ABB Wins Contract - Analyst Blog

ABB Ltd. (ABB) was recently awarded a contract in southeastern Australia to work on Cadia East gold and copper project of Newcrest Mining, a renowned gold company of the world. The company will be providing electrical and automation systems for six underground mine conveyors of the largest underground mining project in Australia, expected to be completed in 2013.

Newcrest, which is the largest gold producer of Australia and ranks among the leading ten gold companies of the world, is said to produce gold at lowest cost. The Cadia East orebody possesses the largest amount of gold deposits in the world. Upon completion, the Cadia East mine project will become the biggest underground mine of Australia and is expected to operate for about 30 years.

ABB Ltd. will deliver its conveyor control system and its design, engineering and full electrical solution to the project in the first quarter of 2011. The comprehensive solutions of the company will be used to optimize energy efficiency and performance of all the mines at Cadia East.

Recently, the company also upgraded the distributed control system of the 1,200 megawatt Ilijan combined-cycle power plant in Batangas City, Philippines. The power plant is the largest power generation facility in the country and a part of Philippines' massive gas-to-power project. The plant, owned by KEILCO, started its operation in 2002.

The power and automation technologies provided by ABB Ltd. enable utility and industry customers to improve performance, while lowering environmental impact. The company has witnessed improving signs in late-cycle power, with some recent large contracts to be reported in 3Q10, including the largest transmission project awarded worth $700 million.

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).

Based in Zurich, Switzerland, ABB Ltd. is a power and automation technology company. The company operates in five segments: Power Products and Power Systems supply products and complete Transmission and Distribution (T&D) solutions to utility and industrial customers. Discrete Automation & Motion, Low-Voltage Products and Process Automation supply products, systems and solutions to customers across nearly all segments of the process and manufacturing industries, as well as specialist end markets, such as marine and utility. ABB Ltd operates in approximately 100 countries and structured its global organization into five regions, Europe, Americas, Asia, the Middle East, and Africa .

We have a Zacks #2 Rank (short-term Buy recommendation) on ABB Ltd.