ABB ABB Ltd

ZURICH—ABB Ltd. on Wednesday lowered its five-year growth outlook and launched a big reorganization of its business as the power and automation giant said it faced slower global growth, including in China.

Zurich-based ABB, the world's largest maker of power grids, cut its annual revenue growth target to 3% to 6% between 2015 and 2020 from 4% to 7% previously.

The company, which reported revenue of $39.8 billion for 2014, said it was facing weaker development in emerging markets, while lower oil prices were reducing spending by customers in the energy-industry.

Chief Executive Ulrich Spiesshofer said ABB was adjusting its goals in line with worsening economic conditions. When the company decided its targets last year, it was expecting GDP growth of 3% to 3.5% and an oil price of around $100 a barrel, with growth in the utility industries, transport and infrastructure.

"Global GDP growth is now more around 2.5% to 2% rather than 3% to 3.5%, and the oil price has come down in a significant way," said Mr. Spiesshofer. "We are looking at our targets in a responsible way and we have to acknowledge there is a changed world out there."

China's slowdown has put pressure on industrial companies around the world. The country's manufacturing measure for August slumped to a three year low while economic growth in the world's second largest economy is expected to slow this year.

ABB has been under pressure to improve profitability and its stock price has come under pressure this year amid a slowdown in the U.S. and China, the company's two largest markets, which together generate around a third of its sales.

"China is a tough environment, there is significant short term uncertainty," Mr. Spiesshofer said on a conference call with reporters. "Lower oil prices has made the major oil companies contract their discretionary spending, and with political uncertainty it is important we stay cautious."

Mr. Spiesshofer also announced a revamp of ABB's organization. The company's five divisions will be realigned into four new operations—power grids, electrification products, discrete automation and motion and process automation. The overhaul is intended to make it easier to serve electricity grid customers, and industrial clients who use electricity at facilities such as factories and data centers.

The company's new power grids divisions, which will provide products and services for utilities to transmit and distribute electricity, will be put under strategic review, "to determine the best way to enhance its long-term success and create value for our customers and shareholders," Mr. Spiesshofer added. The term strategic review is often used by companies to say they are considering a sale.

ABB also said it aimed to make around $1 billion in savings from its 100,000 strong white collar workforce, although Mr. Spiesshofer declined to say how many job losses this could trigger.

Write to John Revill at john.revill@wsj.com

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(END) Dow Jones Newswires

September 09, 2015 03:35 ET (07:35 GMT)

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