ABB will not go bankrupt: CEO

ABB’s chief executive and chairman Jurgen Dorman admitted there had been a breakdown in internal reporting procedures that encouraged managers to underestimate the firm’s financial problems.

He is quoted in today’s Financial Times as saying: "I really have to sort out which is wishful thinking and what is reality."

ABB, Europe’s second-largest engineering group, had debts of almost €5.5bn and is facing massive claims in asbestos-related cases in the US.

Dormann said the group will not go bankrupt, and added that the Swedish-Swiss engineer group still has the support of its banks.

He denied the possibility that ABB could be forced into bankruptcy, but admitted that the company experienced a "bad quarter" and that it has to restructure and cut costs even further.

Yesterday, ABB shares plummeted 61.8% or SFr3.32 to SFr2.05, after issuing a profit warning on Monday and saying its US subsidiary Combustion Engineering (CE) might be placed under Chapter 11 bankruptcy protection.

ABB said the 2002 earnings outlook is being revised downwards as a result of lingering market weakness and slower than expected benefits from its cost-cutting programme.

In early deals this morning, ABB extended yesterday's losses, ahead of tomorrow's full-year results.