rs-august-2016 jefferies-conference.ppt [kompatibilitätsmodus] · 1 andritz group overview 2...

Company presentation August 2016ANDRITZ GROUP

1 ANDRITZ GROUP overview

2 Business areas: market update

3 Outlook, Group strategy and long-term goals

Contents

Results for Q2/H1 2016

KEY FINANCIAL FIGURES H1 2016 VS. 2015

3

Unit* H1 2016 2015

Order intake MEUR 2,566.4 6,017.7

Order backlog (as of end of period) MEUR 7,076.3 7,324.2

Sales MEUR 2,761.2 6,377.2

EBITA MEUR 183.0 429.0

Net income (including non-controlling interests) MEUR 120.3 270.4

Employees (as of end of period; without apprentices) - 25,737 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/salescompanies worldwide

Sales by region 2015 (%)

H1 2016 2015 2014

Europe 38 38 41

North America 21 19 16

South America 14 14 15

Asia (ex. China) 11 13 11

China 11 12 13

Others* 5 4 4

* Africa and Australia

Europe & North America: 57%

Emerging markets: 43%

6,377MEUR

* MEUR = million euro

The ANDRITZ GROUPOverview

Well-balanced geographical exposure

Company presentation August 2016

4

Company profileWorldwide leading position in four business areas

Product offerings: electromechanical equipment for hydro-power plants (turbines, generators); pumps; turbo generators

30%*

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

35%* 25%* 10%*

Product offerings: presses formetalforming (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 pro-duction of animal feed and biomass pellets

Note: figures above relate to the FY 2015* Average share of ANDRITZ GROUP’s total order intake

Order intake:

1,719MEUR

Sales:

1,835MEUR

Order intake:

2,264MEUR

Sales:

2,196MEUR

Order intake:

1,439MEUR

Sales:

1,718MEUR

Order intake:

597MEUR

Sales:

628MEUR


Strengthening of market positionGrowth through organic expansion and acquisitions

Acquisitions by business area since 1990 Acquisitions by business area since 1990

1,744

2,710

3,2833,610

3,1983,554

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)

Compound Annual Growth Rate (CAGR) of Group sales 2005-2015: +14% p. a. (thereof approximately half organic growth)2011 Tristar Industries

2011 Asselin-Thibeau2012 AES2013 MeWa2015 Euroslot

METALS1997 Sundwig1998 Thermtec2000 Kohler2002 SELAS SAS Furnace Div.2004 Kaiser2005 Lynson2008 Maerz2012 Bricmont2012 Soutec2013 Schuler (> 95%)2013 FBB Engineering2014 Herr-Voss Stamco2016 Yadon (51%)2016 AWEBA

SEPARATION1992 TCW Engineering1995 Jesma-Matador1996 Guinard2000 UMT2002 3SYS2004 Bird Machine2004 NETZSCH Filtration2004 Fluid Bed Systems2005 Lenser Filtration2006 CONTEC Decanter2009 Delkor Capital Equipment2009 Frautech2010 KMPT2012 Gouda2013 Shende Machinery

HYDRO2006 VA TECH HYDRO2007 Tigép2008 GE Hydro business2008 GEHI (JV)2010 Precision Machine2010 Hammerfest Strøm (59%)2010 Ritz2011 Hemicycle Controls

PULP & PAPER1990 Sprout-Bauer1992 Durametal1994 Kone Wood1998 Kvaerner Hymac1999 Winberg2000 Ahlstrom Machinery2000 Lamb Baling Line2000 Voith Andritz Tissue LLC (JV)2002 ABB Drying2003 IDEAS Simulation 2003 Acutest Oy2003 Fiedler2004 EMS (JV)2005 Cybermetrics2005 Universal Dynamics Group2006 Küsters2006 Carbona2006 Pilão2007 Bachofen + Meier2007 Sindus2008 Kufferath2009 Rollteck2010 Rieter Perfojet2010 DMT/Biax2011 AE&E Austria2011 Iggesund Tools

5 Company presentation August 2016

1 ANDRITZ GROUP overview



Contents


SALES (MEUR)

SALES by region (%)

7

Group sales down with decline in all four business areas

H1 2016 H1 2015

Europe 38% 37%

North America 21% 19%

South America 14% 15%

China 11% 13%

Asia (without China) 11% 12%

Others* 5% 4%

Well-balanced geographical exposure

H1 2015 H1 2016 * Africa and Australia

SALES by business area (MEUR)


Europe/North America: 59%

2,761MEUR

H1 2016 H1 2015 +/- Q2 2016 Q2 2015 +/-

HYDRO 807 866 -7% 439 458 -4%

PULP & PAPER 980 1,044 -6% 523 563 -7%

METALS 704 796 -12% 371 419 -12%

SEPARATION 270 299 -10% 143 161 -11%

3,006

2,761

Q2:1,601

Q1:1,405

Q2:1,476

Q1:1,286

-8%

-8%

-9%


ORDER INTAKE by business area (MEUR)

ORDER INTAKE by region (%)

ORDER INTAKE (MEUR)

8

H1 2016 H1 2015

Europe 42% 44%

China 19% 11%

North America 19% 21%

Asia (without China) 10% 12%

South America 7% 10%

Others* 3% 2%

Stablegeographical split

* Africa and Australia


Europe/North America: 61%

2,566MEUR

Increase of Group order intake in Q2 2016, attributable to METALS - Schuler

H1 2015 H1 2016

-13%

2,580 2,566

Q2:1,149

Q1:1,431

Q2:1,319

Q1:1,247

-1%

+15%

H1 2016 H1 2015 +/- Q2 2016 Q2 2015 +/-

HYDRO 591 795 -26% 339 348 -2%

PULP & PAPER 916 909 +1% 370 447 -17%

METALS 769 595 +29% 469 211 +123%

SEPARATION 290 281 +3% 140 145 -3%


9

Order backlog by business area (as of end of period in MEUR)

H1 2016 H1 2015 +/-

HYDRO 3,325 3,750 -11%

PULP & PAPER 1,898 1,809 +5%

METALS 1,488 1,417 +5%

SEPARATION 366 373 -2%

Group order backlog remains at good level

Order backlog (as of end of period in MEUR)

-4%

2013:7,389

HYDRO and PULP & PAPER account for 74% of total backlog

HYDRO:47%

PULP & PAPER:27%

METALS:21%

SEPARATION:5%

H1 2016:7,076

2014:7,511

H1 2015:7,349

-3%

2015:7,324


EBITA (MEUR)

EBITA margin (%)

10

Earnings and profitability Satisfactory development in H1 2016

Q2 2016: EBITA amounted to 99.1 MEUR (-11.1% vs. Q2 2015: 111.5 MEUR); EBITA margin, at 6.7%,

below level of last year (Q2 2015: 7.0%).

H1 2016: Despite decline in sales, EBITA, at 183.0 MEUR practically reached level of H1 2015 (-1.0%;

184.9 MEUR). Thus, profitability for H1 2016 increased to 6.6%.

Q2 2016: EBITA amounted to 99.1 MEUR (-11.1% vs. Q2 2015: 111.5 MEUR); EBITA margin, at 6.7%,

below level of last year (Q2 2015: 7.0%).

H1 2016: Despite decline in sales, EBITA, at 183.0 MEUR practically reached level of H1 2015 (-1.0%;

184.9 MEUR). Thus, profitability for H1 2016 increased to 6.6%.

Q2 20157.0%

Q2 20166.7%

H1 2015 H1 2016

184.9 183.0

Q2:111.5

Q1:73.4

Q2:99.1

Q1:83.9

-1%

-11%

+14%H1 20156.2%

H1 20166.6%


11

Key figures Q2/H1 2016 at a glance

Unit H1 2016 H1 2015* +/- Q2 2016 Q2 2015* +/- 2015

Order intake MEUR 2,566.4 2,580.0 -0.5% 1,319.0 1,149.4 +14.8% 6,017.7

Order backlog (as of end of period) MEUR 7,076.3 7,349.0 -3.7% 7,076.3 7,349.0 -3.7% 7,324.2

Sales MEUR 2,761.2 3,005.6 -8.1% 1,475.6 1,601.3 -7.8% 6,377.2

EBITDA MEUR 229.6 230.9 -0.6% 122.9 134.8 -8.8% 534.7

EBITA MEUR 183.0 184.9 -1.0% 99.1 111.5 -11.1% 429.0

EBIT MEUR 163.0 159.6 +2.1% 88.8 98.1 -9.5% 369.1

EBT MEUR 171.8 166.4 +3.2% 96.9 103.8 -6.6% 376.4

Financial result MEUR 8.9 6.7 +32.8% 8.1 5.6 +44.6% 7.3

Net income (including non-controlling interests)

MEUR 120.3 115.9 +3.8% 67.7 72.1 -6.1% 270.4

Cash flow from operating activities MEUR 200.6 -7.8 +2,671.8% 33.1 -45.0 +173.6% 179.4

Capital expenditure MEUR 44.8 36.3 +23.4% 28.3 15.5 +82.6% 101.4

Equity ratio % 19.8 18.9 - 19.8 18.9 - 21.0

Liquid funds MEUR 1,358.2 1,363.5 -0.4% 1,358.2 1,363.5 -0.4% 1,449.4

Net liquidity MEUR 863.0 901.3 -4.2% 863.0 901.3 -4.2% 984.0

Net working capital MEUR -232.2 -436.4 +46.8% -232.2 -436.4 +46.8% -182.1

EBITDA margin % 8.3 7.7 - 8.3 8.4 - 8.4

EBITA margin % 6.6 6.2 - 6.7 7.0 - 6.7

EBIT margin % 5.9 5.3 - 6.0 6.1 - 5.8

Employees (as of end of period; without apprentices)

- 25,737 24,992 +3.0% 25,737 24,992 +3.0% 24,508

* Restated

Lower customer advances and

payments to sub-suppliers lead to

increase in net working capital

Strong development of operating cash flow

mainly due to changes in net working capital


1ANDRITZ GROUP overview



Contents


HYDRO: Project and investment activity subdued,however selective larger projects awarded

13

MODERNIZATIONS/REHABILITATIONSProjects postponed until further notice due to unchanged low electricity and energy prices

NEW HYDROPOWER PLANTSSome new projects in advanced planning phase

SMALL-SCALE HYDROPOWER AND PUMPSGood project activity

COMPETITIONChallenging market conditions for some selective projects

▲ Hydropower as renewable energy source – the Limmernboden reservoir in Switzerland

Long-term average growth

potential:

3-4% p.a.


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

14

Source: Hydropower & Dams World Atlas, 2015

37%

63%

1,941TWh/year

24%

76%

2,803TWh/year

7%

93%

1,640TWh/year

49%51%

1,207TWh/year

39%

61%

2,720TWh/year

China

13%

87%

5,744TWh/year

Asia (ex. China)

■ Not developed hydropower potential (%)

■ Developed hydropower generation (%)

Technically feasible hydropower potential : ~ 16,000 TWh/yearExisting hydropower generation: ~ 3,930 TWh/year

Europe

Africa

South America

North America


PULP & PAPERSolid project and investment activity

15

▲ Eldorado pulp mill, Brazil.

MODERNIZATION AND GREENFIELDSolid project and investment activity for modernization/refurbishment projects; no contracts were awarded for greenfield pulp mills in Q2 2016

BIOMASS/POWER BOILERSUnchanged subdued investment activity, especially for power boilers

COMPETITIONStable competitive environment


potential:

2-3% p.a.


16

Source: PPPC reports (09/2015); Excludes Sulphite and UKP market pulp; Fibria (2016).

Global market pulp demand Hardwood will continue to increase faster than softwood

in million tons

in million tons in million tons

in million tons


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

Arauco – Bio-Bio 1.6 2019

17

* 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 2019Veracel – Eunápolis 1.8 2020 et seq.

Braxel – Peixes 2.0 2020 et seq.CRPE Holding S.A –Ribas do Rio Pardo 2.2 2020 et seq.Suzano – Imperatriz 1.3 2020 et seq.

Fibria – Aracruz 1.7 2020 et seq.

Owner Capacity/a.* Planned start-upPortucel 1.5 2020 et seq.

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

Finnpulp – Kuopio 1.2 2019

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

Guangxi Jingui –Qinzhou City 1.2 2020 et seq.

PULP & PAPERGood project pipeline for greenfield pulp mills

Russia?


METALS: Continued moderate market, howeverincreasing project activity in metalforming

18

▲ The new Performer S produces laminations for electric motors and generators with diameters of 80 to 1,800 millimeters.

METALFORMINGSlow market continued, however some selective order awards from automotive OEMs in Q2 2016

STAINLESS STEELUnchanged low project activity, only selective investments in emerging markets

COMPETITIONStable competition at challenging level

ALUMINUMProject and investment activity below the favorable level of the previous year


potential:

4-5% p.a.


19

SEPARATIONMixed market development continued

MINING AND MINERALSSatisfactory project activity

FEED AND BIOMASS PELLETINGSolid project activity

FOODLow project activity

ENVIRONMENT AND CHEMICALSSatisfactory investment activity

COMPETITIONVery fragmented market with global and regional competitors

▲ The new ANDRITZ SEPARATION service center in Krefeld serves solid/liquid separation customers in the German and neighboring markets.


potential:

2-3% p.a.


1ANDRITZ GROUP overview



Contents



21

Outlook for remainder of 2016Stable market conditions

Project activity for modernizations and new hydropower stations to continue at subdued level; some medium-sized projects are expected to be awarded in the near future; satisfactory market activity for pumps to continue

Good project activity for modernizations and capacity increases to continue, however, below the extraordinary high level of 2015

Unchanged slow market, however normalization of project activity in metalformingexpected

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

ANDRITZ GROUP 2016E vs. 2015:

- Decrease of Group sales

- Solid development of profitability

ANDRITZ GROUP 2016E vs. 2015:

- Decrease of Group sales

- Solid development of profitability


Global Footprint Balanced global presence

Emerging markets expansion

Further shift of manufacturingcapacities to emerging markets

goal of 50% by 2017 vs. 40% in 2015

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: IoT, 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 marketleader

22 Company presentation August 2016

Thank you!

Appendix: Financials

HYDRO Unit H1 2016 H1 2015 +/- Q2 2016 Q2 2015 +/- 2015

Order intake MEUR 591.4 794.7 -25.6% 339.4 347.7 -2.4% 1,718.7

Order backlog (as of end of period) MEUR 3,324.8 3,750.1 -11.3% 3,324.8 3,750.1 -11.3% 3,640.9

Sales MEUR 807.3 866.3 -6.8% 439.4 458.4 -4.1% 1,834.8

EBITDA MEUR 71.8 73.8 -2.7% 40.3 45.8 -12.0% 183.6

EBITDA margin % 8.9 8.5 - 9.2 10.0 - 10.0

EBITA MEUR 56.0 58.0 -3.4% 32.3 38.1 -15.2% 145.3

EBITA margin % 6.9 6.7 - 7.4 8.3 - 7.9

Employees (as of end of period; without apprentices) - 7,683 8,588 -10.5% 7,683 8,588 -10.5% 8,230

25

HYDRO Difficult market conditions impact order intake in H1 2016

Order intake in H1 2016 significantly down due to

difficult market conditions; challenging competition on

some selective projects

Satisfactory development of earnings and margin despite decline in sales

Sales slightly down

PULP & PAPER Unit H1 2016 H1 2015 +/- Q2 2016 Q2 2015 +/- 2015

Order intake MEUR 916.0 908.9 +0.8% 370.4 446.5 -17.0% 2,263.9

Order backlog (as of end of period) MEUR 1,898.4 1,809.0 +4.9% 1,898.4 1,809.0 +4.9% 1,998.6

Sales MEUR 980.4 1,043.9 -6.1% 522.8 563.4 -7.2% 2,196.3

EBITDA MEUR 90.4 81.7 +10.6% 44.0 48.1 -8.5% 214.8

EBITDA margin % 9.2 7.8 - 8.4 8.5 - 9.8

EBITA MEUR 78.2 69.9 +11.9% 38.0 42.1 -9.7% 190.9

EBITA margin % 8.0 6.7 - 7.3 7.5 - 8.7

Employees (as of end of period; without apprentices) - 7,638 7,277 +5.0% 7,638 7,277 +5.0% 7,324

26

PULP & PAPER Solid business development

Sales down mainly due to lower project-related sales

generation in capital business

Satisfactory development of earnings and margin

in H1 2016; solid development in Q2 2016

Order intake significantly down compared to Q2 2015 which included a

large pulp mill order

METALS Unit H1 2016 H1 2015 +/- Q2 2016 Q2 2015 +/- 2015

Order intake MEUR 768.7 595.4 +29.1% 469.4 210.5 +123.0% 1,438.6

Order backlog (as of end of period) MEUR 1,487.5 1,417.4 +4.9% 1,487.5 1,417.4 +4.9% 1,332.5

Sales MEUR 703.6 796.1 -11.6% 370.6 419.0 -11.6% 1,718.1

EBITDA MEUR 53.1 60.4 -12.1% 29.2 32.2 -9.3% 104.8

EBITDA margin % 7.5 7.6 - 7.9 7.7 - 6.1

EBITA MEUR 38.8 47.2 -17.8% 21.5 25.4 -15.4% 70.5

EBITA margin % 5.5 5.9 - 5.8 6.1 - 4.1

Employees (as of end of period; without apprentices) - 7,647 6,317 +21.1% 7,647 6,317 +21.1% 6,160

27

METALS Order intake significantly up, sales, earnings and margin down

Doubling of orders in Q2 2016 compared to the very low figure for the previous

year’s reference period

Earnings and profitability down mainly due to lower

sales generation

Increase mainly due to acquisition of Yadon (991)

and AWEBA (580)

SEPARATION Unit H1 2016 H1 2015 +/- Q2 2016 Q2 2015 +/- 2015

Order intake MEUR 290.3 281.0 +3.3% 139.8 144.7 -3.4% 596.5

Order backlog (as of end of period) MEUR 365.6 372.5 -1.9% 365.6 372.5 -1.9% 352.2

Sales MEUR 269.9 299.3 -9.8% 142.8 160.5 -11.0% 628.0

EBITDA MEUR 14.3 15.0 -4.7% 9.4 8.7 +8.0% 31.5

EBITDA margin % 5.3 5.0 - 6.6 5.4 - 5.0

EBITA MEUR 10.0 9.8 +2.0% 7.3 5.9 +23.7% 22.3

EBITA margin % 3.7 3.3 - 5.1 3.7 - 3.6

Employees (as of end of period; without apprentices) - 2,769 2,810 -1.5% 2,769 2,810 -1.5% 2,794

28

SEPARATION Some profitability improvement in Q2 2016

Order intake practically unchanged compared to

Q2 2015; stable development in Q2

2016

Improved earnings and margin development, however still not at a

satisfactory level

Sales significantly down

Certain statements contained in this presentation constitute “forward-looking statements.” These statements, which contain the words “believe”, “intend”, “expect” and words of similar meaning, reflect management’s beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially.

As a result, readers are cautioned not to place undue reliance on such forward-looking statements. The company disclaims any obligation to publicly announce the result of any revisions to the forward-looking statements made herein, except where it would be required to do so under applicable law.

All figures according to IFRS.

Due to the utilization of automatic calculation programs, differences can arise in the addition of rounded totals and percentages.

MEUR = million euros.

Disclaimer

29 Company presentation July 2016

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