ABB: a mixed outlook

Hold

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We were critical of Moody’s and S&P’s double-A ratings last year but on fundamentals we regard Moody’s latest ‘Baa2’ rating as a step too far. We support ABB’s forecast 4%-5% underlying Ebitda margins for 2002 (approximately Ebitda of $1.8 billion) and although the issues of cash expenditure against restructuring and asbestos provisions remain an issue, we are optimistic about ABB’s debt reduction prospects for the $4.1 billion of net debt.

ABB’s liquidity crisis was avoidable but is resolvab

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