andritz capital market days...
TRANSCRIPT
Slide No. 2
Disclaimer
Certain statements contained in this presentation constitute “forward-looking statements.” These statements, which contain the words “believe”, “intend”, “expect” and words of similar meaning, reflect Management’s beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. As a result, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to publicly announce the result of any revisions to the forward-looking statements made herein, except where it would be required to do so under applicable law.
Slide No. 3
Agenda
Update on recent developments
- Review on targets of past Andritz Investor Days
- Important achievements and developments during the last 12 months
Growth and the supply chain
Outlook 2008 by Business Area
Summary
Slide No. 4
Agenda
Update on recent developments
- Review on targets of past Andritz Investor Days
- Important achievements and developments during the last 12 months
Growth and the supply chain
Outlook 2008 by Business Area
Summary
Slide No. 5
Review on targets of past Investor Days
Increase profitability (EBITDA) of Feed Technology Business Area (FT) from 4.4% in 2001 to 10% in 2004
Targets Achievements
Target reached
Become a 2 billion Euro companyby 2007
Event
Investor Days 2003:
Investor Days 2004: Target reached
Reach Group EBIT(A) margin of 7% by 2008
Increase dividend payout ratio to 40% over the next few years
Investor Days 2005:
Targets not yetreached!
Slide No. 6
5.2 5.3 5.1
6.3 6.15.9
0
1
2
3
4
5
6
7
2001 2002 2003 2004 2005 2006
Update on EBITA margin target of 7%
Achievements
EBIT(A) margins Andritz Group (%)
Margin development in recent years mainly influenced by acquisition of VA TECH HYDRO and fast growth of the capital business
Excluding VA TECH HYDRO, EBITA margin in 2006 would have been approx. 6.3%
Due to the strong growth of the capital business, service sales as % of total sales declined from 26.5% in 2004 to 22.5% in 2006, thus impacting margin on the down side
Slide No. 7
Target to increase profitability of VA TECH HYDRO by 1 percentage point per year: from ~3.5% in H2 2006 to 6.5% in 2009:
- Full integration of VA TECH HYDRO’s existing production facilities into Andritz Group
- Optimization of Group sourcing through integration of VA TECH HYDRO
- Regional employee adjustment
Recent acquisitions of Service companies and launch of new products should support share of Service Sales, thus enhancing margins
Maintain focus on correct pricing
Planned measures and expected developments to reach EBITA Group goal of 7%
Slide No. 8
Update on dividend payout ratio
Dividend per share and payout ratio: 2002: 0.23 EUR (44.1%)2003: 0.25 EUR (44.2%)2004: 0.35 EUR (34.3%)2005: 0.50 EUR (32.6%)2006: 0.75 EUR (32.5%)
New target is to increase the dividend payout ratio to 40%for the financial year 2007
Dividend per share (adjusted for share split of 1:4)
0.23 0.25
0.35
0.50
0.75
0,00
0,50
1,00
2002 2003 2004 2005 2006
EUR1.00
0.50
0.00
Slide No. 9
Agenda
Update on recent developments
- Review on targets of past Andritz Investor Days
- Important achievements and developments during the last 12 months
Growth and the supply chain
Outlook 2008 by Business Area
Summary
Slide No. 10
Continuation of Group growth in 2007 and 2008
Successful integration and development of VA TECH HYDRO
Complementary acquisitions further extend product range and strengthen market position
Successful start-ups and major orders in pulp and stainless steel confirm excellent market position
Important achievements and developments during the last 12 months
Slide No. 11
Continuation of Group growth in 2007 and 2008
13191110 1225
1481
2710
35003200
1744
937656666
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E 2008E
Andritz Group Sales in MEUR
For 2007, Group Sales are expected to increase by 20% compared to 2006; most of the Sales increase comes from first-time consolidation of VA TECH HYDRO
Based on the current high Order Backlog of approximately 3.8 bn EUR, Group Sales are expected to grow organically to approximately 3.5 bn EUR in 2008
CAGR 1998-2007:+19%
Slide No. 12
Strong organic growth
666
937
1319
2710
3200
14811225
1110
1744
3500
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E 2008E
Andritz Group Sales in MEUR
+7.4%
+18.4%
-15.8%+7.1% +13
.0%
+16.5
%
+29.
6%
656
+8%Since 1998, the Andritz Group has shown a strong organic growth of 12% p.a.
Organic growth+12% p.a.
Slide No. 13
0
500
1000
1500
2000
2500
3000
1998 2006
+18%
+40%
+16%
+23%
+7%
Growth by Business AreaSales 1998-2006
666 MEUR
2,710 MEUR
+264%
+1,343
%+2
34%
+417
%+7
5%
Pulp and Paper
Hydro Power
Rolling Mills and Strip Processing
Lines
Environmentand Process
Feed and Biofuel
CAGR by Business Area:MEUR
Slide No. 14
0
500
1000
1500
2000
2500
3000
1998 2006
+260%
+120%
+3,900%
+370
%+280
%
666 MEUR
2,710 MEUR
Growth by regionSales 1998-2006
+21%
+18%
+11%
+59%
+44%
Europe
North America
South America
Asia
ROW
CAGR by region:MEUR
Slide No. 15
Further continuation of Group growth in 2007 and 2008
Successful integration and development of VA TECH HYDRO
Complementary acquisitions further extend product range and strengthen market position
Successful start-ups and major orders in pulp and stainless steel confirm excellent market position
Important achievements during the last 12 months
Slide No. 16
R&DAndritz HM will be fully integrated into VA TECH HYDRO’s R&D program
EngineeringHarmonization of all computation and design (CAD) tools and software
Organizational integrationIntegration has been progressing as planned since June 1, 2006; completion expected by end of 2006
Controlling and AccountingWill be fully harmonized by end of Q3 2006 and will remain under well-established VA TECH HYDRO management
Integration: Markets
Review on CMD 2006 regarding integration measuresof VA TECH HYDRO
The entire product range of VA TECH HYDRO and Andritz HM will be integrated into the Hydro Power Business Area
All activities for “small turbines” so far handled by Andritz Graz will be integrated into the Compact Hydro Division of VA TECH HYDRO(CoC Grenoble and Ravensburg)
Graz will remain the Center of Competence for all types of pumps (except pump turbines)
Integration: Products
Integration: Cross Functions
Existing overlaps:
Service business for Austria and Germany
Large Hydro core component business in ChinaStatus of integration:
Service business for Austria directed from Graz location (former HM Business Area)
German market is served by Ravensburg (VA TECH HYDRO)
Chinese market will be served by both VA TECH HYDRO Beijing as well as ATC (Andritz Technologies China) in Foshan. Key account approach will be followed.
in progress
Slide No. 17
VATH16%
Alstom22%
Voith16%
GE5%
Others41%
World market shares for hydropower equipment
Hydro Power: Strong development of VA TECH HYDRO
Order Intake of VA TECH HYDRO developedsubstantially above expectations
Given the high Order Backog of over 1.7 bn. EUR of VA TECH HYDRO, Sales of the Hydro Power Business Area could approach 1 bn. EUR in 2008 already Simon Bolivar hydropower station
0
100
200
300
400
500
600
H1 2005 H2 2005 H1 2006 H2 2006 H1 2007
Order Intake VA TECH HYDRO
260.8310.6
389.2
474.4512.6
Source: Estimate VA TECH HYDRO
MEUR
Acquisition by Andritz
Slide No. 18
Planned measures and targets for 2008
Further enhancement of supply chain and business processmanagement
Combine organizations in China; VA TECH HYDRO to benefit fromstrong local presence of the Andritz Group in China
Further exploitation of cross-functional synergies with the Andritz Group
Expansion of sourcing, engineering, and production capacities forturbines and generators in China, India, and Brazil
Further increase competitiveness of Hydro Generator Business byfocussing on technical and standardization issues as well as on optimization of the supply chain
Slide No. 19
Further continuation of Group growth in 2007 and 2008
Successful integration and development of VA TECH HYDRO
Complementary acquisitions further extend product range and strengthen market position
Successful start-ups and major orders in pulp and stainless steel confirm excellent market position
Important achievements during the last 12 months
Slide No. 20
Sindus Human TechnologyBRAZIL - North and Northeast RegionsVERACEL – BahiaKLABIN – BahiaJARI – ParáSUZANO - Bahia
BRAZIL – Southeast RegionARACRUZ – Espírito SantoKLABIN – Rio de Janeiro and São PauloRIPASA – São PauloVOTORANTIM – São PauloCENIBRA – Minas Gerais
BRAZIL – Southern RegionARACRUZ – Rio Grande do SulKLABIN – ParanáKIMBERLY-CLARK – Santa Catarina
SINDUS BRANCHES
SINDUS HQ
Sindus is the leading provider of outsourced automation, instrumentation, and electrical maintenance services for the Pulp & Paper sector in Brazil.
Approx. 600 employees
Andritz acquired 50% stake in Sindus Human Technology.
Andritz will add its proven process know-how to Sindus’experience. Sindus Andritz will continue to offer its services mainly to Brazilian customers, but over time, to other mills in South America.
Strong national presence, with 12 branches in 8 states, reaching the largest P&P mills in Brazil.
Slide No. 21
Bachofen + Meier (Andritz BMB)
PrimeCoat™ Super Roll Off Machine Coating Station
Board Coating Line
Supplier of coating equipment, size and film presses, air turns, and related equipment since the 1960’s.
Complements existing product range for paper and board production.
Slide No. 22
Cooperation with UPM for biomass gasification
Utilizing technology of Andritz Carbona, a specialist in advanced biomass gasification processesJoint development of technology and processesTesting to be conducted at the Gas Technology Institute’s (GTI) pilot lab near ChicagoTests expected to be finalized in 2008Targeting biomass gasification plants for:
Fuel gas production for pulp mill energy needsSynthetic gas production for Biomass-to-Liquid (BTL) motor fuels
Joint development project of Andritz Carbona and UPM for biomass gasification and synthetic gas production
Slide No. 23
Supplier of renewable energy products
Approximately 35-40% of Andritz‘sSales are derived from
renewable energy products
Pulp and Paper
Hydro Power
Rolling Mills and Strip
ProcessingLines
Environmentand Process
Feed and Biofuel
Andritz Group Order Intake H1 2007: 2,037 MEUR
Pulp and PaperRecovery boilers in pulp mills
generate net surplus of electricity from biomass;
Wood gasification
Hydro PowerWater turbines and
generators
Feed and BiofuelSystems for production
of biofuel pelletsComponents for bio-ethanol
Environmentand Process
Conversion of liquid sewagesludge into dry granulate, which can beused as a substitute for fossil fuels in
heat and power generation;Centrifuges for bio-ethanol
40% Renewableenergyproducts
Slide No. 24
Further continuation of Group growth in 2007 and 2008
Successful integration and development of VA TECH HYDRO
Complementary acquisitions further extend product range and strengthen market position
Successful start-ups and major orders in pulp and stainless steel confirm excellent market position
Important achievements during the last 12 months
Slide No. 25
Single-line successes
World record of 3,796 t/d
Record start-u
p –within 6 months
already exceeding nominal
capacity
Slide No. 26
Andritz: Preferred technology for eucalyptus
Aug 20053,740 t/dDigester Retrofit, EvapsJacarei,Brazil
VCP
Dec 20062,405 t/dFiberline, Pulp Drying, Recovery Boiler, White Liquor Plant
Santa Fe,Chile
CMPC
Sept 2007
3,000 t/dComplete MillFray Bentos,Uruguay
Botnia
Oct 20073,160 t/dWoodyard, Washing, and Bleaching
Mucuri,Brazil
Bahia Sul
April 2009
3,924 t/dFiberline, Pulp Drying, White Liquor Plant
Três Lagoas,Brazil
VCP
Sept 2004
700 t/dComplete FiberlineLençois Paulista,Brazil
Lwarcel
May 20052,830 t/dFiberline, Pulp Drying, White Liquor Plant
Eunapolis, Brazil
Veracel
Start-upSizeAndritz ScopeLocationCustomer
Slide No. 27
Rolling Mills and Strip Processing Lines:Successful start-ups of stainless steel plants
Annealing and pickling linesupplied by Andritz to LianzhongLianzhong Stainless Steel Corp:
Complete stainless steel annealing and pickling line; with 550 meters length, this line has an annual production capacity of 800,000 metric tons and is capable of handling strip with thicknesses of up to 10 mm.
ThyssenKrupp: Stainless steel annealing and pickling line for hot-rolled and cold-rolled strip. The line went into operation only six months after a severe fire damage and reached its full performance of 400,000 tons/year two months later.
Slide No. 28
Agenda
Update on recent developments
- Review on targets of past Andritz Investor Days
- Important achievements and developments during the last 12 months
Growth and the supply chain
Outlook 2008 by Business Area
Summary
Slide No. 29
Andritz purchasing
600750
9501100
1250
1750
1200
400400350
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Purchasing volume of local Andritz Group subsidiaries in MEUR: Europe as most important
region (~75% of total purchasing volume), followed by North America, China, and India
Main components purchased:Special components Raw materials (sheet metal, castings, forgings, etc.)Electrical drive engineering, including control systems, process control and instrumentationVessels, steel structures, pipeworks
Slide No. 30
Andritz purchasing strategy and trends
Increase volume of purchased components in East Asia (particularly China), in South America, and in India
Tendency towards more complex purchased components/systems
Increase inter- and intra-continental cooperation by Andritz subsidiaries in South America, North America, and China
Slide No. 31
Buy-ratio continues to increaseSales of the Andritz Group
1997-2006; in MEUR
0
500
1000
1500
2000
2500
3000
1997 2006
2,710
646
+320
%
Outsourcing > 50%
0
1
2
3
4
5
6
+227
%
1997 2006
1.5
4.9
Direct labour hours of the Andritz Group 1997-2006; in million
Slide No. 32
Pittsburg (TX)/USA
Pomerode/BR
Senden/D
Chennai/IND
Graz/A
Sibiu/RO
Spisska/SKCologne/D
Foshan ATC/RC
Kuala Lumpur/MAL
Singapore/SGP
Geldrop/NL
Châteauroux/F
Bretten/D
Regensburg/D
Savonlinna/FIN
Brantford/CAN
Muncy/USA
Foshan J.V. /RC
Växjö/SVallentuna/S
Esbjerg/DK
Humenne/SK
Hemer/D
Varkaus/FIN
Morelia/MEX
Madrid/E
Kriens/CH
Ravensburg/D
Jevnaker/N
Weiz/A
Krefeld/D
Bhopal/INDFaridabad/IND
São Paulo/BR
Päiverinne/FIN
Foshan AnWo/RC
Bülach/CH
Manufacturing sites worldwide
Direct labour hours :
> 500 kh100-500 kh< 100 kh
Slide No. 33
Sales/Direct labour hours 2006 by Business Area
Breakdown of Sales 2006 by Business Area
* Share of Sales based on pro-forma 2006 figuresincluding VA TECH HYDRO
45%*
4%*
15%*
24%*
12%*
Breakdown of direct labour hours 2006 by Business Area
6%
6%
37%
20%
31%
Pulp and Paper
Hydro Power
Rolling Mills and Strip Processing Lines
Environment andProcess
Feed and Biofuel
Slide No. 34
Andritz manufacturing strategy
Manufacturing strategy:
Focus manufacturing on key components (A parts)
Maintain outsourcing (C parts permanently, B parts partly)
Increase production capacities in emerging markets to serve both local and global markets
Further enhance lead times
Focus on productivity and quality
Consistent use of temporary staff
Slide No. 35
Development of employees by region
Europe65.6%
N-America12.4%
Asia 1.7%
S-America7.0%
RoW1.3%
China7.2%India
4.7%H1 2007:~ 22% of employees
in Emerging Markets
H1 20072000
2000: ~ 3% of employeesin EmergingMarkets
Employees Europe:
Europe70.1%
N-Am erica26.9%
As ia 0.8%
S-Am erica0.4%
RoW0.3%
China1.1%
India0.3%
Employees North America: Employees Brazil, India, China:
0
500
1000
1500
2000
2000 H1 20070
2000
4000
6000
8000
2000 H1 2007
2,950
7,200
+140%
1,950
50
+3,1
00
>50%in
manu-facturing
0
500
1000
1500
2000
2000 H1 2007
1,1501,350
+20%
~40%in
Manu-facturing
~40%in
Manu-facturing
Slide No. 36
Agenda
Update on recent developments
- Review on targets of past Andritz Investor Days
- Important achievements and developments during the last 12 months
Growth and the supply chain
Outlook 2008 by Business Area
Summary
Slide No. 37
Many pulp mill projects …
Major new pulp mill/expansionprojects planned or announceduntil 2012:
Gunns, Australia Ence, Uruguay Visy Paper, Australia
Aracruz, BrazilVCP, BrazilStora Enso, Brazil/UruguayCenibra, BrazilVeracel, BrazilStora Enso, RussiaMondi, RussiaInternational Paper, RussiaRuukki, Russia
High project activity for new pulp mills/expansion of existing lines to continue during the next few years In total, approximately 15 million tons of new pulp mill capacity are expected to be decided until 2012
Record start-up within 171 daysof CMPC‘s fiberline supplied by Andritz
Slide No. 38
… based on fast growing plantations and …
Approx. 150,000 - 200,000 hectars ofplantations needed for a
pulp mill with 1 million tons capacity
Source: J. Pöyry
Slide No. 39
… natural wood resourcesRussia holds the largest resource of unutilized softwood and hardwood
Source: J. Pöyry
Slide No. 40
Hydro Power: High project activity worldwide
Andritz VA TECH HYDRO is a global leading supplier of turnkey electromechanical equipment and services for hydropower plants with a leading position in the growing market of plant refurbishment
Integration of VA TECH HYDRO(acquired in June 2006) has been progressing as planned
Goal to increase profitability to Group level over the next few years
Continued high project activity worldwide, with focus on Asia and South America (especially for new plants) as well as North America and Europe (especially modernizations/replacements)
Simon Bolivar rehabilitation project, Venezuela
Lang Ya Shan hydropower station, China
Rehabilitation of Dolna Arda Cascade, Bulgaria
Slide No. 41
Big replacement cycle underway
Source: VA TECH International GmbH; Reinhard Laurich; Hydropower Generation – Industry Analysis
Share of installed turbines older than 30 years
The predominant markets for rehabilitation and upgrades areEurope and North America.
Inst
alle
dC
apac
ity
Asia
192,000 MW
North America
159,000 MW
25%
65%
Western Europe
154,000 MW70%
Central/South America125,000 MW
15%
Eastern Europe 87,000 MW 55%
30%Middle East 30,000 MWAfrica 13,000 MW 35%
World Average50%
Slide No. 42
Overall continued good projectactivity with focus on:
China:- Long-term modernization of domestic
steel industry targeted- Continued expansion of stainless steel
capacities due to fast growing demand: market share of Andritz over 60%
- Temporary production and price cuts in August/September 2007
- Anti-dumping process initiated in the European Union
North America: Slightly increasing project activity (project of ThyssenKrupp for steel mill in the US; recent order from NAS)
India: Increased project activity in carbon and stainless steel
Europe: Modernizations and capacity enlargements
Good project activity for Rolling Mills and Strip Processing Lines
Annealing and pickling line for SKS, China
Slide No. 43
Environment and Process – excellent growth prospects
Andritz offers complete systems for solid/liquid separation (centrifuges, thermal driers) for various types of sludges from municipalities and industries
Directives and stringent environmental regulations as long-term major growth drivers, especially in Europe and the U.S.
Increased demand from mining and steel industries due to global shortage of raw materials (iron ore, coal, etc.)
Increasing Sales from Emerging Markets (from 10% in 2000 to 30% in 2007); for mining equipment, Emerging Markets account for over 65% of Sales
Drum drying plant Bran Sands, UK
Slide No. 44
Feed & Biofuel – continued strong organic growth
Andritz wood pelleting plant
Wood pellets
Andritz is a world market leader forplants to produce animal feed and biofuel pellets out of materials, such as wood, peat, and agriculturalby-products.
Continued strong organic growthof Order Intake (+25.6% in 2006; +17.1% in H1 2007); maincontributor is wood pelletingequipment, currently approx. 25% of the Business Area‘s Sales
Since 2002, more than 200 woodand biomass pelleting linessupplied to customers, mainly in North America, and Northern and Eastern Europe
Slide No. 45
Agenda
Update on recent developments
- Review on targets of past Andritz Investor Days
- Important achievements and developments during the last 12 months
Growth and the supply chain
Outlook 2008 by Business Area
Summary
Slide No. 46
Summary and goals
Assuming an overall solid development of the global economy, Andritz expects good project activity in all Business Areas to continue
Continuation of strategy to acquire complementary businesses/companies in all Business Areas
Focus on improving the Group EBITA towards 7%
Based on the high Order Backlog and the overall good development of Order Intake, Group Sales in 2008 are expected to grow organically to approximately 3.5 billion Euros (~+9% vs. 2007)
Increase of dividend payout ratio to 40% for financial year 2007
Increase of share buy-backs if no large acquisition opportunities materialize