andritz company presenation - june 2019 · andritz is a globally leading supplier of plants,...

COMPANY PRESENTATION

ANDRITZ GROUP

JUNE 2019

01 ANDRITZ GROUP OVERVIEW

CHAPTER OVERVIEW

/ ANDRITZ / COMPANY PRESENTATION / JUNE 2019 / © ANDRITZ GROUP 2

02 HYDRO

03 PULP & PAPER

04 05 SEPARATION

06 LONG-TERM TARGETS AND STRATEGY

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 280 production sites and service/sales companies worldwide. KEY FINANCIAL FIGURES:

THE ANDRITZ GROUP

3

SALES BY REGION 2018 (%)

Emerging markets: 41% Europe &

North America: 59%

6,031 MEUR

UNIT Q1 2019 2018

Order intake MEUR 1,658.1 6,646.2

Order backlog (as of end of period) MEUR 7,260.9 7,084.3

Sales MEUR 1,489.2 6,031.5

Net income (including non-controlling interests) MEUR 32.6 219.7

Employees (as of end of period; without apprentices) - 29,398 29,096

/ ANDRITZ / COMPANY PRESENTATION / JUNE 2019 / © ANDRITZ GROUP

A WORLD MARKET LEADER WITH FOUR BUSINESS AREAS


Electromechanical equipment for hydropower plants (turbines, generators); pumps; turbo generators.

PRODUCT OFFERING

HYDRO

Equipment for production of all types of pulp, paper, tissue, and board; energy boilers.

PRODUCT OFFERING

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 OFFERING

METALS

Equipment for solid/liquid separation for municipalities and various industries; equipment for production of animal feed and biomass pellets.

PRODUCT OFFERING

SEPARATION

39 29 10 22 % order intake* % order intake* % order intake* % order intake*

* Share of total Group order intake 2018

LONG-TERM GROWTH BASED ON ACQUISITIONS AND ORGANIC EXPANSION


Growth evenly split between organic expansion and acquisitions

3,198 3,554

4,596

5,177

5,711 5,859 6,377

6,039 5,889 6,031

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Sales (MEUR)

2,855 3,682

4,284 4,214

5,338 5,435 5,186 5,176 5,463 5,986 494

450

1,423 710

273 666 832

393 117

660

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Order intake (MEUR) Orders >100 MEUR

5,707

4,924

5,611 6,101 6,018

5,569 5,580

6,646

3,349

4,132

HMI CANADA INC.

• About 3,100 employees • Annual sales of more than 500 million Euros • Extension of the ANDRITZ product portfolio,

mainly in the stable service business

Seven acquisitions; foundation of a cybersecurity company in Israel

2018 WAS A VERY ACTIVE YEAR WITH REGARD TO EXTERNAL GROWTH

6

XERIUM TECHNOLOGIES, INC.

ASKO, INC.

DIATEC S.R.L.

NOVIMPIANTI DRYING TECHNOLOGY S.R.L.

OTORIO LTD

PSIORI GMBH

FARINA PRESSE S.P.A.

/ ANDRITZ / COMPANY PRESENTATION / JUNE 2019 / © ANDRITZ GROUP

RISING SHARE OF SERVICE BUSINESS


Service business increased in absolute and relative terms

29 30 32 34 36 40

2014 2015 2016 2017 2018 Q1 2019

% OF TOTAL SALES

1,670 1,892 1,930 2,010 2,155 2,319

2014 2015 2016 2017 2018 Last 4quarters

IN MEUR Hydro Pulp & Paper

Metals Separation

26%

Share of service sales by business area (Q1 2019)

57%

25%

46%

2014-2018 (in %)

EBITA MARGIN FOR THE GROUP AND BY BUSINESS AREA


6.5 6.7*

7.3 7.5*

6.5*

2014 2015 2016 2017 2018

3.7 3.6 2.9 4.6 4.8

2014 2015 2016 2017 2018

ANDRITZ GROUP

7.1

4.1*

7.2 6.0

1.7*

2014 2015 2016 2017 2018

8.3 7.9 7.3 7.8

7.5*

2014 2015 2016 2017 2018

5.2

8.7* 8.7 9.5 9.9

2014 2015 2016 2017 2018

HYDRO PULP & PAPER

METALS SEPARATION

Stable profitability despite drop of market volume by one third.

Weak global automotive market and underabsorption in Germany.

Improved profitability in capital as well as service business growth.

Profitability turnaround continuing.

* EBITA margin reported **EBITA margin adjusted by extraordinary items

7.1%** 7.3%**

Long-term goal:

8.0-9.0%

Long-term goal: >8%

Long-term goal:

8.5-9.0%

Long-term goal:

6.0-7.0%

6.9%**

7.9%** 6.9%**

8.6%**

4.6%**

2.5%**

DEVELOPMENT OF LIQUID FUNDS AND NET WORKING CAPITAL


1,082

1,595

1,815

2,048

1,517

1,702

1,449 1,507

1,772

1,280

1,475

678

1,177

1,401

1,286

893

1,065

984 945 908

-100

-72

-150

350

850

1,350

1,850

2,350

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q12019

Liquid funds Net liquidity

-570.9

-182.1 -215.8

-121

160.5 183.4

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

2014 2015 2016 2017 2018 Q1 20192015 2017

Increase mainly due to: • Xerium working capital (+100 MEUR) • Reduction of POC payables

2014 2016

NET WORKING CAPITAL LIQUID FUNDS / NET LIQUIDITY

IN MEUR

IN MEUR Acquisition of Xerium (~770 MEUR),

inclduding redemption of 480 MUSD bond Acquisition of Schuler

(~600 MEUR)


CHAPTER OVERVIEW


02 HYDRO

03 PULP & PAPER

04 05 SEPARATION


• New hydropower plants Some new, larger projects are currently in the planning phase, especially in Southeast Asia and Africa; selective award of individual projects is likely.

• Pumps

Satisfactory project activity.

• Modernizations/rehabilitations As a result of the continuing low investment activity by utilities, many modernization projects are still postponed, particularly in Europe.

• Competition Stable competition at challenging level.

Selective award of individual projects, particularly in the growing Asian market

HYDRO: UNCHANGED MODERATE MARKET ENVIRONMENT


ANDRITZ supplied equipment for the pumped storage hydropower plant Shi Shan Ling, China.

Average annual growth of 2.4% expected for 2018-2030E

GLOBAL HYDROPOWER CAPACITY EXPECTED TO GROW SLIGHTLY IN THE LONGER TERM


758 767 777 799 822 844 868 900 933 969 1,003 1,036 1,070 1,097 1,137 1,170 1,203 1,223 1,247 1,274 1,303 1,334 1,364 1,398 1,435 1,476 1,516 1,555 1,592 1,629 1,663

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

2018: more than 76% of total hydropower capacity related to large conventional hydropower plants with a capacity of 952 GW. The remainder related to small hydro and pumped storage capacities at 138 GW and 157 GW respectively.

CAGR 2018-2030E: +2.4%

■ Small hydro +2.5%

■ Pumped storage +4.1%

■ Large conventional hydro* +2.1%

*) turbines > 30 MW

Source: GlobalData

15% 19%

26% 24% 23%

34%

24% 22%

17% 20% 18%

22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

AND

RIT

Z H

ydro

mar

ket s

hare

[%]

Mar

ket

(MEU

R)

World Andritz HYDRO Total E&M OI Andritz market share

GLOBAL HYDROPOWER MARKET DECLINED BY ONE THIRD SINCE PEAK IN 2011


Source: ANDRITZ

Cost structures adjusted to market decline

World ANDRITZ market share (based on order intake)

Order intake ANDRITZ Hydro

7,285 7,469 7,445 8,339 8,230 7,260 7,237

7,002

2011 2012 2013 2014 2015 2016 2017 2018

7,000 7,200

6,000

7,400

8,300

5,100

6,400 6,800

8,000

5,900 5,600 5,600

2,978 2,656 2,791 2,808 2,673 2,588 2,522

2,334

2011 2012 2013 2014 2015 2016 2017 2018

HYDRO EMPLOYEES

HYDRO DIRECT LABOR HOURS

-33% -16%

-22%

Average investment cost for hydropower equipment: ~250-500 MEUR / GW (amount per GW depends on scope of supply)

GOOD PIPELINE FOR LARGE-SCALE HYDRO PROJECTS


Planned projects Country GW total plant Decision time frame Caculo Cabaca Angola 2.1 2019 Koysha (Gibe IV) Ethiopia 2.3 2019 Carillon Rehab Canada 0.6 Next 1-2 years Dasu Pakistan 2.2 Next 1-2 years Rogun Tajikistan 2.4 Next 1-2 years Nurek Rehabilitation – Phase 2 Tajikistan 2.2 2021 Itaipu - Automation Brazil -- Next 1-3 years Upper Cisokan Indonesia 1.0 Next 1-3 years Hatta Pumped Storage U.A.E. 0.3 2019 Pfaffenboden Austria 0.3 Next 1-3 years Grand Coulee Units G19-G21 Turbine upgrade/rehabilitation United States 1.8-2.3 Next 2-3 years

Koralm Austria 0.9 Next 3-5 years Demwe Lower India 1.9 Next 3-5 years Grand Coulee Units G1-G18 Rewinds United States 1.8-2.3 Medium to long term Inga 3 Congo 4.8 Medium to long term

Over one third of world hydropower capacity was originally commissioned more than 40 years ago

FAVORABLE MODERNIZATION POTENTIAL


Average: 36% more than 40 years old

* Installed hydropower capacity older than 40 years in percent of the region’s total installed capacity Source: S&P WORLD ELECTRIC POWER PLANTS data base (WEPP)

5%

22%

30%

31%

57%

67%*

China

South America

Africa

Asia (without China)

Europe

North/Central America

177 GW

132 GW older than 40 years

56 GW

18 GW

38 GW

12 GW

Global hydropower capacity ~1,200 GW, thereof ~440 older than 40 years


CHAPTER OVERVIEW


02 03 PULP & PAPER

04 05 SEPARATION


• Pulp Excellent project activity for both modernization of existing pulp mills and greenfield pulp mills.

• Paper Satisfactory market development for tissue and packaging equipment continued.

• Power generating boilers Very good project and investment activity, especially in Europe and Asia (Japan).

• Competition

Stable competitive environment.

PULP & PAPER: CONTINUED GOOD MARKET ENVIRONMENT


The ANDRITZ tissue pilot plant in Graz, Austria – the PrimeLineTIAC – offers customers the opportunity to test and develop their future textured tissue.

Tissue and packaging as major drivers

LONG-TERM PAPER DEMAND GROWTH BY PRODUCT


Source: Pöyry WF: Woodfree; UC: uncoated; WC: wood-containing; C: coated

GR

OW

TH P

.A 2

017-

2030

E

ANDRITZ‘s potential market

WORLD FIBER PRODUCTION DEVELOPMENT 2017-2030E


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Recovered Paper Chemical Pulp Mechanical Pulp

2017 2020 2025 2030

Source: Pöyry

1,00

0 to

ns/a

Global consumption growth, replacement of shutdowns as well as bio-refinery products

NEW PULP MILLS AND LINES ≥0.5MT IN PLANNING


*Annual capacity in million tons (subject to 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

Owner – project Capacity/a* Planned start-up

SUN BIO Arkansas 1.0 2023

USA:

Owner Capacity/a* Planned start-up

UPM 2.1 2022

URUGUAY: Owner Capacity/a* Planned start-up

Portucel 1.5 2025-

MOZAMBIQUE:


Kemijärvi 0.5 2021

Finnpulp – Kuopio 1.2 2022

FINLAND:


Acacia Cellulose Malaysia

0.9 2022

Double A Thailand 0.6 2025-

OTHER:


OOO Monolog 0.5 2020

Krasleinvest 0.8 2022

China Chentong 0.8 2022

Siberwood 0.9 2023

Segezha/CAMCE 0.5 2024

China Metallurg. Group

0.5 2025-

JSC Arkhangelsk 0.5 2025-

Boguchanskiy 0.8 2025-

RUSSIA:


Klabin 1.0 2020

Eldorado – Três Lagoas 2.3 2022

Lwarcel 1.3 2022

Suzano 2.0 2022

CRPE Holding S.A – Ribas do Rio Pardo

2.2 2024

Jari Cellulose 0.8 2024

Suzano – Três Lagoas 1.9 2025-

Suzano – Aracruz 1.7 2025-

Veracel – Eunápolis 1.8 2025-

Braxel – Peixes 2.0 2025-

Suzano – Imperatriz 1.3 2025-

CMPC Brazil – Pelotas 1.8 2025-

Aditya Birla & Eco Brazil Florestas

1.0 2025-

BRAZIL:


Agroforestal Oberá 0.6 2021

ARGENTINA:


Est-For Oü 0.7 2025-

ESTONIA:

Owner Capacity/a* Planned start-up

Paraguay pulp project 1.5 2025-

PARAGUAY:

BUT: substantial pulp inventory increase globally in Q1 2019


CHAPTER OVERVIEW


02 03 04 METALS

05 SEPARATION


• Metals Forming (Schuler) Unchanged moderate project and investment activity due to the continuing weak international automotive market as well as due to the economic slow down in China.

• Metals Processing Overall satisfactory project activity. Orders placed focused mainly on technologies and plants for the production of advanced high-strength steel grades.

• Competition Unchanged challenging competition.

Satisfactory market environment in Metals Processing

METALS: CONTINUED LOW PROJECT AND INVESTMENT ACTIVITY IN METALS FORMING


Bridle rolls in an ANDRITZ aluminum finishing line.

Despite acquisitions order intake practically flat over the last five years

SCHULER: ORDER INTAKE AND SALES 2013-2018


1,039

1,194

1,016

1,200 1,141

1,255 1,165 1,178 1,200 1,174

1,233 1,212

2013* 2014 2015 2016** 2017 2018

Order intake Sales

ORDER INTAKE AND SALES (IN MEUR)

* First-time consolidation of the Schuler Group as of March 1, 2013; pro forma ** First-time consolidaton of Yadon and Aweba as of July 1, 2016

595 660

EBITDA EBITDA excl.extraordinary items

287 272 298 290 310 334

2013* 2014 2015 2016** 2017 2018

• Purchased in 2013 business plan assumed lower sales going forward

• Acquisition multiple: 4.1 EV/EBITDA Actual six year average: 5 / 4.6 (excl. extraordinary items)

• Two restructuring programs in 2013 and

2015 with a total of 60 MEUR implemented

• Acquisition of Yadon in 2016 to expand business in the Chinese growth market

• Some shift of production capacities to China

• Weakness of the global automotive market in 2018 leads to under-absorption especially in Germany

SALES CHINA (IN MEUR)

AGGREGATED EBITDA 2013-2018 (IN MEUR)


CHAPTER OVERVIEW


02 03 04 05 SEPARATION

06 OUTLOOK, GROUP STRATEGY, AND FINANCIAL TARGETS

• Municipal Investment activity at unchanged good levels (sewage sludge dewatering and drying).

• Industrial Good project activity in chemicals, mining, and minerals; investment activity in food improved significantly from low level.

• Feed and biomass pelleting

Solid project activity. • Competition

Unchanged market environment with some global and many regional competitors.

Particularly for solid/liquid separation equipment

SEPARATION: GOOD PROJECT AND INVESTMENT ACTIVITY CONTINUED


ANDRITZ Gouda paddle dryer for hygienic drying of food and chemicals.

• ANDRITZ will supply nine fluidized bed dryers and six EcoFluid fluidized bed boilers for one of the world’s largest effluent treatment plants.

• Order value of just under 120 million euros (60% for Pulp & Paper, 40% for Separation). • Start-up at the end of 2019. • Important references for sludge drying and incineration plants in Asia:

• Supply of four EcoFluid boilers to Hong Kong for power generation from sludge. • Delivery of five drum drying plants to Singapore for water evaporation.

Bailonggang effluent treatment plant, Shanghai

EQUIPMENT FOR THE WORLD’S LARGEST PLANT FOR GENERATING POWER FROM SEWAGE SLUDGE


Four ANDRITZ EcoFluid boilers generate power from sludge at the effluent treatment plant in Hong Kong.

3D image of the planned extension to Bailonggang effluent treatment plant.


CHAPTER OVERVIEW


02 03 04 05


Stay within four segments and achieve long-term profitable growth

LONG-TERM TARGETS AND STRATEGY


FINANCIAL TARGETS • Sales • Profitability • Dividend

CAGR of 5-8% based on organic and external growth Achieve average EBITA-margin of 8% over the next 3-5 years Payout of 50-60% of earnings on average

STRATEGY

• No diversification, continue to grow the four business areas • Further expansion of service business • Maintain/expand technological leadership • Achieve/maintain competitive cost structure • Expand global presence

andritz company presenation - june 2019 · andritz is a globally leading supplier of plants,...

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