ABB Procures Contract in Brazil

Zacks

Recently the Turbocharging business segment of ABB Ltd. (ABB) procured an order to upgrade 30 turbochargers in a series of power plants in Brazil. The plants are currently being operated by Wärtsilä under operations and maintenance agreement. The company has been operating in association with Wärtsilä since last one year to build and manage this service wing. The current order is the first with two more to follow, which will help achieve considerable fuel saving for the power plants and thus has a very short payback period.

Management believes that an upgradation will be more beneficial than a product exchange. This is because an upgradation improves engine performance with a more fuel efficient engine that saves 1% to 3% fuel annually. The new and modified engine will also reduce the exhaust gas temperature of the engine by 20oC to 30oC. This will in turn improve the life of the turbochargers by reducing thermal load and minimizing the maintenance cost.

The new turbochargers are expected to run for about eight years. In general, given the right conditions and technical specifications, the cost of the upgrade pays back in a period of less than two years. But with the current order in Brazil, it is anticipated that the upgrades will pay back on the fuel savings alone in less than three years. Savings from reduced maintenance cost and others are additional benefits.

Based in Zurich, Switzerland, ABB Ltd. is a power and automation technology company and currently has a Zacks Rank #3 (Hold). Some other players in the same industry, which can be considered at present are Chicago Bridge & Iron (CBI), Orion Marine Group Inc. (ORN) and Honeywell International (HON) all having a Zacks Rank #2 (Buy).

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