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COMPANY PRESENTATION
ANDRITZ GROUP
MARCH 2018
01 ANDRITZ GROUP OVERVIEW
02 RESULTS 2017
03 OUTLOOK AND FINANCIAL TARGETS
CHAPTER OVERVIEW
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 2
ANDRITZ is a globally leading supplier of plants, equipment, systems and services for hydropower stations, the pulp and paper industry, the metalworking and steel industries, and solid/liquid separation in the municipal and industrial sectors as well as for animal feed and biomass pelleting.
Global presence Headquarters in Graz, Austria; over 250 production sites and service/sales companies worldwide KEY FINANCIAL FIGURES:
THE ANDRITZ GROUP
3
SALES BY REGION 2017 (%)
Emerging markets: 42% Europe &
North America: 58%
5,889 MEUR
UNIT 2017 2016
Order intake MEUR 5,579.5 5,568.8
Order backlog (as of end of period) MEUR 6,383.0 6,789.2
Sales MEUR 5,889.1 6,039.0
Net income (including non-controlling interests) MEUR 265.6 274.8
Employees (as of end of period; without apprentices) - 25,566 25,162
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP
A WORLD MARKET LEADER WITH FOUR BUSINESS AREAS
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 4
Electromechanical equipment for hydropower plants (turbines, generators); pumps; turbo generators.
PRODUCT OFFERINGS
HYDRO
Equipment for production of all types of pulp, paper, tissue, and board; energy boilers.
PRODUCT OFFERINGS
PULP & PAPER
Presses/press lines for metal forming (Schuler); systems for production of stainless steel, carbon steel, and non-ferrous metal strip; industrial furnace plants.
PRODUCT OFFERINGS
METALS
Equipment for solid/liquid separation for municipalities and various industries; equipment for production of animal feed and biomass pellets.
PRODUCT OFFERINGS
SEPARATION
36 29 11 24 % order intake* % order intake* % order intake* % order intake*
* Share of total Group order intake 2017.
LONG-TERM GROWTH BASED ON ACQUISITIONS AND ORGANIC EXPANSION
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 5
Compound Annual Growth Rate (CAGR) of Group sales 2007-2017: +6% p.a. (thereof approximately half from organic growth)
3,283 3,610
3,198 3,554
4,596
5,177
5,711 5,859 6,377
6,039 5,889
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sales (MEUR) Order intake (MEUR)
STRENGTHENING OF MARKET POSITION BY ACQUISITIONS
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 6
HYDRO PULP & PAPER METALS SEPARATION
2006 VA TECH HYDRO 1990 Sprout-Bauer 2006 Pilão 1997 Sundwig 1992 TCW Engineering
2007 Tigép 1992 Durametal 2007 Bachofen + Meier 1998 Thermtec 1995 Jesma-Matador
2008 GE Hydro business 1994 Kone Wood 2007 Sindus 2000 Kohler 1996 Guinard
2010 GEHI (JV) 1998 Kvaerner Hymac 2008 Kufferath 2002 SELAS SAS Furnace Div. 2000 UMT
2010 Precision Machine 1999 Winberg 2009 Rollteck 2004 Kaiser 2002 3SYS
2010 Hammerfest Strøm 2000 Ahlstrom Machinery 2010 Rieter Perfojet 2005 Lynson 2004 Bird Machine
2010 Ritz 2000 Lamb Baling Line 2010 DMT/Biax 2008 Maerz 2004 NETZSCH Filtration
2011 Hemicycle Controls 2000 Voith Andritz Tissue 2011 AE&E Austria 2012 Bricmont 2004 Fluid Bed Systems
2002 ABB Drying 2011 Iggesund Tools 2012 Soutec 2005 Lenser Filtration
2003 IDEAS Simulation 2011 Tristar Industries 2013 Schuler (> 95%) 2006 CONTEC Decanter
2003 Acutest Oy 2011 Asselin-Thibeau 2013 FBB Engineering 2009 Delkor Capital Equipment
2003 Fiedler 2012 AES 2014 Herr-Voss Stamco 2009 Frautech
2004 EMS (JV) 2013 MeWa 2016 Yadon 2010 KMPT
2005 Cybermetrics 2015 Euroslot 2016 AWEBA 2012 Gouda
2005 Universal Dynamics Group 2016 SHW Casting Technologies 2017 Powerlase (51%) 2013 Shende Machinery
2006 Küsters 2017 Paperchine 2016 ANBO
2006 Carbona
Acquisitions by business area since 1990
01 ANDRITZ GROUP OVERVIEW
02 RESULTS 2017
03 OUTLOOK AND FINANCIAL TARGETS
CHAPTER OVERVIEW
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 7
SALES (MEUR)
6,039 5,889
2016 2017
GROUP SALES SLIGHTLY BELOW LEVEL OF LAST YEAR Decrease mainly due to Hydro as a result of lower order intake in the past few years.
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 8
SALES BY BUSINESS AREA (MEUR)
SALES BY REGION (%)
Emerging markets: 42%
Europe/North America: 58%
GEOGRAPHICAL EXPOSURE
5,889 MEUR
-2.5%
2017 2016
Europe 37 35
North America 21 21
China 15 12
Asia (without China) 13 12
South America 10 15
Africa, Australia 4 5
2017 2016 +/-
Hydro 1,583 1,752 -10%
Pulp & Paper 2,060 2,094 -2%
Metals 1,644 1,598 +3%
Separation 603 594 +2%
SHARE OF SERVICE SALES OF GROUP AND BUSINESS AREA SALES (%)
Increase in all four business areas.
FAVORABLE DEVELOPMENT OF SERVICE BUSINESS
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 9
ANDRITZ GROUP 2016: 2017:
+200 bps
2017: 2016:
26%
46%
22%
41%
29%
42%
24%
47%
+300 bps
+100 bps
+200 bps
+100 bps
Hydro 2017: 2016: Metals
2017: 2016: Pulp & Paper 2017: 2016: Separation
34% 32%
Note: bps = basis points
ORDER INTAKE (MEUR)
5,569 5,580
2016 2017
GROUP ORDER INTAKE PRACTICALLY UNCHANGED COMPARED TO 2016 Good development in Pulp & Paper, Metals Processing, and Separation negatively offset by weakness in Hydro.
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 10
ORDER INTAKE BY BUSINESS AREA (MEUR)
ORDER INTAKE BY REGION (%)
Emerging markets: 39%
Europe/North America: 61%
GEOGRAPHICAL EXPOSURE
5,580 MEUR
+0.2%
2017 2016
Europe 40 41
North America 21 20
China 16 16
Asia (without China) 13 11
South America 7 8
Africa, Australia 3 4
2017 2016 +/-
Hydro 1,317 1,500 -12%
Pulp & Paper 2,033 1,920 +6%
Metals 1,607 1,552 +4%
Separation 622 598 +4%
Decrease mainly due to Hydro business area.
GROUP ORDER BACKLOG DOWN COMPARED TO YEAR-END 2016
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 11
6,683 6,615 7,389 7,511 7,324 6,789 6,383
2011 2012 2013 2014 2015 2016 2017
ORDER BACKLOG (AS OF END OF PERIOD; IN MEUR) -6%
ORDER BACKLOG BY BUSINESS AREA (AS OF END OF PERIOD; IN MEUR)
Hydro: 45%
Pulp & Paper: 28%
Metals: 21%
Separation: 6%
HYDRO AND PULP & PAPER ACCOUNT FOR 73% OF TOTAL BACKLOG
2017 2016 +/-
Hydro 2,922 3,270 -11%
Pulp & Paper 1,787 1,803 -1%
Metals 1,310 1,369 -4%
Separation 365 347 +5%
EARNINGS AND PROFITABILITY AT SOLID LEVELS DESPITE DECREASE IN SALES
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 12
442.1 444.0
2016 2017
EBITA (MEUR)
• Despite slight decline in sales, EBITA, at 444.0 MEUR, reached practically last year’s level (2016: 442.1 MEUR). EBITA includes net positive one-off effect of ~25 MEUR (mainly from sale of the Schuler Technical Center in China, as reported in Q2 2017).
• EBITA margin increased to 7.5% (2016: 7.3%). Excluding the net positive effect, EBITA margin would have been at 7.1%.
• Good profitability in Pulp & Paper; satisfactory profitability in Hydro; margin recovery in Separation underway; profitability in Metals down due to cost overruns on some projects and depressed market prices in the Metals Processing sector.
EBITA MARGIN (%)
2016: 7.3%
2017:
7.5% (7.1%*)
+0.4%
* Excluding extraordinary effect (mainly due to the sale of the Schuler Technical Center in Tianjin).
EARNINGS AND PROFITABILITY BY BUSINESS AREA
EBITA (MEUR) and EBITA margin (%).
13
128 123
2016 2017
182 195
2016 2017
17 28
2016 2017
SEPARATION
7.3%
7.8%
8.7%
9.5%
2.9% 4.6%
115 99
2016 2017
7.2%
6.0%
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP
HYDRO PULP & PAPER METALS
ORDER INTAKE 2017 BY BUSINESS AREA
14
1,500
1,317
2016 2017
HYDRO (MEUR)
1,920 2,033
2016 2017
598 622
2016 2017
PULP & PAPER (MEUR) METALS (MEUR) SEPARATION (MEUR)
1,552 1,607
2016 2017
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP
-12.2%
+5.9%
+3.5%
+4.0%
SALES 2017 BY BUSINESS AREA
15
1,752 1,583
2016 2017
HYDRO (MEUR)
2,094 2,060
2016 2017
594 603
2016 2017
PULP & PAPER (MEUR) METALS (MEUR) SEPARATION (MEUR)
1,598 1,644
2016 2017
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP
-9.6%
-1.6%
+2.9%
+1.5%
KEY FIGURES 2017 AT A GLANCE
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 16
Decrease mainly due to the lower gross cash flow as a result of the sale of fixed assets (shown in the cash flow from investing activities) as well as higher income taxes paid.
Increase in net working capital mainly due to lack of larger orders as well as increase in service business.
UNIT 2017 2016 +/-
Order intake MEUR 5,579.5 5,568.8 +0.2%
Order backlog (as of end of period) MEUR 6,383.0 6,789.2 -6.0%
Sales MEUR 5,889.1 6,039.0 -2.5%
EBITDA MEUR 541.7 542.4 -0.1%
EBITA MEUR 444.0 442.1 +0.4%
EBIT MEUR 399.3 385.8 +3.5%
EBT MEUR 400.6 398.4 +0.6%
Financial result MEUR 1.3 12.6 -89.7%
Net income (including non-controlling interests) MEUR 265.6 274.8 -3.3%
Cash flow from operating activities MEUR 246.5 366.6 -32.8%
Capital expenditure MEUR 116.8 119.5 -2.3%
Equity ratio % 21.2 21.7 -
Liquid funds MEUR 1,772.3 1,507.1 +17.6%
Net liquidity MEUR 908.0 945.3 -3.9%
Net working capital MEUR -121.0 -215.8 +43.9%
EBITDA margin % 9.2 9.0 -
EBITA margin % 7.5 7.3 -
EBIT margin % 6.8 6.4 -
Employees (as of end of period; without apprentices) - 25,566 25,162 +1.6%
Significant decrease due to substantially lower interest rates in Brazil, as well as interest expense for the Schuldscheindarlehen issued in June 2017.
01 ANDRITZ GROUP OVERVIEW
02 RESULTS 2017
03 OUTLOOK AND FINANCIAL TARGETS
CHAPTER OVERVIEW
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 17
• Project activity for modernizations and new hydropower stations to remain at subdued level.
• Some larger, new hydropower projects are currently in the planning phase, especially in Southeast Asia and Africa; selective award of individual large-scale projects is likely.
• Satisfactory market activity for pumps to continue.
• Project activity in Metal Forming to remain stable/improve slightly compared to 2017.
• Investment activity in Metals Processing to remain at reasonable level.
• Reasonable market activity in environment, mining and chemicals.
• Low investment activity in food to continue.
• Project and investment activity to continue at a high level in 2018, especially for modernization of existing plants.
• Continued satisfactory investment activity for tissue and packaging, especially in the emerging markets.
Hydro Pulp & Paper
Metals Separation
OUTLOOK FOR 2018
Unchanged expectations for markets served by ANDRITZ.
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 18
Stable +/-
Stable +/- Stable +
Stable +
For 2018, ANDRITZ expects stable sales compared to 2017 and solid profitability.
5.3% 6.0% 6.2%
7.0-8.0%
2000-2004 2005-2009 2010-2014 2015-2019P
* Growth rates include organic growth and acquisitions
TARGET TO CONTINUE LONG-TERM PROFITABILE GROWTH Goal: further improve profitability with top-line sales growth
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 19
How to achieve long-term profitbale growth: • Price discipline • Launch of new service and digital
products • Continued cost optimization • Reduction of negative project cost
deviations • Focus on further acquisitions
Average EBITA margin
Sales CAGR: 16.4%
Sales CAGR*: 12.1%
Sales CAGR: 13.3%
Sales CAGR:
5-8% p.a.
UPDATE ON LONG-TERM EBITA MARGIN GOALS PER BUSINESS AREA
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 20
8.3 8.1 8.3 7.9 7.3 7.8
2012 2013 2014 2015 2016 2017
5.9
-1.8
5.2
8.7 8.7 9.5
2012 2013 2014 2015 2016 2017
6.2
4.1
7.1
4.1
7.2 6.0
2012 2013 2014 2015 2016 2017
6.9
-0.1
3.7 3.6 2.9
4.6
2012 2013 2014 2015 2016 2017
HYDRO
METALS
PULP & PAPER
SEPARATION
Long-term goal:
8.5-9.0% CONFIRMED
Long-term goal:
7.0-8.0% NEW:
6.0-7.0%
Long-term goal:
7.0-8.0% NEW: >8%
Long-term goal:
8.0-9.0% CONFIRMED
This presentation contains valuable, proprietary property belonging to ANDRITZ AG or its affiliates (“the ANDRITZ GROUP”), and no licenses or other intellectual property rights are granted herein, nor shall the contents of this presentation form part of any sales contracts that may be concluded between the ANDRITZ GROUP companies and purchasers of any equipment and/or systems referenced herein. Please be aware that the ANDRITZ GROUP actively and aggressively enforces its intellectual property rights to the fullest extent of applicable law. Any information contained herein (other than publically available information) shall not be disclosed or reproduced, in whole or in part, electronically or in hard copy, to third parties. No information contained herein shall be used in any way either commercially or for any purpose other than internal viewing, reading, or evaluation of its contents by the recipient, and the ANDRITZ GROUP disclaims all liability arising from the recipient’s use or reliance upon such information. Title in and to all intellectual property rights embodied in this presentation and all information contained therein is and shall remain with the ANDRITZ GROUP. None of the information contained herein shall be construed as legal, tax, or investment advice, and private counsel, accountants, or other professional advisers should be consulted and relied upon for any such advice. All copyrightable text and graphics, the selection, arrangement, and presentation of all materials, and the overall design of this presentation are © ANDRITZ GROUP 2018. All rights reserved. No part of this information or materials may be reproduced, retransmitted, displayed, distributed, or modified without the prior written approval of the owner. All trademarks and other names, logos, and icons identifying the owner’s goods and services are proprietary marks belonging to the ANDRITZ GROUP. If the recipient is in doubt whether permission is needed for any type of use of the contents of this presentation, please contact the ANDRITZ GROUP at [email protected].
DISCLAIMER
/ COMPANY PRESENTATION, MARCH 2018 / © ANDRITZ GROUP 21