ABB Ltd. (ABB) has been awarded a contract to provide 380 kilovolt (kV) indoor gas-insulated switchgear (GIS) for new substations in Saudi Arabia, which will power the 444-km long high-speed Haramain rail line currently under construction. The contract has been received from AlFanar Construction Co. and is valued at $85 million.
By mid-2013, it is expected that design, supply, installation and commission work of the substations will be completed by ABB. The employment of GIS increases reliability, simplifies operation, decreases maintenance costs and provides environmental benefits.
The substations to be built are owned and operated by the Saudi Electricity Company and will be supplying electricity need to run high-speed (360 kph) electric trains. These trains are expected to provide means of transit for approximately three million passengers annually and will be linked to the pilgrimage cities of Mecca and Medina via the King Abdullah Economic City, Rabigh, Jeddah and King Abdulaziz International Airport. This will decrease road traffic and reduce the traveling time between Medina and Mecca by four hours with the distant being covered in just two hours.
Business in the emerging markets are seen as prime benefactors for the company though rising demand levels in mature market also supports ABB’s future growth prospects. Price increases initiated by the company to meet the rising raw material costs will lead to margin improvement. ABB focuses on attaining profitable growth opportunities by maintaining a competitive cost position, strong balance sheet, strong presence in global market and a leading technology.
ABB Ltd.’s power and automation technologies offer solution for sustainable development, thus helping to shield the world's resources. The company has a number of technologies for the solar power industry with a growing installed base. ABB Ltd. has witnessed improving signs in late-cycle power, with some recent large contracts.
However, ABB's results are likely to be adversely affected 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).
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.
We maintain a Zacks #2 Rank (short-term Buy recommendation) on ABB Ltd.
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