ZURICH, Dec 20 (Reuters) - ABB ABBN.S will revamp its engineering, procurement and construction (EPC) business - including its biggest but least profitable power grids division - by spinning off and winding down some operations, triggering fourth-quarter charges.
Last month, ABB said it would revamp its global power grids operations as it responds to the division's sluggish profitability and falling orders.
The move came as ABB sought to justify its decision last year to reject calls from Cevian Capital, its second-largest shareholder, to spin off power grids, which has suffered a 9 percent drop in orders in 2017. the Power Grids division, which also makes electrical substations, ABB will form a joint venture with SNC-Lavalin SNC.TO for electrical substation EPC projects, the Swiss technology group said on Wednesday.
SNC-Lavalin will have the controlling interest in the venture, it said.
"We are taking decisive actions to complete our EPC business model change as we end our transition year," finance chief Timo Ihamuotila said. "These actions are in line with our strategy to shift our center of gravity towards strengthened competitiveness, higher growth segments and lower risk."
In the Industrial Automation division, ABB's oil & gas EPC business will be transferred into a previously announced joint venture controlled by Saudi-based Arkad Engineering and Construction Ltd in a deal now expected to close this month.
In the Robotics and Motion division, ABB is winding down its turnkey full train retrofit business.
"The fourth quarter 2017 results of Power Grids and Robotics and Motion are each expected to be impacted by approximately $75 million on operational EBITA. The transfer of the turnkey oil & gas EPC business into the JV with Arkad is expected to result in a non-operational pre-tax charge to net income of approximately $75 million," the company said.
ABB will report these businesses as a non-core operating unit which will manage its backlog of existing business. The new unit will report to Ihamuotila as of the start of next year.