philippe joubert pt/pe: strategic directions - alstom · scr swfgd dfgd wfgd alstom positioning on...

1

Notes

Philippe Joubert

PT/PE: Strategic Directions

2

Notes

2

Agenda

Market overview

Strategy & Positioning

Change program status

3

Notes

3

Market drivers

Installed Base Growth ~ linked to GDP

World Real GDP ~ 3% pa

0

500

1000

1500

2000

2500

3000

3500

4000

4500

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04

35

25

15

5

Trillion 2000 USDGW

Installed Base ~ 3% pa

Installed Base Growth ~ linked to GDP

World Real GDP ~ 3% pa

0

500

1000

1500

2000

2500

3000

3500

4000

4500

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04

35

25

15

5

0

500

1000

1500

2000

2500

3000

3500

4000

4500

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04

35

25

15

5

35

25

15

5

Trillion 2000 USDGW

Installed Base ~ 3% pa

1990-2002

2002-2010f

GDP annual growth rates

Percent

-4 -2 0 2 4 6 8 10

World

Europe

NAM

LAM

Rest of Asia

MEA

India

Russia/CIS

China

Source: ALSTOM, EIA-DOE, UDI, Worldbank

4

Notes

4

Electricity consumption

BillionkWh

Electricity Consumption per capita (2003)

0 2 4 6 8 10 12

World

India

MEA

China

LAM

Rest of Asia

Russia/CIS

Europe

NAM

MWh per inhabitant per year

x25:Indian electricityconsumption per capita x25 lower than NAM

0

5 000

10 000

15 000

20 000

1990 2002 2010

Electricity consumption by region

BillionkWh

17

98

28

6

4

Percent of worldconsumption

13

Europe

CISMEA

NAM

LAM

India

China

Ro Asia

15

2010

21

87

30

5

4

15

10

2002

Source: ALSTOM, EIA-DOE

5

Notes

5

0

20

40

60

80

100

120

1990 1995 2000 2005 2010 2015 2020 2025

Market drivers

Source: UDI

15 GW p.a

27 GW p.a

37 GW p.a

64GW p.a

93GW p.a

87GW p.a95 GW p.a

GW

ChinaAsia excluding China

South & Central AmericaMiddle East & Africa

North AmericaEurope

Installed capacity reaching 40 years by region

Source: ALSTOM, UDI

6

Notes

6

Market drivers

Environment

2002 CO2 Emissionsfrom fossil fuel combustion

40%

17%

21%

14%

8%

Power Sector

Industry

Transport

Residential

Other

Source: EIA

7

Notes

7

Market drivers

Deregulation

Source: BD/MI

020406080

100120140160180200220

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

An

nu

al O

rder

s [

GW

/a]

China Customer

Industry

IPP (PPA)

Merchant (no PPA)

Utility

Order Year

8%

39%53%

2004 Share w/o China

(*)

Source: ALSTOM

8

Notes

8

Fuel reserves

Coal availability higher than gas in most regions

Russia/CIS

Europe

Rest of Asia

MiddleEast

Africa

Central & SouthAmerica

China

NorthAmerica

Note :*Ton of oil equivalent

Gas: 10 bn of t.o.e.*

Coal: 10 bn of t.o.e.*

Reserves

Source: ALSTOM, BP

9

Notes

9

Successive Peaks in Fundamentally Growing Market

0

75

150

85 87 89 91 93 95 97 99 01 03 05e 07f 09f

ChinaOceaniaIndiaAsia excl. China & IndiaLatin AmericaNorth AmericaMiddle East & AfricaRussia & CISEurope

Notes: Large GTs, Large Conv STs, ST CC, Nuclear, Hydro Source: ALSTOMOrder Year

An

nu

al O

rder

s[G

W/a

]

US Boom

China Boom

Forecast

Market development Order volumes per region

10

Notes

10

Balance Mix Forecast

Market by technology

0

75

150

85 87 89 91 93 95 97 99 01 03 05e 07f 09f

ST NuclearLarge Conventional STHydroST for CCLarge GT

Order Year

An

nu

al O

rder

s[G

W/a

]

Gas Dominant

Steam Dominant

Balanced Mix

Forecast

Source: ALSTOM

Source: ALSTOM

11

Notes

11

Agenda

Market overview



12

Notes

12

Our key competitive strengths

Technology leadership and ownership

Global reach – customer intimacy

Comprehensive offering

Largest installed base

Leader in Environmental Control Systems

13

Notes

13

Plant demonstrationpartnerships: 6 examples

CFB, Lower cost NT CycloneGob CoalUSADOE / Western Greenbrier90 MW

Ultra Super Crit l COMTES 700°C SteamLignite/CoalGermanyScholven F750 MW

Mercury Mer-CureTM

Coal, PRB, LigniteUSADOE / PacifiCorp, Basin Electric, Reliant Energy, LCRA170-230 MW

We have currently 25 demonstration partnerships with our customers

USC 760°C Boiler & Steam Turbine MatlsConsortiumCoalUSADOE

Oxyfuel CFBCoal, Pet CokeWindsorDOE3 MWth

Chemical AbsorptionCoalEsbjerg, DenmarkElsam/E2 (CASTOR)1 t/h CO2 capture

Working with customers

Making use of Government funds

Focus on environmental technology steps

14

Notes

14

0

20

40

60

80

100

ALSTOM Siemens GE MHI BHEL Doosan Chinese FW B-Hitachi

SNCLavalin

Bechtel* Shaw

Global reach

Estimated power sales by region*

Percent

Note:*Based on 2003-2004 average

Europe

Russia & CIS

MEA

NAM

LAM

Asia Pacific

India

China

Source: Company information, Broker Note

15

Notes

15

ALSTOM has the most extensive product offering

Product Renewable

Player Hydro Others

ALSTOM

GEStrong

focus on Wind

SiemensStrong

focus on Wind

MHIWeak

presence in CFB

All renewable energies

Ranking #3 #1 #1 #1 #2 #1 #1 #1 #1

LargeGT

LargeST

BoilersGene-rators

HRSG HEX ECS PlantNuclear/

Conv. Island

Strong presence Medium presence No presence

16

Notes

16

0

100

200

300

400

500

600

700

800

900

1000

1100

ALSTOM GE Siemens MHI

Nuclear

Steam Plant

Hydro Plant

Gas Plant

ALSTOM has the largest installed base in the industry

OEM’s supplies in worldwidepower plants

GW

Total World = ~4000 GW

Nuclear Plant Conventional Island

Source: UDI - ALSTOM

Note: OEM supplied at least the turbine generator boiler in HRSG in the power train

17

Notes

17

ALSTOM is leader in all ECS market segments

Market shares 2003-04

Environmental Control Systems

0

20

40

60

80

100

SOx NOx(SCR)

NOx(LNB)

PM

ALSTOM

Babcock & Wilcox

B&V

MHI

Hitachi

AE&EFisia

€2.3bn

Others

ALSTOM

Foster Wheeler

Termokimik

Fisia

Lurgi

MHIChyoda (licensee)

ALSTOM

Babcock &Wilcox

Foster Wheeler

Mitsui Babcock

Hitachi

Total NOx 1.0bn€

Others

ALSTOM

Wheelabrator

(Siemens)

SouthernEnvironmental

Fisia

Termokimik

AE&EHamon

€1.0bn

Source: Company information

Estimated market share by product in NAM, Europe, MEA(average 2003/04)

18

Notes

18

Positioning

– Plant Integrator

– Clean Combustion Leader

19

Notes

19

HRSG

Gas TurbineControl Systems

Generator

Steam Turbine

Condenser

Combined-Cycle Power Plant

All core plant components are in-house ALSTOM technology

20

Notes

20

Boiler

Steam Turbine

Generator

Condensing § Feed heating plant

Control system

Electrical BOP

Coal § ash handling

Flue Gas Desulphurisation

Electrostatic dust precipitator

All core plant components are in-house ALSTOM technology

Coal Power Plant

21

Notes

21

Tu

rnke

y/E

PC

Component

Architect Engineers

(A/E)

Our positioning

ALSTOM

A fully fledged plant integrator

22

Notes

22

Plant Integrator example“Lingen and Modugno”

40 MW additional Net Power

Time to completion:

from 27 to 25 months

23

Notes

23

Plant Integrator approach is not only for fullturnkey plants

Power Blocks…

Boiler Island…

Environment Solutions…

Retrofit Solutions…

24

Notes

24

Positioning

– Plant Integrator

– Clean Combustion Leader

25

Notes

25

Clean Combustion Leader

Environment – a market driver

Customer perceptions

ALSTOM positioning

26

Notes

26

Environmental legislation evolution

Lower limits for NOx and SOxand cap & trade for Mercury

US

First regulation on emission limits for SOx, NOx and PM

Europe

First emission limits for SOx, NOx and PM

China

First emission limits (NOx, PM and cap & trade system for SOx)

Lower limits for NOx

1995 2001 2003 2005 2016

Full compliance with 1st set of regulation for all units in all countries

2008

Source: ALSTOM

27

Notes

27

Growing CO2 concern

Kyoto ratification– CO2 trading started in

Europe with booming prices

Non-Kyoto countries launching own CO2 reduction initiatives– Individual State moves in US

Emissions limits bindingSigned Kyoto, no emission limitsNot yet ratified Rejected

Kyoto will necessarily be followed by more stringent global initiatives

Kyoto ratification status

28

Notes

28



Customer statements

ALSTOM positioning

29

Notes

29

Environment: a top priority

0

20

40

60

80

100

US Europe Asia

"Environmental questions are amongst my top 3 operational

issues”

% of

resp-ondents

Environmental issuesviewed as critical at board & CEO level

Fundamental change in customer behaviour

Source: Customer interviews

30

Notes

30

Customer views on CO2

Europe: already a major concern (Kyoto – NAPs)

US customers perceive CO2 as a longer term problem, but views evolving rapidly

0

20

40

60

80

100

US Europe Asia

Short term Mid term Long term

% of resp-ondents

“ In what time horizon do yousee CO2 as an issue for you? ”

CO2 becoming important everywhereSource: Customer interviews

31

Notes

31

Fuel options for the longer term

0

20

40

60

80

100

US Europe Asia

NuclearHydroWindGas*Coal

Note:* US customer sample not representative for gas, hence not conclusive

“ In the longer term, what are yourpreferred fuel options for new

electricity generation? ”

% of resp-ondents

Coal is back

Customers increasingly have diversified fuel approachSource: Customer interviews

32

Notes

32

Environmental compliance increasinglyviewed in broader context

“Would you consider work on environmental compliance separately or combine it with other upgrades?”

0

20

40

60

80

100

US Europe Asia

Depends onspecific case

Combine with otherupgrades

Separately

% of resp-

ondents

Customer trend to portfolio management

Environmental compliance in context of broader plant retrofit/replacement plans

Source: Customer interviews

33

Notes

33



Customer statements

ALSTOM positioning

34

Notes

34

Clean Combustion

Clean Combustion solutions: limiting emissionswhile maintaining power plant economics

Limiting pollutantsproduction

Removing pollutantspost-combustion

Fuel / technology mix

Long term: USCNew power

plants

Installedbase

Retrofit to improve thermal / environmental efficiency

Emissions control equipment

Long-term: CO2 capture systems

Emissions control Back-end equipment

Long-term: CO2 post-combustion capture

35

Notes

35

Energy & Environmental Systems Offering

Selective Catalytic

Reduction(SCR)

Wet Flue GasDesulfurization

(WFGD)

InducedDraft Fans

AirPre-Heater

DryElectrostaticPrecipitator

(DESP)

PulverizedCoal Boiler

Stack

Wet ElectrostaticPrecipitators

(WESP)

Low NOxBurners

Temp Dictates Catalyst Efficiency

Driven by SO3 concentrationIn furnace NOx Dictates SCR Reduction

Gas Temperature DrivesTreated Volume

Boiler Excess Air, TemperatureFurnace Leakage, Boiler Efficiencydictate treated gas volume

Ash characteristics/particle size affects ESP sizing

SO3 concentration, VOC levels, NH3 slipResult in total particulate levels

Pulverisers

36

Notes

36

0 1 2 3

Wet ESP

FF

ESP

LNB

SCR

SWFGD

DFGD

WFGD

ALSTOM positioning on traditional pollutants

2004 market size (Bn Euros)

DeSOx

DeNOx

PM

ALSTOM market share in NAM and Europe

< 40%

< 25%

25%

40%

Emerging market. Mercury

ALSTOM leader in all segmentsSource: ALSTOM

37

Notes

37

0 0.5 1.0 1.5

ALSTOM positioning on retrofit

Average 2003/04 market (Bn Euros)

Boiler

Market share

ST

Generator

HRSG

HEX

25%

35%

15%

10%

15%

ALSTOM is THE leading player in retrofitSource: ALSTOM

38

Notes

38

Competitor mapping – traditional pollutants

Wide product portfolio

ALSTOM: the only player with a global offer

Globalgeneralists

Local specialists

2003-04 ECS orders

€100m

Local player

Limited product portfolio

Global player

ALSTOM

i

Source: ALSTOM

39

Notes

39

CO2

To achieveKyoto targets

Use “Market Mechanisms”: - CDM / JI- ETS

Reduce CO2 emissions

Switch Fuel

Increase Efficiency

Capture & Store CO2

Pre-combustion capture

Post-combustion capture

Oxygen combustion capture

Storage

40

Notes

40

Coal

Air Separation

UnitGASIFIER

IGCC-specificenvironmental

equipment(gas cleaning)

CC Power Block(GT+HRSG+ST)

Traditionalback-end

ECS equipment(SCR, FGD, ESP)

USC

IGCC

In furnace solutionSteam Power Block

(Boiler+ST)

O2

Coal

CO CO

Air

Main pollutants NOx, SOx, PM + CO2

Main pollutants SOx, PM + CO2

Both IGCC and USC need clean-up for traditional pollutants, but very different processes

IGCC is an emerging technology …Source: ALSTOM

IGCC and USC technology

41

Notes

41

USC & IGCCEmissions comparison

0,00

0,10

0,20

0,30

0,40

0,50

0,60

Gra

m/k

wh

PC IGCC

Dust emissions

PC USC

FutureIGCC Future

Currently, better environmental performance for USC

Long-term, comparable very low IGCC/USC emissionspost clean-up

PM* SOx* NOx*

0

1

2

3

4

Gra

m/k

wh

PC IGCC

NOx emissions

PC Today

PC Future

IGCC Today

IGCC Future

Coal 1980’s

0

1

2

3

4

5

6

Gra

m/k

wh

SO2 emissions

PC IGCC

PC Future IGCC Future

Source: ALSTOM

42

Notes

42

Only player with a global,comprehensive offer

Strong player inthe retrofit market


CleanCombustion

Specialist

0

50

100

NOx(SCR)

NOx(LNB)

SOx PM

Emissions control market shares

# 1 # 1 # 1 # 1ALSTOMPosition

Emissions control product offering

0

50

100

ST UB

Retrofit market shares

# 1 # 1ALSTOMPosition

Market leader forenvironmental systems

and the combustion

Local player

Limited portfolio

Global player

Wide portfolio

ALSTOM

Today THE leading provider of competitive clean combustion solutions

0

5

10

15

20

25

30

01/0

2

02/03

03/04

04/0

5

05/06

06/07

excl. China

incl. China

ALSTOM Boilers market share

43

Notes

43

Jaenschwalde HP Turbine Retrofits– Impact on CO2 Emissions

CO2-Reduction per unit [t/a] 110.000total 8 units [t/a] 880.000

Highly attractiveROI < 3 Year

(at 20 €/t € 17,600,000)Plus NOx-Reduction from ≈500 mg/Nm3 to < 200 mg/Nm3

Plus further potential with co-firing biomass

44

Notes

44

Our Energy and Environment Business

Today we provide the cleanest air solutions– for new plants

– for the installed base


45

Notes

45

Agenda

Market overview



46

Notes

46

From Problem to Solution

47

Notes

47

Increase the intake of profitable orders

Improve our Project Management

Optimise our cost base

Back to Basics

3 priorities

48

Notes

48

Project management

Launched Early Warning System

Launched initiative to harmonize claim management

Launched workshops improving project planning

Assessment, best practices exchanges and specific development programs of Community done

Projects at the heart of our Business

49

Notes

49

Optimise our cost base

Categories Description

Sourcing

Overheads

Industrial footprint

Product Cost

Coordinated sourcing activities at sector level ensuring transparency and volume effectsMove to LLCC

Adapt the S&A overheads to the business size and needsRestructuring

Optimize industrial base by restructuringMove to LLCCDiversify the manufacturing base to avoid strong€ currency dependence

Different Cost Killing programs driven by the businesses, looking at redesigns and process improvement solutions leading to competitive products

50

Notes

50

Headcount evolution

Sept 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08

Europe

North America

South America

Asia

PT/PE Employees by region64%

14%

7%

15%

22,000

50%

13%

7%

30%

19,500

51

Notes

51

…September 2005…

Move the cost base

China

March 2005…

First Steam Turbine componentsdelivered by ALSTOM BeizhongPower Joint Venture (Beijing) in February 2006

Tianjin ALSTOM Hydro is owned99% by ALSTOM since August 2005

Turbomachines Engineering in Wuhan

...March 2006

52

Notes

52

…September 2005

India

Move the cost base

Baroda implementation plan on schedule

Engineering in Delhi

Bangalore Global R&D center with Infosys

Boiler manufacturing in Shahabad & Durgapur

March 2005…

...March 2006

53

Notes

53

Our new global sourcing organizationwill accelerate ourmove to low costcountries

Turbomachines - Orders placed

0%

20%

40%

60%

80%

100%

FY05a

FY06b

FY06f

FY07b

FY08p

FY09p

Rest of the World

Western Europe

Optimise our sourcing

Sourcing Sector VP

Sourcing Sector VP

KCM 1

KCM 2

Cross businessKCM

Shared process for supplier qualif.+ dvt

Controller

HR

Supply intelligence

East. Europe Head

India Head

China Head

Brazil Head

Sourcing business VP1




Local procurement 2

Local procurement 1

Local procurement 3

PT/PE mainly sourcesin Western Europe

54

Notes

54

Main orders 2005/06

AberthawSTR & ECS

Sohar1000 MW

Blue Waters200 MW

Oskarshamn1450 MW

Afam VI215 MW

Aluar II465 MW

Castejon II400 MW

Neurath1100 MW

ElektrenaiECS

Heimifeng1200 MW

SWIS 2300 MW

Wagerup350 MW

Dubal Ext.430 MW

PegoECS

Belews CreekECS

Subansiri2000 MW

Braemar420 MW

Ling Ao Phase 22100 MW

Comanche 3800 MW

JK Spruce 2750 MW

Modugno800 MW

55

Notes

55

Orders

PT/PE Sector - Comparables

Sales

Operating margin

H1 04/05 H1 05/06

H1 04/05 H1 05/06

H1 04/05 H1 05/06

56

Notes

56

Conclusion

57

Notes

5757

In a growing and changing Market,

ALSTOM Power achieved a major turnaround and

is now ideally repositioned to capture the growth

profitably.

58

Notes

www.alstom.com

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