Andritz Ag · VIE:ANDR
Andritz — Investor Day (September 2019)
54 slides from Andritz's investor day presentation, Sep 17, 2019
Slide 1: ANDRITZ Capital Market Day 2019 - ANDRITZ Group
ANDRITZ CAPITAL MARKET DAY 2019 ANDRITZ GROUP WOLFGANG LEITNER SEPTEMBER 17, 2019
Slide 2: Chapter Overview
CHAPTER OVERVIEW 01 FINANCIAL DEVELOPMENT AND GOALS 06 ANDRITZ AUTOMATION 02 HYDRO 07 SUMMARY 03 PULP & PAPER 04 METALS 05 SEPARATION 2 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 3: ANDRITZ's automotive exposure weighs on share price
ANDRITZ'S AUTOMOTIVE EXPOSURE WEIGHS ON SHARE PRICE Auto-related companies have been under pressure during the last 12 months Performance comparison Last 12 months* Comparison of Multiples EV/EBITA 2019E** ANDRITZ GROUP 7.8 ANDRITZ -37.4% Valmet 12.4 Valmet -12.5% Duerr -39.7% voestalpine -45.4% Dai
Slide 4: During the last 10 years, ANDRITZ achieved growth of ~8% p.a.
DURING THE LAST 10 YEARS, ANDRITZ ACHIEVED GROWTH OF ~8% P.A. ON AVERAGE Growth evenly split between organic expansion and acquisitions 6,646 6,101 6,018 660 5,707 5,611 5,569 5,580 666 273 832 393 117 • Strong organic growth between 2009 and 2013 4,924 1,423 710 • Roughly two thirds of this growth
Slide 5: EBITA margin: good stability, however no clear trend
EBITA MARGIN: GOOD STABILITY, HOWEVER NO CLEAR TREND 2009-2018 (in %) Average EBITA margin adjusted 2009-2018: 6.8% Average EBITA margin reported 2009-2018: 6.4% 7.3 7.5* 7.2 7.2 8.3** 6.9 7.1** 6.9** 6.5 6.7* 6.5* 6.0** 5.1* 3.7** 2.9* 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 * EBITA margi
Slide 6: Pulp & Paper: sales and earnings development
PULP & PAPER: SALES AND EARNINGS DEVELOPMENT 2009-2018 SALES (IN MEUR) EBITA MARGIN (IN %) Average EBITA margin adjusted 2009-2018: 6.5% Average EBITA margin reported 2009-2018: 6.2% Practically flat sales development 10.5** 2,282 2,233 2,196 2,094 2,060 9.5 2,005 1,969 250 1,885 8.7 8.7 9.9* 612 45
Slide 7: Hydro: sales and earnings development
HYDRO: SALES AND EARNINGS DEVELOPMENT 2009-2018 SALES (IN MEUR) EBITA MARGIN (IN %) Average EBITA margin adjusted 2009-2018: 8.1% Average EBITA margin reported 2009-2018: 7.8% 8.8** 8.5** 8.3 8.3 8.1 8.1** 7.8 7.5 7.5 7.3 8.3* 7.9* 1,837 1,805 1,835 1,773 1,752 1,752 7.3* 1,579 1,583 1,518 1,378 200
Slide 8: Metals Processing: sales and earnings development
METALS PROCESSING: SALES AND EARNINGS DEVELOPMENT 2009-2018 SALES (IN MEUR) EBITA MARGIN (IN %) Average EBITA margin adjusted 2009-2018: 3.5% Average EBITA margin reported 2009-2018: 3.3% Practically flat sales development 6.2 6.2 518 5.7** 5.4 5.2 473 4.8** 5.0 425 423 4.0 405 411 4.3* 373 372 340
Slide 9: Metals Forming - Schuler: sales and earnings development
METALS FORMING - SCHULER: SALES AND EARNINGS DEVELOPMENT 2009-2018 SALES (IN MEUR) EBITA MARGIN (IN %) Average EBITA margin adjusted 2013-2018: 7.3% SINCE ACQUISITION Average EBITA margin reported 2013-2018: 6.1% Practically flat sales development 9.6**** Acquisition by ANDRITZ 9.0*** 1,233 8.4****
Slide 10: Separation: sales and earnings development
SEPARATION: SALES AND EARNINGS DEVELOPMENT 2009-2018 SALES (IN MEUR) EBITA MARGIN (IN %) Average EBITA margin adjusted 2009-2018: 5.5% Growth 2009-2012 Average EBITA margin reported 2009-2018: 4.8% 25% organic 75% Practically flat sales development acquisitions 8.1** 7.8 653 646 628 7.3** 603 6.9 59
Slide 11: Increase of service business
INCREASE OF SERVICE BUSINESS GROUP SERVICE SALES IN MEUR 2,155 1,930 2,010 1,892 1,612 1,670 ANDRITZ Fabrics and Rolls provides machine clothings 1,345 1,230 and roll covers for paper, tissue, and board machines. 1,024 874 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Hydro Pulp & Paper Metals S
Slide 12: Service sales by business area
SERVICE SALES BY BUSINESS AREA % of total business area sales HYDRO PULP & PAPER 48 41 40 41 42 36 35 37 26 26 29 28 30 29 24 24 24 24 25 25 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 METALS Processing METALS Forming (Schuler) SEPARATION 44 46
Slide 13: Development of net working capital
DEVELOPMENT OF NET WORKING CAPITAL • Reclassification of late costs from other liabilities NET WORKING CAPITAL OF THE ANDRITZ GROUP (IN MEUR) to project provisions in 2015 300 • Deterioration in all four business areas since 200 160.5 2014: 100 84.2 • Reduction of contract liabilities / increase of
Slide 14: Development of cash position
DEVELOPMENT OF CASH POSITION IN MEUR 2,350 2,048 Mainly acquisition of 1,815 Schuler (~600 MEUR) 1,850 1,772 1,595 1,517 1,507 1,614 1,702 1,449 1,401 1,286 1,280 1,350 1,177 1,065 1,082 984 • Acquisitions: 945 908 ~770 MEUR, thereof Xerium (~700 893 MEUR), including net financial liabilities 850 (m
Slide 15: Target equity ratio between 20-25%
TARGET EQUITY RATIO BETWEEN 20-25% TOTAL SHAREHOLDERS‘ EQUITY (IN MEUR) EQUITY RATIO (IN %) 1,344 21.7 1,325 1,331 21.0 21.1 19.2 16.7 17.3 1,216 1,038 929 5.6* 6.0 5.8 6.2 6.3 6.9 2013 2014 2015 2016 2017 2018 TANGIBLE EQUITY RATIO** (IN %) 11.9 12.6 12.4 7.2 8.3 7.9 2013 2014 2015 2016 2017 2018 2
Slide 16: Group Roadmap 2020-2022 (1)
GROUP ROADMAP 2020-2022 (1) Main challenges/goals for the coming years Promote growth Organic: • Continue to develop intelligent mill services (Metris OPP, sensors, etc.) • Further expand O&M business External: • Continue with complementary M&A • Continued focus on existing four business areas • Hig
Slide 17: Group Roadmap 2020-2022 (2)
GROUP ROADMAP 2020-2022 (2) Main challenges/goals for the coming years Improve Group profitability • Turnaround Metals Processing and Forming • Keep high profitability in Pulp & Paper • Retain solid profitability in Hydro despite stagnant market • Further increase profitability in Separation Reduce
Slide 18: Unchanged long-term financial targets
UNCHANGED LONG-TERM FINANCIAL TARGETS Achieve long-term profitable growth FINANCIAL TARGETS CAGR of 5-8% based on organic and • Sales external growth • GROUP Achieve average EBITA margin of 8% Profitability over the next 3-5 years • Dividend Payout of 50-60% of earnings on average, however depending
Slide 19: Long-term EBITA margin goals by business area
LONG-TERM EBITA MARGIN GOALS BY BUSINESS AREA HYDRO PULP & PAPER 9.5 9.9 9.4 8.7 8.7 8.3 8.1 8.3 7.9 7.8 7.3 7.5 Long-term 6.5 Long-term 5.9 goal: 5.2 goal: 7.0-8.0% 8.5-9.0% NEW NEW 9.0-10.0% 7.0-8.5% 2012 2013 2014 2015 2016 2017 2018 H1 2012 2013 2014 2015 2016 2017 2018 H1 2019 2019 -1.8 METALS
Slide 20: Chapter Overview
CHAPTER OVERVIEW 01 FINANCIAL DEVELOPMENT AND GOALS 06 ANDRITZ AUTOMATION 02 HYDRO 07 SUMMARY 03 PULP & PAPER 04 METALS 05 SEPARATION 20 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 21: Hydro: unchanged moderate market environment
HYDRO: UNCHANGED MODERATE MARKET ENVIRONMENT Selective award of individual projects, particularly in the growing Asian market • 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 like
Slide 22: Global hydropower market declined by one third since peak in 2011
GLOBAL HYDROPOWER MARKET DECLINED BY ONE THIRD SINCE PEAK IN 2011 ANDRITZ Hydro 2018 vs. 2011: Cost structures adjusted to market decline • Order intake : -31.0% • Sales : -14.4% 9,000 100% HYDRO EMPLOYEES 8,300 -33% 8,000 -16% 8,339 8,230 7,260 7,237 8,000 90% 7,285 7,469 7,445 7,400 7,002 7,200 7,
Slide 23: Pumped storage is the bulk storage technology #1
PUMPED STORAGE IS THE BULK STORAGE TECHNOLOGY # 1 Global operational electricity storage power capacity by technology Electro-chemical storage is one of the most rapidly growing market segments, although operational installed battery storage power capacity is only approximately 1.9 GW. Source: IRENA
Slide 24: Good pipeline for large-scale hydro projects
GOOD PIPELINE FOR LARGE-SCALE HYDRO PROJECTS Average investment cost for hydropower equipment: ~250-500 MEUR* / GW 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 N
Slide 25: O&M: new promising business field
O&M: NEW PROMISING BUSINESS FIELD • Started in 2017 • Remote operations from Italy • Accumulative order intake roughly 100 MEUR • 2018/19 first contracts (large O&M) in Latam achieved • Goal to further expand this business 25 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 26: Hydro Roadmap 2020-2022
HYDRO ROADMAP 2020-2022 Hydropower plant Nurek • Continue with structural adjustments in Hydro: Global market volume for hydropower equipment is expected to remain stable for the next few years • Continuing capacity adjustments • Secure earnings and profitability by correct sizing and reducing negat
Slide 27: Chapter Overview
CHAPTER OVERVIEW 01 FINANCIAL DEVELOPMENT AND GOALS 06 ANDRITZ AUTOMATION 02 HYDRO 07 SUMMARY 03 PULP & PAPER 04 METALS 05 SEPARATION 27 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 28: Pulp & Paper: very good market environment
PULP & PAPER: VERY GOOD MARKET ENVIRONMENT The HERB recovery boilers from ANDRITZ • Pulp maximize the production of green energy in pulp mills Very good project activity for both modernization of existing pulp mills and greenfield pulp mills (particularly in South America) • Paper Satisfactory marke
Slide 29: Major pulp orders received underline ANDRITZ's strong position in pulp
MAJOR PULP ORDERS RECEIVED UNDERLINE ANDRITZ‘S STRONG POSITION IN PULP The white liquor plant delivered by ANDRITZ in 2016 for • Long-term maintenance and service contract for Arauco‘s MAPA project in Klabin’s pulp mill in Ortigueira, Paraná, Brazil, has one of the world’s largest recausticizing pla
Slide 30: Strong position in large fiberlines in South America
STRONG POSITION IN LARGE FIBERLINES IN SOUTH AMERICA Continued technological improvement ANDRITZ has delivered 7 out of 9 fiberlines in South America since Fray Bentos 1,950,000 Horizonte 2 1,500,000 1,500,000 1,500,000 1,500,000 1.500.000 1,300,000 Suzano 1,300,000 arauco 1,250,000 Imperatriz CMPC
Slide 31: New pulp mills and lines in planning
NEW PULP MILLS AND LINES IN PLANNING ≥0.5MT FINLAND: RUSSIA: Owner – project Capacity/a* Planned start-up Kemijärvi 0.5 2021 Owner – project Capacity/a* Planned start-up USA: Finnpulp – Kuopio 1.2 2022 Ust-Ilimsk 0.6 2021 Owner – project Capacity/a* Planned start-up MF Kemi 1.5 2023 Segezha/CAMCE 1.
Slide 32: Pulp & Paper Roadmap 2020-2022
PULP & PAPER ROADMAP 2020-2022 • Target to make it a 3 billion+ EUR business ANDRITZ teamed up with Suzano to build Horizonte 2 project • Further good growth potential seen in the power market • Goal is to maintain high profitability in future This should be supported by the strong technical marke
Slide 33: Chapter Overview
CHAPTER OVERVIEW 01 FINANCIAL DEVELOPMENT AND GOALS 06 ANDRITZ AUTOMATION 02 HYDRO 07 SUMMARY 03 PULP & PAPER 04 METALS 05 SEPARATION 33 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 34: Metals Processing: tough price competition
METALS PROCESSING: TOUGH PRICE COMPETITION Good project activity in 2018, however tough competition • Overall good market conditions in 2018 with capacity utilizations in the carbon and steel industries of above 80%, however tough price competition • Strong development of order intake in 2018 due to
Slide 35: Metals Processing Roadmap 2020-2022
METALS PROCESSING ROADMAP 2020-2022 ANDRITZ annealing furnace in a cold strip annealing • Focus on light-weight materials for automotive applications: and pickling line • AHSS (Advanced High-Strength Steel): Galvanizing lines • Aluminum: Continuous annealing and processing lines • Tailor welded blan
Slide 36: Metals Forming - Schuler
METALS FORMING - SCHULER Despite acquisitions order intake practically flat over the last five years ORDER INTAKE AND SALES (IN MEUR) AGGREGATED EBITDA 2013-H1 2019 (IN MEUR) • Purchased in 2013 (purchase price: 611 676 ~600 MEUR) business plan 1,233 1,2551,212 assumed lower sales going forward 1,
Slide 37: Metals Forming: challenging market conditions
METALS FORMING: CHALLENGING MARKET CONDITIONS • Weakness of the global automotive market • Declining demand for press lines and forging presses in Europe, especially in Germany • High price pressure due to market weakness • Rising costs in Germany • Change of product and geographical order mix leads
Slide 38: Necessary capacity adjustments
NECESSARY CAPACITY ADJUSTMENTS Excluding acquisitions, total number of employees reduced by ~24% since acquisition in 2013 SALES (IN MEUR) EMPLOYEES BY REGION (AS OF END OF PERIOD) +4% 1,212 1,165 +7% 5,607** 208 5,219 • Restructuring programs in 2013, -14% North America: 355 North America: 377 2015
Slide 39: Metals Forming Roadmap 2020-2022
METALS FORMING ROADMAP 2020-2022 • Restructuring based on 1.2 billion annual sales • Target is to get to 1.5 billion EUR sales and 6-7% EBITA margin mid-term • Growth to be absorbed by localization (Asia) and outsourcing • Automotive: • Entry in „middle segment“ achieved however more references ne
Slide 40: Chapter Overview
CHAPTER OVERVIEW 01 FINANCIAL DEVELOPMENT AND GOALS 06 ANDRITZ AUTOMATION 02 HYDRO 07 SUMMARY 03 PULP & PAPER 04 METALS 05 SEPARATION 40 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 41: Separation: good project and investment activity to continue
SEPARATION: GOOD PROJECT AND INVESTMENT ACTIVITY TO CONTINUE Particularly for solid/liquid separation equipment • Municipal & Industrial Rapid urbanization and industrialization, especially in emerging markets, lead to increasing focus on waste water treatment market expected to grow by 3.6% globa
Slide 42: Equipment for the world's largest plant for generating power from sewage sludge
EQUIPMENT FOR THE WORLD’S LARGEST PLANT FOR GENERATING POWER FROM SEWAGE SLUDGE Bailonggang effluent treatment plant, Shanghai • 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 1
Slide 43: Separation Roadmap 2020-2022
SEPARATION ROADMAP 2020-2022 • ANDRITZ well positioned in growing industries (starch, lithium, PVC, etc.) further establish ANDRITZ as premium brand in the market • Organic growth due to development from equipment supplier to solution provider • Offer customers attractive IIoT solutions (Metris) •
Slide 44: Chapter Overview
CHAPTER OVERVIEW 01 FINANCIAL DEVELOPMENT AND GOALS 06 ANDRITZ AUTOMATION 02 HYDRO 07 SUMMARY 03 PULP & PAPER 04 METALS 05 SEPARATION 44 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 45: ANDRITZ Automation global presence and competence
ANDRITZ AUTOMATION GLOBAL PRESENCE AND COMPETENCE > 2,000 EMPLOYEES > 110 LOCATIONS (ANDRITZ GROUP: > 29,600 employees) (ANDRITZ GROUP: > 280 locations) Complete automation solutions for the industries Hydro, Pulp & Paper, Engineering, service and support Metals and Separation Headquarters in Graz,
Slide 46: Sales Group ANDRITZ Automation
SALES GROUP ANDRITZ AUTOMATION 2009-2018 IN MEUR 673 646 612 520 520 472 409 391 258 254 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 46 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 47: Complete product portfolio
COMPLETE PRODUCT PORTFOLIO Complete automation solutions Simulation of plants, machines and systems • Full Automation Electrification Instrumentation (AEI) portfolio • Detect savings potentials with regard to quality, sustainability and costs Optimization of Process Performance (OPP) • Improve mill
Slide 48: Strategic pillars of Metris: cyber security
STRATEGIC PILLARS OF METRIS Joint venture with OTORIO: Increasing importance of cyber security Risk assessment and management: Penetration testing, incidence response, training Cyber security 48 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 49: ANDRITZ Digital Solutions
ANDRITZ DIGITAL SOLUTIONS METRIS UX Metris digitalization platform METRIS X – Distributed control system Metris UX digitalization platform ✚ Control Studio + ✚ Process display as an integrated part of the platform METRIS OPP CONTRACT Metris UX digitalization platform ✚ local analyst 49 / ANDRITZ CMD
Slide 50: The autonomous pulp mill with Metris OPP
THE AUTONOMOUS PULP MILL WITH METRIS OPP Analysis of 5,000 to 125,000 real-time process variables collected by sensors, maximum data safety guaranteed Metris OPP enhances plant efficiency and performance: • More than 22,000,000 adt/y pulp production • Increase process stability • Certain contracts r
Slide 51: Smart Woodyard
SMART WOODYARD Prerequisite for an autonomous woodyard - Instrumentation, advanced process controls, decision support to ensure availability, performance rate and quality TOOLS FOR MAXIMIZING AND TOOLS FOR MAXIMIZING MONITORING QUALITY PERFORMANCE AND QUALITY • Flow Scanner • Process Optimization •
Slide 52: Chapter Overview
CHAPTER OVERVIEW 01 FINANCIAL DEVELOPMENT AND GOALS 06 ANDRITZ AUTOMATION 02 HYDRO 07 SUMMARY 03 PULP & PAPER 04 METALS 05 SEPARATION 52 / ANDRITZ CMD 2019 - ANDRITZ GROUP, SEPTEMBER 17, 2019
Slide 53: Summary
SUMMARY Main challenges/goals for the coming years Focus on growth: • Continue to push/launch internal innovations in digitalization and service • Complementary acquisitions in all four business areas, especially in service Focus on profitability: • Turnaround Metals, keep high profitability in Pulp
Slide 54: Many thanks!
ANDRITZ CAPITAL MARKET DAY 2019 MANY THANKS! SEPTEMBER 17, 2019