ANDRITZ company presentation February 2017atl.g.andritz.com/c/com2011/00/04/42/44256/1/1/0/332716210/gr... · pulp, paper, tissue, and board; ... Business areas: market update . 3

Company presentation February 2017 ANDRITZ GROUP

1 ANDRITZ GROUP overview

2 Business areas: market update

3 Outlook, Group strategy, and long-term goals

Contents

KEY FINANCIAL FIGURES Q1-Q3 2016 AND 2015

3

Unit* Q1-Q3 2016 2015

Order intake MEUR 4,036.5 6,017.7

Order backlog (as of end of period) MEUR 7,043.6 7,324.2

Sales MEUR 4,239.3 6,377.2

EBITA MEUR 292.1 429.0

Net income (including non-controlling interests) MEUR 194.3 270.4

Employees (as of end of period; without apprentices) - 25,547 24,508

ANDRITZ is a globally leading supplier of plants, equipment, and services for hydropower stations, the pulp and paper industry, the metal-working and steel industries, and solid/liquid separation in the municipal and industrial sectors. Headquarters: Graz, Austria Global presence: over 250 production sites and service/sales companies worldwide

Sales by region 2015 (%)

Q1-Q3 2016 2015 2014

Europe 38 38 41

North America 21 19 16

South America 15 14 15

China 11 12 13

Asia (ex. China) 10 13 11

Others* 5 4 4

* Africa and Australia

Europe & North America: 57%

Emerging markets: 43%

6,377 MEUR

* MEUR = million euro

The ANDRITZ GROUP Overview

Company presentation February 2017

4

Company profile Worldwide leading position in four business areas

Product offerings: electromechanical equipment for hydropower plants (turbines, generators); pumps; turbo generators

Product offerings: equipment for production of all types of pulp, paper, tissue, and board; energy boilers

Product offerings: presses for metal forming (Schuler); systems for production of stainless steel, carbon steel, and non-ferrous metal strip; industrial furnace plants

Product offerings: equipment for solid/liquid separation for municipalities and various industries; equipment for production of animal feed and biomass pellets


* Average share of ANDRITZ GROUP’s total order intake

30%* 35%* 25%* 10%*

Strengthening of market position Growth through organic expansion and acquisitions

Acquisitions by business area since 1990

1,744

2,710

3,283 3,610

3,198 3,554

4,596

5,177

5,711 5,859

6,377

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales (MEUR) Order intake (MEUR)

Compound Annual Growth Rate (CAGR) of Group sales 2005-2015: +14% p. a. (thereof approximately half organic growth) 2012 AES

2013 MeWa 2015 Euroslot 2016 SHW Casting Technologies

METALS 1997 Sundwig 1998 Thermtec 2000 Kohler 2002 SELAS SAS Furnace Div. 2004 Kaiser 2005 Lynson 2008 Maerz 2012 Bricmont 2012 Soutec 2013 Schuler (> 95%) 2013 FBB Engineering 2014 Herr-Voss Stamco 2016 Yadon (51%) 2016 AWEBA SEPARATION 1992 TCW Engineering 1995 Jesma-Matador 1996 Guinard 2000 UMT 2002 3SYS 2004 Bird Machine 2004 NETZSCH Filtration 2004 Fluid Bed Systems 2005 Lenser Filtration 2006 CONTEC Decanter 2009 Delkor Capital Equipment 2009 Frautech 2010 KMPT 2012 Gouda 2013 Shende Machinery

HYDRO 2006 VA TECH HYDRO 2007 Tigép 2008 GE Hydro business 2008 GEHI (JV) 2010 Precision Machine 2010 Hammerfest Strøm (59%) 2010 Ritz 2011 Hemicycle Controls PULP & PAPER 1990 Sprout-Bauer 1992 Durametal 1994 Kone Wood 1998 Kvaerner Hymac 1999 Winberg 2000 Ahlstrom Machinery 2000 Lamb Baling Line 2000 Voith Andritz Tissue LLC (JV) 2002 ABB Drying 2003 IDEAS Simulation 2003 Acutest Oy 2003 Fiedler 2004 EMS (JV) 2005 Cybermetrics 2005 Universal Dynamics Group 2006 Küsters 2006 Carbona 2006 Pilão 2007 Bachofen + Meier 2007 Sindus 2008 Kufferath 2009 Rollteck 2010 Rieter Perfojet 2010 DMT/Biax 2011 AE&E Austria 2011 Iggesund Tools 2011 Tristar Industries 2011 Asselin-Thibeau

5 Company presentation February 2017




Contents

HYDRO Challenging market environment

7

Modernizations/rehabilitations Slow project activity due to unchanged

low electricity and energy prices,

especially in Europe

Outlook:

New hydropower plants Some new projects in advanced

planning phase, however awards only

expected in the medium-term

Outlook:

Small-scale hydropower

and pumps Satisfactory project activity,

especially in emerging markets

Outlook:

Competition Challenging market conditions for

some selective projects

Main competitors: GE/Alstom, Voith

Long-term average growth

potential:

3-4% p.a.

Stable -

Stable +/-

Stable +/-


Planned projects Country MW Total plant Time frame Inga 3 Congo 4,800 Medium to long term

Swansea Bay United Kingdom 352 Government decision in 2017 Koralm Austria 918 Effective within next 2-3 years

Grand Coulee Units G19-G21 Turbine upgrade/rehabilitation United States 1,800-2,310 Effective within next 2-3 years

Upper Cisokan Indonesia 1,040 Expected to be effective within 2017 McNary – Runner Replacement United States 980-1,127 Effective within next 2-3 years

Dasu Pakistan 2,160 Effective within next 2-3 years Caculo Cabaca Angola 2,100 Effective within next 2-3 years

Rogun Tajikistan 2,400 Effective within next 2-3 years Koysha (Gibe IV) Ethiopia 2,300 Effective within next 2-3 years

Toktogul (phase 2) Kyrgyzstan 1,440 Effective within next 2-3 years Pfaffenboden Austria 300 Effective within next 2-3 years

Polavaram India 960 Effective within next 2-3 years

Large-scale hydro projects with potential order values of > 100 MEUR for electro-mechanical equipment

Advance work agreement signed. ANDRITZ HYDRO

share ~ 250 MEUR. Expected to be

booked as order intake in 2017


Global hydropower potential by region To date, only about 25% has been developed

9

Source: Hydropower & Dams World Atlas, 2016

36%

64%

1,910 TWh/year

24%

76%

2,803 TWh/year

7%

93%

1,646 TWh/year

47% 53%

1,200 TWh/year

41%

59%

2,720 TWh/year

China

15%

85%

5,463 TWh/year

Asia (ex. China)

■ Not developed hydropower potential (%)

■ Developed hydropower generation (%)

Technically feasible hydropower potential : ~ 15,700 TWh/year Existing hydropower generation: ~ 3,962 TWh/year

Europe

Africa

South America

North America


Biggest hydro potential in Asia

10

8%

11%

15%

10%

17%

39%

Europe North America South AmericaAfrica China Asia (ex. China)


19%

39% 11%

9%

22%

Asia EuropeAfrica / Middle East North AmericaSouth America

Regional split of total value of ANDRITZ offers outstanding

Not developed hydropower potential by region

19%

33%

13%

20%

15%

Asia EuropeAfrica / Middle East North AmericaSouth America

Regional split of number of ANDRITZ offers outstanding

~12,000 TWh/year

PULP & PAPER Satisfactory project and investment activity

11

Modernizations Satisfactory project and investment

activity for modernization/refurbishment

projects (increase capacity, efficiency,

and profitability of existing mills)

Outlook:

Competition Stable competitive environment

Main competitors: Valmet, Voith

Greenfield Investments in greenfield pulp mills to

continue; mid- to long-term good

project activity for greenfield pulp mills

Outlook:

Stable +/-

Service Solid demand should ensure further

organic growth; Focus on enlarging

IIoT product offerings (eShop,

ANDRITZ OPP)

Outlook:



potential:

2-3% p.a.

Stable +

Mozambique: Chile: Owner – project Capacity/a.* Planned start-up

Arauco – MAPA 1.6 2020

12

* Annual capacity in million tons (may change over time); source: Pöyry. Capacity/year refers to added gross capacity (i.e. relevant as accessible market) without taking into account possible shut-downs of existing capacities

Brazil: Owner – project Capacity/a.* Planned start-up

Eldorado – Três Lagoas 2.3 2021 Veracel – Eunápolis 1.8 2022 et seq.

Braxel – Peixes 2.0 2022 et seq. CRPE Holding S.A – Ribas do Rio Pardo 2.2 2022 et seq. Suzano – Imperatriz 1.3 2022 et seq.

Fibria – Aracruz 1.7 2022 et seq. Eldorado - Três Lagoas 2.3 2022 et seq. CMPC Brazil – Pelotas 1.8 2022 et seq.

Owner Capacity/a.* Planned start-up Portucel 1.5 2022 et seq.

Finland: Owner – project Capacity/a.* Planned start-up

Finnpulp – Kuopio 1.2 2020

China: Owner – project Capacity/a* Planned start-up

Guangxi Jingui – Qinzhou City 1.2 2020

PULP & PAPER Good project pipeline for greenfield pulp mills


Owner – project Capacity/a* Planned start-up Siberwood 0.9 2019

Sveza Group 1.2 2020 Segezha 1.3 2022 et seq.

Russia:

METALS Satisfactory project and investment activity

13

Metal forming Satisfactory project activity; some

medium-sized order awards by car

manufacturers and suppliers

Stable demand from other industries

Outlook:

Carbon steel / Stainless steel Unchanged low project activity,

only selective investments in emerging

markets

Outlook:

Aluminum Project and investment activity below

the favorable level of the previous year

Outlook:

Competition Stable competition at challenging level

Competitors: Metal forming: main competitors from

Japan and China

Carbon, Stainless, Aluminum:

Danieli, SMS, Primetals (Mitsubishi/VAI)

Stable +

Stable -

Stable +/-


Metal processing:

2-3% p.a.

Metal forming:

4-5% p.a.

Long-term average growth potential

14

Light vehicles production (in million units) Further growth expected until 2020, especially in China

20.6 20.5 23.2

21.2 21.9 24.3

21.0 21.4 25.1

23.3 25.5 31.7 2.1 2.2

3.0

2015 2016E 2020E

88.2

107.3 91.5

Source: PwC, Autofacts, October 2016

CAGR 2015-2016E

CAGR 2016-2020E

■ Americas -0.5% +3.1% ■ Europe +3.3% +2.6% ■ Asia (ex. China) +1.9% +4.1% ■ China +9.4% +5.6% ■ Others +4.8% +8.1%


15

SEPARATION Mixed development of markets

Municipal Investment activity at reasonable

levels, mainly in developed markets

Outlook:

Industrial >> Reasonable demand in

chemicals

>> Low project activity in food and

mining/minerals

Outlook:

Feed and biomass pelleting Solid project activity

Outlook:

Competition Very fragmented market with global

and regional competitors

Stable +/-

Stable +/-


potential:

2-3% p.a.


Stable +/-




Contents

17

Outlook for 2017 Investment activity expected to remain at last years‘ levels

Project activity for modernizations and new hydropower stations to continue at subdued level; satisfactory market activity for pumps to continue

Good project activity for modernizations and capacity increases to continue; good pipeline for greenfield pulp mill projects in Brazil and Russia

Unchanged slow market for stainless steel equipment; satisfactory project activity in metal forming to continue

Low project activity in mining to remain; solid project activity in environment, food, chemicals, and feed/biomass pelleting


stable +/- stable +/- stable + stable +

ANDRITZ GROUP 2017E: - Satisfactory business development

- Slight increase in Group sales - Improvement of profitability

Global Footprint Balanced global presence

Emerging markets expansion

Further shift of manufacturing capacities to emerging markets

Group strategy and long-term goals

Technological Leadership Achieving the status of preferred supplier

by virtue of its technology, quality and references

Offer best ROI for customer

Sustainability in development of innovative technologies

Focus R&D: IIoT, environmental protection, enhancing energy efficiency, clean power generation

Growth Focus on growth markets with higher growth

opportunities

Expansion of product portfolio through R&D and acquisitions

Achieve long-term growth of 5–8 % p.a. depending on market growth and acquisitions

Profitability Service: increase share of service sales to 35-40%

EBITA margin: regain 7% and improve to 8% with top-line sales growth

Dividend: payout ratio at least ~50% and mid-term increase to ~60%

Global market leader



Target to continue long-term profitable growth Goal: further improve profitability with top-line sales growth

Average EBITA margin

Sales CAGR: 12.1%

Sales CAGR: 16.4%

Sales CAGR: 13.3%

Sales CAGR: 5-8% p.a.

How to achieve long-term profitable growth: - Launch of new service products (OPP, eShop) - Focus on further acquisitions - Continued cost optimization

Documents

ANDRITZ company presentation February 2017atl.g.andritz.com/c/com2011/00/04/42/44256/1/1/0/332716210/gr... · pulp, paper, tissue, and board; ... Business areas: market update . 3