Back to top

Analyst Blog

Zacks Equity Research

ABB Wins Brazilian Shipyard Contract

ABB SI TYC

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

ABB Ltd. (ABB - Snapshot Report) received a contract from Jurong Shipyard Pte Ltd. for the design, supply, supervision of installation, testing and commissioning of the main electrical systems for seven next generation drill ships. The contract is valued at $160 million.

The ships will operate in the deep water oil and gas fields off the coast of Brazil. Bookings in this contract were made in the fourth quarter of 2012 and first quarter of 2013. 

As per the plan, wells will be drilled in the offshore pre-salt fields off the southeast coast of Brazil with the help of these drill ships. These high-efficiency drill ships are the first of its type and will be using the integrated electrical package of ABB to maximize energy efficiency.

Estaleiro Jurong Aracruz plans to build seven such vessels for ultra-deep water operations at their shipyard on the central eastern coast of Espirito Santo, Brazil. The shipyard is wholly owned by Singapore-based Jurong Shipyard.

ABB will be providing electrical systems including generators, distribution switchboards, transformers, drives and motors to power the ships’ thrusters and drilling systems for this project. The solutions to be provided by ABB are as per IEC (International Electrotechnical Commission) and IMO (International Maritime Organization) regulations.

The equipment will be delivered to the shipyard in 2013 and the first vessel will be delivered in the second quarter of 2015. Sete Brazil, a company established in 2010 by various Brazilian and international investors, will receive the ships.

ABB’s expertise and its ability to provide locally produced content for this project along with the the skill of its local organization give ABB the advantage to execute this contract successfully. The company has worked on a number of such projects with Jurong’s shipyard in Singapore. In addition, the contact also provides ABB a good opportunity to enter the high potential Brazilian market.

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 counter 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.

ABB Ltd. currently has a Zacks #3 Rank (Neutral). Its close rivals such as Siemens AG (SI - Analyst Report) and Tyco International Inc. (TYC - Analyst Report) both have Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%