We are taking action now to improve our competitiveness, as we expect challenging conditions over the next 12 months

Joergen Centreman ABB chief exec

ABB employs about 8,000 people spread across the UK. It has major concentrations in Solihull, Aberdeen the Manchester area and Stevenage.

A spokeswoman said that job losses in the UK were expected to be in line with the rest of the world, suggesting that more than 700 jobs are likely to be axed.

The company said its half-year profits had dropped to $626m, down 21% on the same period last year.

Cost of cuts

"Our results reflect uncertainty in the investment climate as the US slowdown spreads into Europe and Asia, yet our underlying operational performance is improving if you look at earnings excluding one-time capital gains," said ABB president and chief executive Joergen Centerman.

"Our goal to grow the business remains unchanged and we are taking action now to improve our competitiveness, as we expect challenging conditions over the next 12 months."

ABB said the cuts would take place over the next 18 months.

Mr Centerman said the cuts would cost $500m over the 18 months and result in annual cost savings of about the same amount.

The company said its net income from continuing operations was $329m, compared with $544m for the first six months of 2000.