ABB South Africa, part of the international power and automation technology group, recorded strong revenue growth in 2003 of R2,2 billion, up 10%. Revenues were boosted by large project orders for Eskom's capital expenditure programme, higher power product sales and several large automation projects in the pulp and paper, mining and minerals industries.
Carlos Poñe, CEO, says local revenues were stronger than anticipated in the power business as Eskom has embarked on a major programme to increase power generation.
The group in South Africa, which contributes about 2% to ABB's global turnover, has established a leading position in the market, doubling its turnover in the past five years. ABB employs 2200 people at manufacturing operations in Gauteng, the Free State, and in the Cape for electrical equipment ranging from large high voltage power transformers and motors to medium and low voltage switchgear products.
ABB benefited from its power technologies division, which had the largest growth in revenues, mainly as a result of local utility infrastructure spending. Large power projects won in 2003 included a R100 million order to supply unit and turbine automated control systems for the refurbishment of the Eskom Arnot power station, and a R30 million order to supply a 145 kV Gas Insulated Switchgear (GIS) for Epping's switching station for the City of Cape Town. In southern Africa a R60 million order from Mozambique national utility, Electricidade de Mozambique (EDM), was won for substation and power distribution network upgrades to improve electricity infrastructure in Maputo.
Demand for electrical power products was robust with ABB's acquisitions in the medium voltage switchgear and distribution transformers business more than doubling revenues in the past two years. "Our acquisitions are bearing fruit. We have optimised operations through international standards, introduced global technology, and appointed strong local management." Export revenues for power products and projects, hit by the strengthening rand, were substantially lower than 2003 levels.
The automation technologies division performance was raised by winning a R100 million order to supply electrification and automation equipment to Mondi's Kraft mill in Richards Bay; a R32 million process automation contract from Alpha South Africa to upgrade Alpha's Kiln 3 at Dudfield near Lichtenburg; and a R20 million order to supply paint robots for tier one automotive supplier Venture's manufacturing plant in Rosslyn, Pretoria, for painting bumpers for BMW South Africa.
"Local orders for automation were lower in 2003 because the strong rand squeezed planned large capital expenditure projects by export-revenue based customers," says Poñe. Despite this, Poñe says there was an upside to the strengthening rand as customers took advantage of ABB's international technology. "Customers in the electricity, mining, pulp and paper, and petrochemical industries were able to buy more of ABB's latest products and systems. ABB has continued to invest heavily in its technology even during tough times," says Poñe. Tight cash management was a highlight of the company in 2003. Improved credit control and better terms with customers contributed to a record increase in free cash flow. "We have positioned ourselves for continued growth in power and automation technologies for utilities and industry," says Poñe.
The ABB South African holding and operations companies are both 20% owned by empowerment company Wiphold, a financial services company run and owned by black women. The relationship is mutually beneficial as ABB has gained access to local expertise and financial services, and Wiphold is better able to achieve its broad based empowerment, which benefits 18 000 rural women. ABB increased its contribution towards affirmative procurement, reaching a target of over 20% of total local purchases.
For more information contact Edwin Bauer, ABB South Africa, 011 236 7000, edwin.bauer@za.abb.com, www.abb.com/</a>
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