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Tickers in this Article: SI, ABB
ABB Ltd. (ABB) received an $80 million order from the Samsung Heavy Industries for supplying energy-efficient, reliable electrical systems for five drill ships and two liquefied natural gas carriers to be built by Samsung at its shipyard in Korea. The function of these vessels will be to extract, process and transport oil and gas. Samsung Heavy Industries, a branch of the Samsung's South-Korean holding that primarily focuses on manufacturing a wide range of large vessel types including LNG carriers, drill ships and semi-submersible drilling rigs.

Of the five drill ships to be built in the project, three are for Seadrill Ltd. in Norway, one for Pacific Drilling S.A in Brazil and one for Ensco plc in the UK. The two LNG carrier vessels are to be built for Golar LNG Ltd in the UK. The supplies from ABB will enhance the energy efficiency of the ships. Further, the reliability of power supply will increase, which in turn, will improve the use of onboard equipment. Commissioning of the project will be done between 2014 and 2015.

ABB has long been engaged in development of technologies to facilitate oil and gas exploration, extraction and transportation from deep sea and other new sources and has gained expertise in it. The company is also an expert in marine application.

Moving ahead, ABB expects the emerging markets to be a significant growth driver, however demand in mature markets is also expected to improve. Customer capital expenditures have increased with the rise in commodity prices. Increased capacity in some later-cycle infrastructure-related businesses continues to exist.  In many sectors, price stability has been attained and ABB has increased its prices to offset rising raw material costs.

However, ABB Ltd's results are likely to be adversely impacted by macroeconomic weakness as more than 80% of the company's orders are derived from outside the US. A major competitor of ABB Ltd. is Siemens AG (SI).

ABB Ltd. is a Zurich (Switzerland) based power and automation technology company. The company operates in approximately 100 countries, structuring its global organization into five regions: Europe, Americas, Asia, the Middle East and Africa.

Currently, we maintain a Zacks #3 Rank (short-term Hold recommendation) on ABB Ltd.

 
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