andritz rolling mills and strip processing...

Capital Market Days 2007

Rolling Mills and Strip Processing Lines

Capital Market Days 2007Slide No. 1

Business ProfileThe Business Area

develops, designs, builds and commissions plants for the metallurgical industry in the field of

• cold rolling, surface treatment and processing of metallic strips

either out of

• steel or stainless steel or nonferrous metals and

manufactures core equipment either in own shops or has it manufactured, under supervision, by sub-suppliers worldwide.


Strategy

The strategy of the Business Area is …

… to have complete full-line capability for all essential processes of the value chain of our customers in its entirety and also to possess an integrated know-how for

Mechanical engineering

Processes engineering (chemical and thermal)

Automation and electrification

in order to …


Strategy (cont’d)

Develop integrated systems under special consideration of the interdependencies of the different process steps

Minimize interface problems related to technology and order execution

To protect our know-how

To increase Sales volume and absolute gross margin per project

To reduce risk, time and cost for commissioning

To reduce cost for sales and order execution

To increase customer satisfaction


Value chain of steel production

Upstream Downstream

Steel making Slabs HR CoilsIron making

Baling

StripProcessing Finishing Final

Product MarketColdRolling

Close to raw material sources

Very cyclical business dependingon economical parameters

Close to market

Rather continuous businessdepending on technology changes


ElectrogalvanizingElectrogalvanizing

Car

bon

Car

bon

Stee

lSt

eel

PicklingPickling Cold RollingCold Rolling AnnealingAnnealing CoatingCoating

Tandem Tandem MillMillCluster Cluster millmillReversingReversing millmillSkin pass Skin pass millmill

Bright Bright AnnealingAnnealing

AnnealingAnnealing PicklingPickling

Stai

nle

ssSt

ain

less

Stee

lSt

eel

Annealing/PicklingAnnealing/Pickling Cold RollingCold Rolling AnnealingAnnealing

PicklingPickling

AnnealingAnnealing

ColourColour CoatingCoating

Cluster Cluster millmillReversingReversing millmill

TemperTemper millmill

Non

Non

-- fer

rous

ferr

ous

Met

als

Met

als

Cold RollingCold Rolling CoatingCoating

MillingMilling lineslinesGrindingGrinding lineslinesPicklingPickling lineslines

PicklingPickling

AndritzAndritz

SundwigSundwig

ThermtecThermtec

Hot

H

ot R

olle

dR

olle

dS

trip

Str

ip

ContinuousContinuousAnnealingAnnealing

AnnealingAnnealing

SELASSELAS

ColourColour CoatingCoating

Hot Hot dipdip galvanizinggalvanizingReversingReversing millmillSkin pass Skin pass millmill

Tandem Tandem millmillContinuousContinuous PicklingPickling LineLinePush Push PicklingPickling LineLine Bell Bell typetype annealingannealing

ContinuousContinuousAnnealingAnnealing

CuttingCutting + + SlittingSlittingLevellingLevelling linelinePackagingPackaging LineLinePunchingPunching

Process chain from hot rolled strip to value added products



KaiserKaiser

FinishingFinishing

FinishingFinishing

FinishingFinishing


Products

... of the Business Area are derived from the process chain of its customers, starting with the feed stock hot rolled strip until the final handling of the finished product (strip or sheet).

o Cold rolling mills• 2-, 4-, 6-, 12-, 20 high• Roll grinder

o Strip processing lines• Continuous annealing• Grinding• Slitting• Cutting (thick gages)• Levelling• Inspecting• Packaging• Punching

o Surface treatment• Continuous and push pull pickling• Degreasing• Electrolytic and hot dip galvanizing• Tinning• Colour coating• Chrome plating

o Acid regeneration• Hydrochloric acid (HCL)• Mixed acid (HF, HNO3) • Oxide-production (Ni, Co, Ti etc.)


Sales 1998-2002Sales 1998-2002

EBITDA 1998-2002EBITDA 1998-2002Order IntakeOrder Intake

Business development 1998 - 2002

167.4 177.4169.1135.0 140.8

0

50

100

150

200

1998 1999 2000 2001 2002

MEURMedium-term targets

Sales approx. 200 MEUR

EBITDA approx. 8 %

175.7196.3

130.2141.9112.6

0

50

100

150

200

1998 1999 2000 2001 2002

MEUR6.2%

5.2%5.1%5.3%5.1%

0%

2%

4%

6%

8%

1998 1999 2000 2001 2002


Sales 2002-2006Sales 2002-2006

EBITDA 2002-2006EBITDA 2002-2006Order Intake 2002-2006Order Intake 2002-2006

Business development 2002 - 2006

401.9444.8

266.7287.6

175.7

0

100

200

300

400

500

2002 2003 2004 2005 2006

450.5

275.9235.4

173.1177.4

0

100

200

300

400

500

2002 2003 2004 2005 2006

Medium-term targets

Sales approx. 500 MEUR

EBITDA > 8 %

MEUR

MEUR

7.3%6.6%

6.1%

3.8%

6.2%

0%

2%

4%

6%

8%

2002 2003 2004 2005 2006


Order Intake

0

100

200

300

400

500

600

1992 1994 1996 1998 2000 2002 2004 2006 2008

Incoming Orderslinear trend

CAGR 1992-2006: ~ 16%

MEUR

year

Development of Order Intake

Rolling Mills and Strip Processing Lines

Year


Market approach

Most of the products are placed in the high-priced markets with demanding technical requirements

Focus on strongly growing markets like China, India and Russia and devote most resources there without jeopardizing highly developed European market

Focus on selected high potential customers and try to become single source supplier

Strictly follow strategy to supply complete systems with own technology to minimize risks and maximize sales and margin

Try to get high market share to set technical standards

Standardize as much as possible


Market position

strong focus on stainless steelevenly distributedProducts

~ 2,000 MEUR~ 1,200 MEURMarket size (accessible)

~ 26 %~ 10 – 12 %Market share

20062000

Estimated marketshares and competition

structure2006

Andritz26%

SMS13%

DMS/SH6%

LOI/Drever5%

Others19%

VAI5%

CMI4%

Fagor4%

FIMI3%

19 Others <3% 15%

Source: Andritz estimate


Order Intake by Region

EUEU

40 %40 %30 %30 %

AsiaAsia

57 %57 %68 %68 %

OthersOthers1 %1 %

0 %0 %

Incoming Orders 2006: 402 MEUR

North AmericaNorth

America2 %2 %

2 %2 %

Average 2001-2004: 230 MEURAverage 2001-2004: 230 MEUR

Incoming Orders 2005: 445 MEURIncoming Orders 2005: 445 MEUR

0 %0 % 4 %4 %

49 %49 %

47 %47 %

Where are the customers of the Rolling Mills and Strip Processing Lines Business Area?


MarketCarbon Steel:

Booming market for upstream equipment stripprocessing lines and plate mills. However, lowerlevel compared to China

Some investments in Russia in strip processinglines

Many more orders followed until 2007, boomingmarket for plate mills and electrical steel last 2-3 years

Growing orders for cold rolling mills and stripprocessing lines in China

Still same ratio, which means approx. 480 mill. tons in 2007

Approx. 40 % (~ 350 mil tons) of steel productiongoes to flat rolled products which is the focus ofAndritz

In 2007 China will be a net exporter of 40 mill. tons of steel, but still needs to import high-qualityflat products

China will import approx. 30-40 million tons of steel, mainly high quality flat products

Steel production in 2007 will probably reach1,200 mill. tons and grow to 1,500 mill. tons in 2010

Steel analysts expected steel production of 1,000 million tons in 2010

Since 2002 annual growth rate of approx. 7 %;in BRIC-states more than 10 %

Average annual growth for crude steelproduction 1-2 %

Situation in 2007Situation in 2003


Market (cont‘d)Carbon Steel:

Investment activities increased and steelcapacity of roughly 40-50 mill. tons has beenreached. Huge projects are under developmentbut suffer from difficult political situation. Capacity of 100 mill. tons expected after 2010

Few activities in India for investments in steelindustry

Some projects for merchant slabs (Thyssen, Baosteel) are under construction. No investment in downstream activities

South American market seems to be saturatedwith recent investments. Future investments aremainly upstream for merchant slabs

Few investments financed from overseas havehappened. Thyssen will start with huge project inAlabama at the end of 2007

Investment activities in North America have beenclose to zero in the last years. Many companieswent bankrupt. No sign of recovery althoughrestructuring of steel industry has started

After restructuring of steel industry investmentmainly happened in Eastern Europe. Nicheplayers like Voest, Salzgitter, etc. invested inimproving their product range

Investment activities in Europe are still verysluggish. Restructuring of steel industry will befollowed by investing in appropriate equipment



MarketStainless Steel:

No change to situation 4 years agoRussia is still hesitant to invest in stainless steelproduction

New investments (Jindal, Salem) will increasecapacity to more than 2 mill. tons in 2010. Furthercapacities are under discussion, mainly for export

Small capacity for local consumption in India

Since 2003 annual growth rate for stainless flatproduction capacity approx. 12 %(2003: ~ 13 mill. tons; 2007: ~ 21 mill. tons)

Average annual growth for stainless steelproduction was approx. 5-7 % in recent years

High cost for nickel, chromium and molybdenumjeopardize growth of conventional stainless steelgrades

China‘s flat capacity has grown to approx. 9 mill. tons; TISCO is one of the largest stainlesssteel manufacturers worldwide

China’s flat stainless production is less than 1 mill. tons

Capacity growth mainly happened in Asia (China,India, Korea, Japan, Taiwan)

Capacity for flat products has been stronglyincreased in Europe and USA



Market

Non-ferrous Metals:

Investments in rolling mills for copper, brass andcarbon increased, but companies are often selecting simple equipment

Electronic industry is recovering in Asia

Main growth for aluminium strip productionhappened in China. Energy supply is limitingfurther growth

Aluminium strip production slowly growing forconstruction and automotive industry



Competitors

Main suppliers of equipment for metallurgical industry are still located in Europe and Japan

Local suppliers for equipment in China, Korea and India are growing but sell rather simple equipment. Suppliers for upstream equipment (iron making) feel already the heat of low cost competitors

While European suppliers are active worldwide, Asian suppliers mainly concentrate on their home markets and emerging markets.

Due to current booming market for metallurgical equipment consolidation of supplying industry has nearly stopped

Merger of VAI with Siemens Automation improved competitiveness of Andritz


Competitors

Full liners like SMS-DEMAG, VAI-Siemens, Danieli, which cover the whole process chain (upstream and downstream), have only limited advantage.

Smaller suppliers like DMS, CMI and others often have very competitive prices compared with the large suppliers.

Some competitors like SMS-DEMAG and CMI try to copy the Andritz strategy to combine all necessary technologies in one group.

Reputation of Andritz amongst customers and competitors is very high today. Andritz is the benchmark in its market.


Important customers

Australia

BHP

Russia

MagnetogorskNovolipezkSeverstal…

North America

US SteelMittal SteelNucorDofascoHylsamexWorthingtonJ & LNAS…

Asia

Baosteel-GroupWiscoPoscoTisco (Tajyuan)Tisco (India)MaanshanHandanBenxiJiscoYieh-GroupChina-Steel-GroupHandeedJindalSail…

Europe

Thyssen Krupp SteelSalzgitterArcelorCorusVoest AlpineDiehlKabelmetallBöhler-UddeholmOutokumpuRivaAcerinoxArvedi…


Tang EngChien ShingChang Mieng

Yieh UnitedTung Mung

LukensSteel

Columbus JV

Acerinox

ThyssenKrupp

BAOXIN

Nisshin Steel

POSCOJ & L

Acesita

Mexinox

Arinox

Sandvik

Ugine

Outokumpu

Serp I Molot

ALZ

Tscheljabinsk

Ergste

Theis

BHP

Avesta Polarit

Sammi SteelTISCO

Sumitomo

Nippon Steel

Salem

North American Stainless

SKS

Böhler-Uddeholm

Taiyuan

NipponMining

Avesta

References for Stainless Steel Lines

LISCO

JISCO


Annealing and Pickling Line for ThyssenKrupp Stainless

Strip accumulator

Technical Data:Line capacity: 40,000 kg/hLine speed: max. 100 m/min.Strip width: 600-1,380 mmStrip thickness: 0.2 – 2.0 mm

Annealing furnace HNO3 pickling section


Hot Dip Galvanizing Line for ThyssenKrupp Stahl

ThyssenKrupp Stahl,Dortmund/Germany


Hot-Dip Galvanizing Line for ThyssenKrupp Stahl

Strip accumulator Coater and exit vertical strip accumulator

Technical Data:Line capacity: 450,000 t/yearLine speed: 180 m/min.Strip width: 750 – 1,650 mmStrip thickness: 0.3 – 1.5 mm


Shear Line for side trimming, slitting, cut to length and levelling for TKN

KruppThyssen Nirosta, Krefeld/Germany


Push Pull Pickling Line for ThyssenKrupp Stahl

High-capacity push pickling line


Blanking Line for Volkswagen

Blanking line for rectangular and trapezoidal blanks


Leveller and Cutting Shear for CORUS, Germany


Bright Annealing Line for Shanghai Krupp Stainless

Vertical Muffle furnace


Electrolytic Galvanizing Line for Baosteel

Detail of an electrolytic galvanizing cell according to the patented Gravitel process


20-high Cold Rolling Mill for Arcelor (ALZ)


20-high Rolling Mill for ThyssenKrupp, Krefeld/Germany


Grinding Machine


Punching and Metal Forming Presses


Review on Capital Market Days 2003

Super cycle for steel industry already lastsalmost 5 years. Another 2 to 3 years areexpected mainly driven by investment inInfrastructure in Asia (China)

No clear picture beyond 3 years time horizon

Engineering office in Bangalore (approx. 50 people) and Shanghai (5 people) is executingdetail engineering, mainly for local projects.No activities in Russia up to now.

Part of our engineering capacities will move to low cost countries like China, India or Russia

In recent years, more than 50 % of Andritz Sales came from China. Due to increasingrequirements for sole supply of engineeringAndritz participates only in selected projects

China may develop to Andritz „bread and buttermarket“ however strong requirement for localsupply

Today, the Andritz Group is the mainsupplier of rolling mills and strip processing linesfor stainless steel worldwide, with a high marketshare in China

Exploit our potential in stainless steel market, especially in China

Status 2007 / 2008Assumption at CMD 2003

Where do we go in the next 3 to 5 years?


Development of high speed 6-high mill forcarbon steel. Two mills supplied to Korea whichare working very wellDevelopment of integrated tandem S-6-highrolling mills for stainless steel. Andritz suppliedall rolling mills worldwide since 2003 for thisapplicationDevelopment of widest (2,100 mm) S-6-high millfor stainless steel. Mill has been operating sincemid 2007 in Taiyuan

Enlargement of know-how for cold rollingthrough own development and acquisition

Other acquisition targets were either tooexpensive or did not fit anymore in the strategyafter examination

Acquisition of Kaiser manufacturing highlysophisticated mechanical punching pressesmainly for automotive parts

Acquisition of suppliers of equipment forprocessing lines

This idea is not accepted by the market. Ifcustomer decides for Andritz equipment he expects highly sophisticated technology

Split design teams for low cost equipment andhighly sophisticated equipment


Review on Capital Market Days 2003Where do we go in the next 3 to 5 years?


Today many customers give Andritz fullresponsibility for automation and electrification.Due to limited resources, sub-suppliers likeABB, Converteam, Rockwell are involved

Scope of supply for automation andelectrification will further grow when ourreferences are fully accepted by the market

Strong increase of Sales in recent yearsStabilize sales on current level if worldwidemarket recovers

Development of after sales business only limitedsuccess. Very attractive business for flatnesssystems but not for revamps

Increase after sales business with recentstrategy change


Review on Capital Market Days 2003

Where do we go in the next 3 to 5 years?


Our expectations:

Based on the current project list, we expect a solid development of Order Intake for the next few years, which means Sales will be secured at least until 2010

GDP growth in China, India and other Asian countries (like Vietnam) very strong; as a result, investments in infrastructure, housing, energy production, basic supplies and automotive industries will continue to be strong

High raw material cost may deteriorate further growth of steel and stainless steel industry and make technology change in downstream equipment necessary

CMD 2007: Where do we go in the next 3 to 5 years?


Our expectations:

Investment boom for metallurgical equipment in India if government is able to better control conditions in local areas

Engineering activities of the Business Area in India and China will further grow. Eastern Europe or even Russia will probably be our focus for new engineering offices

Increase our sales activities in Russia. Special requirement for EPC-projects necessary where we gained some experience in recent years. Development of infrastructure (Olympic games) and automotive industry will require further modernisation of Russian steel industry

Acquisition of companies and technologies to support our growth strategy for sales and profit



Our expectations:

Market will increasingly require Andritz automation and electrification. Growth in resources difficult potential to get needed resources in Asia

US market seems to recover the Business Area has to re-establish local resources

Get sustained high Sales volume even if the market calms down to a lower level


andritz rolling mills and strip processing...

Documents