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Capital Market Day 2013, GermanyANDRITZ GROUP
Contents
Major developments since last Capital Market Day
Update on market and outlook for the business areas
Capital Market Days: goals and summary
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner2
3 Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Acquisition of ANDRITZ Gouda (1) Complementing drying business of SEPARATION
Products and services:Drying equipment, mainly drum dryers and paddle dryers, for food industry (e.g. baby food), chemical industry, and municipalities
Strategic fit:Complementation and extension of ANDRITZ SEPARATIONʼs drying portfolio
Locations:Netherlands (headquarters), Germany, France, China, Singapore, Indonesia, and USA
Number of employees:~140
Annual sales:~40 MEUR
◄ Drum dryer of ANDRITZ Gouda
4 Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
ANDRITZ Gouda (2)Sales by region and important customers
Important customers: Danone Heinz Petrobras PWT/Ambarli Emsland Nestlé National Starch
Tate & Lyle Unilever BASF Cargill Veolia Roquette Frères
▲ Paddle dryer of ANDRITZ Gouda
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4
12
9
8
Europe
North America
South America
Asia (without China)
China
Others
Sales byregion 2012
in %
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Acquisition of majority stake in Shende MachineryStrengthening of pelleting business, especially in Asia
Products and services:Systems for mid-size animal/aquatic feed and biomass pelleting
Strategic fit:Strengthening of ANDRITZ SEPARATIONʼs portfolio and enhancement of position in China and other Asian countries
Locations:Netherlands (headquarters), Germany, France, China, Singapore, Indonesia, and USA
Number of employees:~120
Annual sales:~20 MEUR
▲ Pellet mill of Shende Machinery
▲ Dies and rolls for pellet mill
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Organic and external growth ANDRITZ GROUP since 2005
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2005
ANDRITZGROUP
Sales(MEUR)
2012
ANDRITZ GROUP sales 2005:1,744 MEUR
Organic growth ofGroup companies
2005: 1,149
ANDRITZ GROUP sales 2012: 5,177 MEUR
Acquisitions:1,525
Organic growth of acquisitions: 759
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Where has the growth come from?Growth trends by business area
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HYDRO:
Organic growth plus market share gains in selective markets (Europe, North America)
PULP & PAPER:
Growth in line with market; 25% weight of large-scale contracts in 2011, now <10%
METALS:
Since 2009, the “old” ANDRITZ METALS segment has stayed at low post-crisis level (except furnaces),
strong organic growth of Schuler with slight market share gains
SEPARATION:
Most of growth organically driven; both segments (solid/liquid separation, feed and biofuel) contributed to that
growth
Contents
Major developments since last Capital Market Day
Update on market and outlook for the business areas
Capital Market Days: goals and summary
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner8
MARKETLarge-scale projects: Solid demand for rehabilitation and modernization to continue due to age of installed base Some greenfield hydropower projects in emerging markets (Africa, South America)
Small-scale projects:Good activity to continue, especially in emerging markets (high energy demand, low capex needs)
Pumps:Demand for special pumps to remain high (irrigation, water transport, etc.)
COMPETITION Stable at challenging level Asian competitors?
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Submersible motor pump for drainage purposes iniron ore mines. The pumps are 13.4 meters long
and have an outer diameter of just 80 centimeters.A complete pump unit weighs 9.5 tons. ►
HYDROGlobal market volume substantially below peak levels
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Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
HYDROCumulative installed hydropower capacity (GW)
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1,0581,017
880850827804785
1,3621,3201,2801,2371,2001,1671,1281,093
913984947
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
CAGR 2003-2005: 2.6% CAGR 2006-2012: 3.7% CAGR 2003-2012: 3.4% CAGR 2013E-2020E: 3.2% CAGR 2003-2020E: 3.3%
Strong growth from 2006 onwards
2013-2020: expected average annual growth of 3.2%
Source: GlobalData
Units older than 30 years (in % of installed capacity in operation)
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
HYDROFavorable long-term potential for rehabilitation/modernization
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Source: ANDRITZ; Platts – UDI
55% of installed capacity older than 30 years!
%
Installed hydropower capacity 2012 (1,058 GW) by region in %
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
HYDRO: based on 55% share of capacity being olderthan 30 years, it would take 58 years to modernize this fleet
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Source: GlobalData, Hydropower&Dams World Atlas
Todayʼs annual 10 GW rehab rate is not sufficient to stop aging of existing fleet!
MARKETPulp: Investments in greenfield pulp mills to continue, mid-term some order awards in South America
and Asia Modernization projects to increase efficiency and profitability of existing mills Green energy investments Regionally different development for biomass pelleting projects
Paper and packaging:Solid demand for tissue and container board machines
Nonwoven and plastic film:Reasonable project activity
Service:Good potential to grow organically and by acquisitions
COMPETITION Stiff price competition for greenfield projects to continue Challenging environment for brownfield projects Consequences of Metso split-up?
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
PULP & PAPERReasonable project activity, but fierce competition
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▲ ANDRITZ will deliver a biomass boiler plant to the new Värtaverket combined heat and power plant in Stockholm, Sweden. The plant will largely replace fossil-based fuels like coal and oil with eco-friendly biomass.
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner14
World consumption of papermaking fiber raw materials has grown from 289 million t in 1995 to 406 million t in 2011 ( annual average growth rate: 2.1%)
The consumption is forecast to grow by an annual average of 1.6% in the long term, reaching 510 million t by 2025:
World consumption of papermaking fiber through 2025Expected growth of 1.6% per year
Consumption of .. 2011 (million t)
2025E(million t) CAGR
Recoveredpaper 223 305 +2.3%
Chemical wood pulp 129 154 +1.3%
Mechanical and semi-chemical wood pulps 37 36 -0.3%
Non-wood pulps 17 15 -0.8%
Source: Pöyry
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-270 1,282 914 2,532 978 1,368 3,445 236 67 1,559 1,750 2,270 4,295
132,452 133,734 134,648 137,180 138,158 139,526 143,207 143,207 143,274 144,833 146,583 148,853 153,148
+/- ktons
Despite new capacities built, net capacity worldwide has only marginally increased
Total ktons
ktons/aDevelopment of net global chemical pulp production capacity (market pulp + integrated pulp)
Chemical pulp production capacity:
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
PULP & PAPERPlanned major projects > 1 million tons
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▲ In addition to the existing mill in Três Lagoas (photo), Brazil, Fibria plans to erect a second market pulp line. Eldorado Brasil announced two additional pulp lines in Três Lagoas
* In million t; source: Pöyry
Country Owner ProjectCapacity/
year*Planned start-up
Brazil Klabin Ortigueira 1.1 2015
Brazil Eldorado Três Lagoas 4.0 2017 et seq
Brazil Fibria Três Lagoas 1.5 2017 et seq
Brazil Fibria Aracruz 1.5 2017 et seq
Brazil Veracel Eunápolis 1.5 2017 et seq
Brazil Brasileira de Celulose Peixes 1.5 2017 et seq
Brazil Suzano Imperatriz 1.3 2017 et seq
Brazil Portucel Brazil - 1.3 2017 et seq
Chile Arauco Bio-Bio 1.6 2017 et seq
China Guangxi Jingui Qinzhou City 1.2 2017 et seq
Indonesia Oki Pulp & Paper Mills Palembang 2.0 2017 et seq
Mozambique Portucel Mozambique - 1.3 2017 et seq
Fibria, Brazil
1,250,000 t/a; start-up 2009
Botnia, Uruguay
1,000,000 t/a; start-up 2007
Veracel Celulose, Brazil
900,000 t/a; start-up 2005
Aracruz fiberline C, Brazil
700,000 t/a; start-up 2002
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Each project enhances our reputation (1)
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Wood-yard Cooking Washers Bleach
plantPulp dryer
ANDRITZ scopeof supply
Balingline Evaps Recov.
boilerWL
plant
Wood-yard Cooking Washers Bleach
plantPulp dryer
Balingline Evaps Recov.
boilerWL
plant
Hunan Tiger Forest & Paper Group, China
400,000 t/a; start-up 2008Wood-yard Cooking Washers Bleach
plantPulp dryer
Balingline Evaps Recov.
boilerWL
plant
Wood-yard Cooking Washers Bleach
plantPulp dryer
Balingline Evaps Recov.
boilerWL
plant
CMPC Santa Fe, Chile
780,000 t/a; start-up 2006Wood-yard Cooking Washers Bleach
plantPulp dryer
Balingline Evaps Recov.
boilerWL
plant
Wood-yard Cooking Washers Bleach
plantPulp dryer
Balingline Evaps Recov.
boilerWL
plant
Eldorado Celulose e Papel, Brazil
1,600,000 t/a; start-up 2012
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Each project enhances our reputation (2)
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ANDRITZ scopeof supply
Zhanjiang Chenming Paper Group, China
700,000 t/a; start-up 2011Wood-yard Cooking Washers Bleach
plantPulp dryer
Balingline Evaps Recov.
boilerWL
plant
Wood-yard Cooking Washers Oxygen
delignifac. ScreeningBleachplant
Pulpdryer
Balingline Evaps Recov.
boilerWL
plant
Montes del Plata, Uruguay
1,600,000 t/a; start-up delayed beyond Q3 2013Wood-yard Cooking Washers Oxygen
delignifac. ScreeningBleachplant
Pulpdryer
Balingline Evaps Recov.
boilerWL
plant
… and now we are working on …
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner19
Update on pulp mill project in Uruguay
~ 95% of project finished
Customer published in September that start-up of the mill is further delayed beyond Q3 2013
Additional provisions likely if difficult labor situation on site continues
When this contract was signed two years ago, it had all the ingredients for success: ANDRITZ successfully executed a similar project in good cooperation with owner (Fray Bentos pulp mill:
successful start-up in 2007): Same country Same sub-suppliers Same capacity
Difference is only related to labor-related strikes on site, which are impacting all suppliers and owners
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ANDRITZ and EPC/large-scale contracts
EPC contracts come inherently with generally manageable, but ultimately not fully avoidable risks
ANDRITZ will limit EPC contracts to divisions where EPC scope offers superior value to customers customers that are willing to pay fair price for such superior value countries with good prospects for repeat orders
In addition, ANDRITZ will continue to offer alternative supply structures such as open book, third-party general contractor etc. in circumstances, where the above mentioned criteria do not apply
In the aggregate, EPC sales are not expected to exceed 15-20 % of total sales
MARKETMetalforming: Automotive demand to slow down from record levels of past years; regionally different
development: Europe ex Germany weak, Asia and South America good Stable demand from other industries
Stainless steel:Investment activity to remain at very low level, no big capex plans by customers
Carbon steel:Unchanged slow market; some early signs of recovery?
Furnaces: Good demand to continue
COMPETITION Stable at challenging level Depreciation of Yen to benefit Japanese
competitors?
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
METALSGood activity in furnaces, low in carbon and stainless
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▲ Schuler successfully started up a 1,600 ton servo press for Miele, Germany. Miele increased the output by up to 50% with the new press.
Core competence Schuler:press shop equipment
Core competence ANDRITZ METALS:processing lines for the production of
steel and aluminum strips
METALSEntire process chain from hot rolled strip to finished parts
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part handlingformingblankingcoatingheat treatmentpicklingrolling
Total flat strip mill products in million metric tons
Share of consumption of flat strip mill products by industry in Europe 2008-2012 (in %)
Consumption of flat strip mill products Car industry with the largest share
Source: Eurofer
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2010 2011 2012
8490
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MARKETMunicipalities:Investment activity at reasonable levels
Industries: Reasonable demand in food processing Low project activity in mining, minerals, and chemical industries
Animal feed:Continuing at solid level
Biomass pelleting:Good demand to continue
ANDRITZ’s product issues expected to be resolved in Q1 2014 at the latest
COMPETITIONChallenging with many local competitors
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
SEPARATIONSlow market to continue
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▲ Biomass torrefaction pilot plant in Frohnleiten, Austria. The energy content of torrefied biomass is 20% higher than that of white wood pellets.
Contents
Foto
: BM
W A
G/M
artin
Klin
dtw
orth
Major developments since last Capital Market Day
Update on market and outlook for the business areas
Capital Market Days: goals and summary
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner25
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Sales: 3.0 bn. EUR
Share ofrenewable
energy sales> 50%
4.0/4.5 bn. EUR 5.0 bn. EUR
EBITAmargin:
7.0%(factual6.5%)
7.0%(factual5.1%*)
7.0% over the cycle: Goal achieved in 2010 + 2011 (each 7.2%) Goal almost achieved in 2012 (6.9%) Average 2010-2012: 7.1%
Dividend:~40%payoutratio
~50%payoutratio
~50% payoutratio
~50% payoutratio
2007 2008 2009 2010 2011 2012
Goal achieved Goal not achieved Goal pending
Review of Capital Market Daysʼ goals: sales and dividend goals achieved, pending margin goal reached in 2010-2012
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* Including restructuring expenses; excluding: 6.0%
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner27
Expected market and order intake development: Stable market development to continue in all four business areas, however no sign of major recovery for
2014
Excluding Schuler, ANDRITZ’s order intake 2013 will be slightly lower than 2012 expected to remain stable in 2014
Chances for some larger orders in HYDRO and PULP & PAPER
Operational measures and IFRS related issues: Given the expected developments as described above, certain, although limited capacity adjustments will
be targeted in some areas
Schuler: First round of simplifications of complex corporate structure and shift of value added to major markets
expected by end of Q4 2013 Purchase price allocation of intangibles (backlog, patents, customer relations) based on IFRS regulations
lead to amortization of approx. 50 MEUR p.a. in 2013 and 2014, declining to below 30 MEUR p.a. from 2015 to 2020
Earnings influencing factors 2013 and 2014and margin improvement potential (1)
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Margin developmentShort-term Long-term
ANDRITZ GROUP - +HYDRO o +PULP & PAPER - +METALS + oSEPARATION - ++
o stable + positive - negative
Margin development: Short-term: Group margin impacted by one-off cost
overruns in PULP & PAPER and SEPARATION; HYDRO stable at solid level; METALS supported by Schuler
Ongoing review of opportunities for structural improvements: Schuler/Müller Weingarten, PULP & PAPER, METALS, SEPARATION
Long-term: Upside due to targeted earnings
improvement in PULP & PAPER as well as in SEPARATION; HYDRO to remain at good level
Earnings influencing factors 2013 and 2014and margin improvement potential (2)
Goal: 7%, improve to 8% with top line sales growth
*
* Including restructuring expenses
2005-2009: avg. 6.0% 2000-2004: avg. 5.3%
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Target to continue long-term profitable growth Goal: maintain 7% and improve to 8% with top line sales growth
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** Including Schuler as of March 1, 2013; for the reference periods of last years, no pro-forma figures available
% MEUR
Payout ratio (%)
Dividend per share (EUR)
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Dividend goals: Keep payout ratio at least at ~50% Mid-term increase to ~60%
Confirmation of dividend payout ratio goalConsistent dividend policy
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Long-term structural trends within all four business areas should
support long-term organic growth of ANDRITZ; however, currently
subdued project activity in all business areas due to general
economic environment being without clear direction
ANDRITZ to adjust organization to market environment
Acquisitions will remain strategic focus to complement product
range and support long-term growth
Capital Market Day goals 2013:
EBITA margin: regain 7% and improve to 8% with top line sales
growth
Dividend: payout ratio at least at ~50% and mid-term increase to
~60%
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner
Summary
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Capital Market Day 2013, GermanyANDRITZ GROUP
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 wouldbe 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
Capital Market Day 2013, Germany – ANDRITZ GROUP – Wolfgang Leitner33