The ANDRITZ GROUP Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009 Contents Current developments of the ANDRITZ GROUP Acquisitions ANDRITZ s markets Capital Market Days goals Summary 2 The ANDRITZ GROUP Capital Market Days 2009, Spain
Order intake and book-to-bill ratio Reasonable development of order intake despite crisis Strong development of order intake over the cycle. Book-to-bill development quite stable; average 1999-H1 2009: 1.1 4.000 3.500 1.2 1.2 1.1 1.2 3,750 3,705 1.1 1.1 1.1 1.3 1.1 1,4 1,2 3.000 2.500 2.000 1.500 1.000 500 1.0 638 0.8 1,083 1,121 1,300 1,394 1,837 1,975 2,891 1.0 2,129 0.8 1,576 1,713 1,0 0,8 0,6 0,4 0,2 Order intake (MEUR) Linear (order intake) Book-to-bill ratio Average book-to-bill ratio 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1 2008 H2 2008 H1 2009 0,0 3 The ANDRITZ GROUP Capital Market Days 2009, Spain
Long-term sales development HYDRO and PULP & PAPER as main growth drivers All business areas with CAGR >10% during the last ten years. Strongest growth came from HYDRO business area. HYDRO PULP & PAPER METALS ENVIRONMENT & ROCESS FEED & BIOFUEL Share of sales by business area 1999 2008 CAGR 5% 33% +51% 56% 37% +17% 20% 16% +17% 11% 10% +16% 8% 4% +10% Sales of the ANDRITZ Group: 3,610 MEUR +450% 1999-2008: + 2,954 MEUR sales, thereof contribution from... ENVIRONMENT & PROCESS: 9% METALS: 14% FEED & BIOFUEL: 3% HYDRO: 40% 656 MEUR 1999 2008 1999 2008 PULP & PAPER: 34% 4 The ANDRITZ GROUP Capital Market Days 2009, Spain
Global presence Strong base in Europe, strong growth in emerging markets Employees 1999-2008 more than tripled Employees 1999-2008: strongest growth in emerging markets Employees by region 1999 vs. 2008: stable base in Europe ~13,700 Others 1999: 2008: 8 178 +170 1% 1% 7% 28% 9% 7% 12% + ~350% Asia (excl. China) China 1999: 9 2008: 976 +967 1999: 30 2008: 1,183 +1,153 71% 64% South America 1999: 2 2008: 946 +944 ~3,000 North America Europe 1999: 838 2008: 1,617 +779 1999: 2,134 2008: 8,807 +6,673 Europe 1999 2008 South America North America China 1999 2008 Asia (excl. China) Others 5 The ANDRITZ GROUP Capital Market Days 2009, Spain
Capex (I) Stable development with 2.0% of sales p. a. on average 3,0 80 80 2.6 2,5 70 70 2,0 60 60 50 50 1,5 40 40 1,0 30 30 20 20 0,5 17 15 2.2 21 19 2.1 1.8 27 24 23 22 1.7 21 21 2.0 29 23 1.5 27 24 1.7 46 32 57 1.7 41 70 1.9 45 1.7 28 22 2.0 1.9* 40 33 10 10 0,0 0 0 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 H1 H1 2008 2008H1 H1 2009 2009 Capex (MEUR) Depreciation (MEUR) Linear (capex in MEUR) Capex share of sales (%) Average capex share of sales Capex: additions to intangible assets and property, plant, and equipment * Excluding depreciation of assets due to restructuring (2.6% including restructuring). 6 The ANDRITZ GROUP Capital Market Days 2009, Spain
Capex (II) Mainly maintenance and modernization capex Increased capex during the last 12 months to enhance future competitiveness. 28 MEUR +45% 40 MEUR Others (incl. R&D, real estate, etc.) IT Manufacturing H1 2008 H1 2009 Capex ANDRITZ GROUP 7 The ANDRITZ GROUP Capital Market Days 2009, Spain
Research & Development (I) Expenses of ~100 MEUR p. a. HYDRO Pump turbines to back up wind power. Matrix turbines to minimize damming in rivers. Hydraulic design that enables complete coating of blade channels as protection against sand abrasion (India). Flow simulations for yield optimization. METALS Zinc recovery from automotive scrap. Full recycling of pickling acid. Reduction of energy consumption for the DeNOx process and of the nitrogen oxide content in annealing furnace exhaust gas. Flow simulation of a supporting blade: ANDRITZ HYDRO examines vortex trails, which can lead to blade cracks. 8 The ANDRITZ GROUP Capital Market Days 2009, Spain
Research & Development (II) Focus on renewable energy PULP & PAPER Effluent free pulp production. Pulp mills as green energy producers. Production of bioethanol/-diesel from cellulosic raw material. Waste paper recycling. Board machines. ENVIRONMENT & PROCESS Efficient biomass drying. Minimization of odor and TOC (Total Organic Carbon) compounds in the offgas from sludge drying plants. FEED & BIOFUEL Higher value wood pellets. Increasing capacity of extruders for the pet food and aquatic feed segments. ANDRITZ biomass-fired power boiler at the ENCE mill in Navia, Spain. 9 The ANDRITZ GROUP Capital Market Days 2009, Spain
Net cash position Stable development despite acquisitions 06-2005: Lenser 05-2006: VA TECH HYDRO 12-2006: BMB 06-2007: Sindus 12-2007: Tigép 05-2008: GE Hydro 10-2008: Kufferath 07-2009: Rollteck 06-2006: Kuesters 03-2008: Maerz 06-2008: GEHI 2005 2006 2007 2008 H1 2009 384 366 409 444 247 2005 2006 2007 2008 H1 2009 Net liquidity as of end of period in MEUR Linear (net liquidity as of end of period in MEUR) 10 The ANDRITZ GROUP Capital Market Days 2009, Spain
Restructuring to further enhance cost structure Expected cost savings of ~60 MEUR p. a. from 2010 on Restructuring expenses Q4 2008: ~14 MEUR Total expected cost savings p. a.* from 2010 on: ~20 MEUR 14 MEUR 20 MEUR Restructuring expenses Q2 2009: ~24 MEUR Total expected cost savings p. a.* from 2010 on: ~40 MEUR 24 MEUR 40 MEUR Restructuring expenses 08 + 09: ~38 MEUR Total expected cost savings p. a.*: ~60 MEUR * vs. 2008 cost level 11 The ANDRITZ GROUP Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009 Contents Current developments of the ANDRITZ GROUP Acquisitions ANDRITZ s markets Capital Market Days goals Summary 12 The ANDRITZ GROUP Capital Market Days 2009, Spain
ANDRITZ HYDRO Strong organic growth since acquisition of VATH and GE Hydro Complementation of product and service range. Strengthening ANDRITZ s presence in the most important hydropower markets (Europe, North and South America, and India). 05-2006: acquisition of VA TECH HYDRO 535 551 665 05-2008: acquisition of GE HYDRO CAGR H1 2006-H1 2009: +66% p. a. (thereof +49% p. a. organic growth) 796 774 1,054 50 H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 Order intake ANDRITZ HYDRO in MEUR Linear (order intake in MEUR) 13 The ANDRITZ GROUP Capital Market Days 2009, Spain
GE Hydro business Completion of ANDRITZ HYDRO product and service portfolio Acquired in May 2008. ~200 MEUR annual sales. Strong expertise and reputation for large (>400 MW) Francis turbines and generators. Local player in Canada and Brasil, strong base in Sweden and Finland. Order backlog under execution so far, no negative surprises. Since acquisition, orders of ~250 MEUR received (e. g. Maua/Brazil, Campbell/Canada, Lasele/Sweden). 14 The ANDRITZ GROUP Capital Market Days 2009, Spain
Current market environment for acquisitions Several possibilities, but few opportunities Several possibilities in almost all business areas to further complement product and service range. Most of them are small to medium-sized companies. Opportunities in both capital and service business. With conservative 2010 EBITA assumptions, price expectations of sellers/multiples are still (too) high. Stick to long-term acquisition strategy: focus on complementary businesses at reasonable prices. No diversification. 15 The ANDRITZ GROUP Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009 Contents Current developments of the ANDRITZ GROUP Acquisitions ANDRITZ s markets Capital Market Days goals Summary 16 The ANDRITZ GROUP Capital Market Days 2009, Spain
HYDRO Solid market with excellent long-term outlook H1 2009 High project activity worldwide: modernization of existing plants in Europe and North America; new hydropower plants mainly in emerging markets. Good development of order intake in all divisions, including the pumps and turbo generator businesses. Sales and earnings increased compared to reference period of last year. Current environment and mid-/long-term drivers Climate change green electricity. Replacement of existing aged installed base in Europe and North America. Growing electricity demand in emerging markets. Economic stimulus packages renewal of infrastructure. 17 The ANDRITZ GROUP Capital Market Days 2009, Spain
PULP & PAPER Despite current downturn, unchanged strong long-term drivers H1 2009 Low project activity in the capital business; service less affected. Order intake substantially below last years reference level; order from China (Chenming, 160 MEUR) booked in Q3 2009. Margins impacted by restructuring expenses and lower sales; price pressure in (large) capital business. Restructuring underway. Current environment and mid-/long-term drivers Long-term shift of production capacity from northern to southern hemisphere to continue however, major projects currently delayed, but execution highly likely due to pre-investments in land, plantations, etc. Expansion of pulp capacities expected in China and Russia (medium-/longterm). Continuing demand for biomass/recovery boilers due to increasing environmental regulations/incentives (e. g. USA, Canada). Increasing project activity for recycled fiber lines in China. 18 The ANDRITZ GROUP Capital Market Days 2009, Spain
METALS Bottom appears to have been reached H1 2009 Low project activity worldwide. Order intake in H1 2009, at 145.3 MEUR, substantially below record high of last year; Q2 2009 heavily impacted by weak market conditions. Sales, earnings, and profitability down compared to last years reference values. Current environment and mid-/long-term drivers Continuing low capacity utilization in the carbon and stainless steel industries; bottom appears to have been reached. Weak cash flows at customers limit capex for next few quarters. Single investments in special segments (automotive China). 19 The ANDRITZ GROUP Capital Market Days 2009, Spain
ENVIRONMENT & PROCESS Stable municipial and biomass drying businesses H1 2009 Good project activity in municipal business (China, USA); lower demand in some industrial segments. Order intake down, mainly due to lower orders from industrial customers and low demand in the drying area. Flat sales; however, earnings and profitability slightly down. Current environment and mid-/long-term drivers Municipal business: expected to continue at current level or higher. Industrial business: depends on overall economy. Growing environmental awareness and more stringent regulations to support demand for environmental equipment. 20 The ANDRITZ GROUP Capital Market Days 2009, Spain
FEED & BIOFUEL Feed expected to recover, good pipeline for biomass projects H1 2009 Low project activity in animal feed with projects delayed due to funding restrictions; reasonable project activity for biomass/wood pelletizing equipment. Order intake down compared to H1 2008, weak development in Q2 2009. Earnings and margins down. Current environment and mid-/long-term drivers Large feed projects still somewhat delayed due to funding restrictions however, expected to recover mid-term. Good pipeline of biomass projects, although also somewhat affected by funding restrictions. Strong growth of biomass market expected. 21 The ANDRITZ GROUP Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009 Contents Current developments of the ANDRITZ GROUP Acquisitions ANDRITZ s markets Capital Market Days goals Summary 22 The ANDRITZ GROUP Capital Market Days 2009, Spain
Review on targets of past Capital Market Days Achievement of targets delayed due to financial crisis CMD 2004: Become a 2 bn. Euro company by 2007 target reached in 2006 CMD 2005: Reach EBITA margin of 7% by 2008 Increase dividend payout ratio to 40% over the next few years target reached in 2008 CMD 2006: Increase of sales towards 3 bn. Euros in 2007 target reached in 2007 CMD 2007: Reach EBITA margin of 7% by 2008 CMD 2008: Increase of sales up to 4.5 bn. Euros by 2010/2011 7% EBITA margin on a sustainable basis Increase dividend payout ratio to ~50% by 2010 4,500 3,610 6.3 3,283 6.1 6.1 6.4 6.5 2,710 5.1* 7.0 1,481 1,744 1,540 2004 2005 2006 2007 2008 H1 2009 2009E 2004 2005 2006 2007 2008 H1 2009 2009E 2010/2011P? Sales in MEUR EBITA margin in % (* excl. restructuring expenses) 23 The ANDRITZ GROUP Capital Market Days 2009, Spain
Sales target 4.5 bn. Euro sales goal delayed due to financial crisis Confident to continue growth: Confirmation of goal to increase sales by 10% p. a. on average. CAGR 1999-2008: +21% p. a. (thereof 13% p. a. organic growth). However, 4.5 bn. goal delayed due to financial crisis. 4,500 3,283 3,610 Range depends on overall economy and on M&A success. 2,710 937 1,319 1,110 1,225 1,481 1,744 1,540 656 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1 2009 Sales in MEUR Linear (sales in MEUR) 2009 2010/ 2011E Target achievement most likely delayed due to financial crisis. 24 The ANDRITZ GROUP Capital Market Days 2009, Spain
EBITA margin target 7% over the cycle EBITA margin H1 2009: 5.1% excl. restructuring expenses 3.6% incl. restructuring expenses 3,283 3,610 Margin development depends on overall economy and on M&A success. 2,710 8.0 4.7 5.2 5.3 5.1 4.8 6.3 6.1 6.1 1,744 6.4 6.5 6.3 5.1? 7.0 3.5 937 1,319 1,110 1,225 1,481 656 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 H1 2009 Average EBITA margin 1999-2003: 4.8% Average EBITA margin 2004-2008: 6.3% * excl. restructuring expenses 2010/ 2011P Sales (in MEUR)? 25 The ANDRITZ GROUP Capital Market Days 2009, Spain
Dividend Sustainable dividend payout ratio on top of strong sales growth Dividend per share (EUR) 1.00 1.10 0.75 0.23 0.25 0.35 0.50 2002 2003 2004 2005 2006 2007 2008 2009 2010 E Payout ratio 44.1% 44.2% 34.3% 32.6% 32.5% 38.3% 40.3% ~50.0% 2002 2003 2004 2005 2006 2007 2008 2010E Dividends 2002-2006 adjusted for share split of 1:4 26 The ANDRITZ GROUP Capital Market Days 2009, Spain
Target for renewable energy sales Long-term more than 50% of Group sales ANDRITZ s renewable energy products: Equipment for hydropower stations. Recovery boilers/ power boilers for the pulp and paper industry. Biomass drying. Biomass pelletizing. Equipment for biofuel production (second generation). 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 21% 1,744 373 32% 2,710 46% 3,283 1,520 49% 3,610 1,771 1,574 55% 876 873 4,500 >50% 2005 2006 2007 2008 H1 2009 2009E 2010E 2011E Total sales (MEUR) Renewable energy sales (MEUR) Renewable energy sales share of total sales 2,250 60 50 40 30 20 10 0 27 The ANDRITZ GROUP Capital Market Days 2009, Spain
ANDRITZ Capital Market Days 2009 Contents Current developments of the ANDRITZ GROUP Acquisitions ANDRITZ s markets Capital Market Days goals Summary 28 The ANDRITZ GROUP Capital Market Days 2009, Spain
Summary Solid business development despite crisis due to broad diversification, strong cash position and solid balance sheet structure. Implemented restructuring measures to adjust cost structure to lower business volume and to enhance future competitiveness. Business development impacted by economic crisis short-term; however, long-term growth drivers and structural trends should ensure long-term growth of ANDRITZ. Achievement of 4.5 bn. sales and 7% EBITA margin goals (Capital Market Days 2008) delayed due to financial crisis, but still valid. Targets Capital Market Days 2009: Confirmation of 4.5 bn. sales and 7% EBITA margin goals. Long-term goal to have more than 50% of Group sales coming from renewable energy products. 29 The ANDRITZ GROUP Capital Market Days 2009, Spain
Disclaimer 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. Note: 2008 figures restated. 30 The ANDRITZ GROUP Capital Market Days 2009, Spain