ABB Wins Paper Mill Contract

ABB Ltd. (ABB - Snapshot Report) recently received a contract from Sappi to provide maintenance services to the Nijmegen fine paper mill in the Netherlands. The Maintenance Improvement Agreement is for a period of five years.

As per the agreement, ABB will handle all related maintenance activity geared toward enhancing productivity and ensuring reliability of equipment at the mill. Further, the company will be responsible for retaining and training all maintenance staff and management present at the mill. Improved production efficiency at the mill is hoped to be achieved by reducing energy consumption. Third-party subcontractors and suppliers for maintenance of the mill will also be managed by ABB.

The Nijmegen mill owned by Sappi is located in the core paper market and engages in the production of coated fine paper. The current investments in maintenance work would enhance the mill’s economic returns while reducing the adverse impact on the environment.

Moving ahead, to ABB’s favor, the emerging markets will be a significant growth driver, with a need for high efficiency power transmission technologies. 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. ABB has increased its prices to offset increasing raw material costs.

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. A major competitor of ABB Ltd. is Siemens AG (SI - Analyst Report).

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