable long-term value for shareholders, contributing to the Kingdom’s ambitions.”
Throughout 2025, AviLease continued to play a pivotal role in the Kingdom’s growing aviation sector and contributed directly to the launch and scaling of the new national carrier, Riyadh Air, by completing a sale and leaseback transaction for a Boeing 787-9 aircraft, which thereby became the first aircraft to join the airline’s fleet.
AviLease also established a strategic partnership with Hassana Investment Co. This partnership aims to provide an opportunity for local and international investors to enter the aircraft financing asset class and benefit from AviLease’s technical expertise and operational capabilities to support partnership growth and enhance performance.
Hassana Investment Co. has agreed to acquire an initial portfolio of 10 modern aircraft from AviLease.
