An order worth $35 million for next generation icebreaker was recently received by ABB Ltd. (ABB - Analyst Report) in Russia from Baltic Shipyard Ltd. A new icebreaking vessel is being built in Russia for a state shipping company Rosmorport FSUE.
Powerful propulsion and energy efficient electrical systems needed for this innovation will be provided by ABB. This significant contract is included in ABB’s third quarter 2012 order booking.
The new technique icebreaker is multifunctional and will run on either diesel or electricity. Further, it will be efficient enough to cut ice almost two meters thick at a temperature as low as minus 35 degrees celcius. Thus, making it indispensable for the difficult conditions in the north of the Arctic Circle.
The use of an Azipod propulsion system provides energy efficiency, reducing fuel consumption by up to 20%. According to plans, the delivery of the systems would begin in 2013 while the vessel will be delivered to Rosmorport in 2015.
ABB has been providing its services to the Russian market for a long time and also enjoys a good reputation. The company is renowned the world over for its propulsion system for icebreaking vessels.
Moving ahead, the emerging markets will be a significant growth driver for ABB. Demand in mature markets is also expected to improve. Customer capital expenditures have soared 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 escalated 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 .
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, the Americas, Asia, the Middle East and Africa.
Currently, we maintain a Zacks #3 Rank (short-term Hold recommendation) on ABB Ltd.