ANDRITZ RS presentation - May 2018

COMPANY PRESENTATION

ANDRITZ GROUP

MAY 2018

01 ANDRITZ GROUP OVERVIEW

02 RESULTS Q1 2018

03 OUTLOOK AND FINANCIAL TARGETS

CHAPTER OVERVIEW

/ COMPANY PRESENTATION, MAY 2018 / © ANDRITZ GROUP 2

ANDRITZ is a globally leading supplier of plants, equipment, systems and services for hydropower stations, the pulp and paper industry, the metalworking and steel industries, and solid/liquid separation in the municipal and industrial sectors as well as for animal feed and biomass pelleting.

Global presence Headquarters in Graz, Austria; over 250 production sites and service/sales companies worldwide KEY FINANCIAL FIGURES:

THE ANDRITZ GROUP

3

SALES BY REGION 2017 (%)

Emerging markets: 42% Europe &

North America: 58%

5,889 MEUR

UNIT Q1 2018 2017

Order intake MEUR 1,532.8 5,579.5

Order backlog (as of end of period) MEUR 6,553.2 6,383.0

Sales MEUR 1,291.0 5,889.1

Net income (including non-controlling interests) MEUR 44.0 265.6

Employees (as of end of period; without apprentices) - 25,822 25,566

/ COMPANY PRESENTATION, MAY 2018 / © ANDRITZ GROUP

A WORLD MARKET LEADER WITH FOUR BUSINESS AREAS


Electromechanical equipment for hydropower plants (turbines, generators); pumps; turbo generators.

PRODUCT OFFERINGS

HYDRO

Equipment for production of all types of pulp, paper, tissue, and board; energy boilers.

PRODUCT OFFERINGS

PULP & PAPER

Presses/press lines for metal forming (Schuler); systems for production of stainless steel, carbon steel, and non-ferrous metal strip; industrial furnace plants.

PRODUCT OFFERINGS

METALS

Equipment for solid/liquid separation for municipalities and various industries; equipment for production of animal feed and biomass pellets.

PRODUCT OFFERINGS

SEPARATION

36 29 11 24 % order intake* % order intake* % order intake* % order intake*

* Share of total Group order intake 2017.

LONG-TERM GROWTH BASED ON ACQUISITIONS AND ORGANIC EXPANSION


Compound Annual Growth Rate (CAGR) of Group sales 2007-2017: +6% p.a. (thereof approximately half from organic growth)

3,283 3,610

3,198 3,554

4,596

5,177

5,711 5,859 6,377

6,039 5,889

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Sales (MEUR) Order intake (MEUR)

STRENGTHENING OF MARKET POSITION BY ACQUISITIONS


HYDRO PULP & PAPER METALS SEPARATION

2006 VA TECH HYDRO 1990 Sprout-Bauer 2006 Pilão 1997 Sundwig 1992 TCW Engineering

2007 Tigép 1992 Durametal 2007 Bachofen + Meier 1998 Thermtec 1995 Jesma-Matador

2008 GE Hydro business 1994 Kone Wood 2007 Sindus 2000 Kohler 1996 Guinard

2010 GEHI (JV) 1998 Kvaerner Hymac 2008 Kufferath 2002 SELAS SAS Furnace Div. 2000 UMT

2010 Precision Machine 1999 Winberg 2009 Rollteck 2004 Kaiser 2002 3SYS

2010 Hammerfest Strøm 2000 Ahlstrom Machinery 2010 Rieter Perfojet 2005 Lynson 2004 Bird Machine

2010 Ritz 2000 Lamb Baling Line 2010 DMT/Biax 2008 Maerz 2004 NETZSCH Filtration

2011 Hemicycle Controls 2000 Voith Andritz Tissue 2011 AE&E Austria 2012 Bricmont 2004 Fluid Bed Systems

2002 ABB Drying 2011 Iggesund Tools 2012 Soutec 2005 Lenser Filtration

2003 IDEAS Simulation 2011 Tristar Industries 2013 Schuler (> 95%) 2006 CONTEC Decanter

2003 Acutest Oy 2011 Asselin-Thibeau 2013 FBB Engineering 2009 Delkor Capital Equipment

2003 Fiedler 2012 AES 2014 Herr-Voss Stamco 2009 Frautech

2004 EMS (JV) 2013 MeWa 2016 Yadon (52.9%) 2010 KMPT

2005 Cybermetrics 2015 Euroslot 2016 AWEBA 2012 Gouda

2005 Universal Dynamics Group 2016 SHW Casting Technologies 2017 Powerlase (51%) 2013 Shende Machinery

2006 Küsters 2017 Paperchine 2016 ANBO

2006 Carbona

Acquisitions by business area since 1990


02 RESULTS Q1 2018


CHAPTER OVERVIEW


SALES (MEUR)

1,386 1,291

Q1 2017 Q1 2018

GROUP SALES: SLOW START INTO THE YEAR

Sales in the coming months are expected to make up for the lower figure in Q1 2018.


SALES BY BUSINESS AREA (MEUR)

SALES BY REGION (%)

Emerging markets: 40%

Europe/North America: 60%

GEOGRAPHICAL EXPOSURE

1,291 MEUR

-7%

Q1 2018 Q1 2017

Europe 40 37

North America 20 21

China 15 14

Asia (without China) 13 12

South America 8 12

Africa, Australia 4 4

Q1 2018 Q1 2017 +/-

Hydro 350 356 -2%

Pulp & Paper 459 509 -10%

Metals 348 398 -13%

Separation 135 124 +9%

ORDER INTAKE (MEUR)

1,560 1,533

Q1 2017 Q1 2018

GROUP ORDER INTAKE: SOLID DEVELOPMENT

High order intake in Hydro, Metals, and Separation; Pulp & Paper significantly below very high reference figure of Q1 2017.


ORDER INTAKE BY BUSINESS AREA (MEUR)

ORDER INTAKE BY REGION (%)

Emerging markets: 47%

Europe/North America: 53%

WELL-BALANCED

GEOGRAPHICAL EXPOSURE

1,533 MEUR

-2%

Q1 2018 Q1 2017

Europe 37 42

China 17 14

North America 16 24

Asia (without China) 15 10

South America 4 5

Africa, Australia 11 5

Q1 2018 Q1 2017 +/-

Hydro 435 310 +40%

Pulp & Paper 457 653 -30%

Metals 468 443 +6%


RISING GROUP ORDER INTAKE SINCE Q2 2017


ORDER INTAKE BY BUSINESS AREA (MEUR)

1,211 1,341

1,467 1,533

Q2 2017 Q3 2017 Q4 2017 Q1 2018

Hydro

472 427

481 457

Q2 2017 Q3 2017 Q4 2017 Q1 2018

GROUP ORDER INTAKE (MEUR)

205

425 378

435

Q2 2017 Q3 2017 Q4 2017 Q1 2018

372 329

463 468

Q2 2017 Q3 2017 Q4 2017 Q1 2018

164 160 145 173

Q2 2017 Q3 2017 Q4 2017 Q1 2018

Pulp & Paper

Metals Separation

GROUP ORDER BACKLOG SLIGHTLY ABOVE YEAR-END 2017


7,324 6,789 6,974 6,383 6,553

2015 2016 Q1 2017 2017 Q1 2018

ORDER BACKLOG (AS OF END OF PERIOD; IN MEUR) -6%

ORDER BACKLOG BY BUSINESS AREA (AS OF END OF PERIOD; IN MEUR)

Hydro: 44%

Pulp & Paper: 29%

Metals: 21%

Separation: 6%

HYDRO AND PULP & PAPER ACCOUNT FOR 73% OF TOTAL BACKLOG

Q1 2018 Q1 2017 +/-

Hydro 2,840 3,184 -11%

Pulp & Paper 1,918 1,979 -3%

Metals 1,402 1,424 -2%


+3%

Earnings / profitability in Metals impacted by lower sales and cost overruns on some projects.

EARNINGS AND PROFITABILITY SIGNIFICANTLY DOWN, MAINLY DUE TO LOWER SALES


97.4

71.7

Q1 2017 Q1 2018

EBITA (MEUR)

• EBITA, at 71.7 MEUR, significantly below the previous year’s reference figure (-26% versus Q1 2017: 97.4 MEUR), mainly due to lower sales, but also due to cost overruns on some projects (Metals). Thus, EBITA margin decreased to 5.6% (Q1 2017: 7.0%).

• Profitability in Hydro and Separation basically unchanged compared to Q1 2017; Pulp & Paper margin decreased compared to very high reference period due to project-related lower sales generation as well as investments in the digitalization business.

EBITA MARGIN (%)

Q1 2017: 7.0%

Q1 2018:

5.6%

-26%

ORDER INTAKE Q1 2018 BY BUSINESS AREA

13

310

435

Q1 2017 Q1 2018

HYDRO (MEUR)

653

457

Q1 2017 Q1 2018

155 173

Q1 2017 Q1 2018

PULP & PAPER (MEUR) METALS (MEUR) SEPARATION (MEUR)

443 468

Q1 2017 Q1 2018


+6%

+12%

+41%

-30%

EARNINGS AND PROFITABILITY BY BUSINESS AREA

EBITA (MEUR) and EBITA margin (%).

14

22 21

Q1 2017 Q1 2018

46

35

Q1 2017 Q1 2018

6 6

Q1 2017 Q1 2018

SEPARATION

6.2% 6.1%

9.1%

7.5%

4.7% 4.6%

23

10

Q1 2017 Q1 2018

5.8%

2.8%


HYDRO PULP & PAPER METALS

KEY FIGURES Q1 2018 AT A GLANCE


Decrease mainly due to change in net working capital.

Decrease mainly due to dividend payment at the end of March 2018.

Decrease mainly due to lower average net liquidity, substantially lower interest rates in Brazil as well as interest expense for the Schuldscheindarlehen issued in June 2017.

UNIT Q1 2018 Q1 2017 +/- 2017

Order intake MEUR 1,532.8 1,560.0 -1.7% 5,579.5

Order backlog (as of end of period) MEUR 6,553.2 6,974.2 -6.0% 6,383.0

Sales MEUR 1,291.0 1,386.2 -6.9% 5,889.1

EBITDA MEUR 93.8 120.7 -22.3% 541.7

EBITA MEUR 71.7 97.4 -26.4% 444.0

EBIT MEUR 64.4 86.9 -25.9% 399.3

EBT MEUR 63.0 90.3 -30.2% 400.6

Financial result MEUR -1.4 3.4 -141.2% 1.3

Net income (including non-controlling interests) MEUR 44.0 63.1 -30.3% 265.6

Cash flow from operating activities MEUR -23.4 147.7 -115.8% 246.5

Capital expenditure MEUR 22.5 29.0 -22.4% 116.8

Equity ratio % 19.6 20.1 - 21.2

Liquid funds MEUR 1,606.9 1,613.0 -0.4% 1,772.3

Net liquidity MEUR 734.3 1,061.0 -30.8% 908.0

Net working capital MEUR -75.4 -254.1 +70.3% -121.0

EBITDA margin % 7.3 8.7 - 9.2

EBITA margin % 5.6 7.0 - 7.5

EBIT margin % 5.0 6.3 - 6.8

Employees (as of end of period; without apprentices) - 25,822 25,247 +2.3% 25,566

Increase in net working capital due to changes in Work in Process (increase in inventories).


02 RESULTS Q1 2018


CHAPTER OVERVIEW


Good project activity on markets served by ANDRITZ; unchanged expectations for 2018.

OUTLOOK FOR REMAINDER OF 2018


Hydro

Separation Metals

Pulp & Paper

• Project activity for modernizations and new hydropower stations to remain at subdued level.

• Some larger, new hydropower projects are currently in the planning phase, especially in Southeast Asia and Africa; selective award of individual large-scale projects is likely.

• Satisfactory market activity for pumps to continue.

• Project and investment activity to continue at a good level in 2018, especially for modernization of existing plants and biomass boilers.

• Continued satisfactory investment activity for tissue and packaging, especially in the emerging markets.

• Project activity in Metal Forming to remain stable/improve slightly compared to 2017.

• Investment activity in Metals Processing to remain at solid level.

• Reasonable market activity in environment, mining, and chemicals.

• Low investment activity in food to continue.

For 2018, ANDRITZ expects stable sales compared to 2017 and solid profitability.

stable +/- stable + stable + stable +/-

5.3% 6.0% 6.2%

7.0-8.0%

2000-2004 2005-2009 2010-2014 2015-2019P

* Growth rates include organic growth and acquisitions

TARGET TO CONTINUE LONG-TERM PROFITABILE GROWTH Goal: further improve profitability with top-line sales growth


How to achieve long-term profitbale growth: • Price discipline • Launch of new service and digital

products • Continued cost optimization • Reduction of negative project cost

deviations • Focus on further acquisitions

Average EBITA margin

Sales CAGR: 16.4%

Sales CAGR*: 12.1%

Sales CAGR: 13.3%

Sales CAGR:

5-8% p.a.

UPDATE ON LONG-TERM EBITA MARGIN GOALS PER BUSINESS AREA


8.3 8.1 8.3 7.9 7.3 7.8

6.1

2012 2013 2014 2015 2016 2017 Q12018

5.9

-1.8

5.2

8.7 8.7 9.5

7.5

2012 2013 2014 2015 2016 2017 Q12018

6.2

4.1

7.1

4.1

7.2 6.0

2.8

2012 2013 2014 2015 2016 2017 Q12018

6.9

-0.1

3.7 3.6 2.9

4.6 4.6

2012 2013 2014 2015 2016 2017 Q12018

HYDRO

METALS

PULP & PAPER

SEPARATION

Long-term goal:

8.5-9.0% CONFIRMED

Long-term goal:

7.0-8.0% NEW:

6.0-7.0%

Long-term goal:

7.0-8.0% NEW: >8%

Long-term goal:

8.0-9.0% CONFIRMED

This presentation contains valuable, proprietary property belonging to ANDRITZ AG or its affiliates (“the ANDRITZ GROUP”), and no licenses or other intellectual property rights are granted herein, nor shall the contents of this presentation form part of any sales contracts that may be concluded between the ANDRITZ GROUP companies and purchasers of any equipment and/or systems referenced herein. Please be aware that the ANDRITZ GROUP actively and aggressively enforces its intellectual property rights to the fullest extent of applicable law. Any information contained herein (other than publically available information) shall not be disclosed or reproduced, in whole or in part, electronically or in hard copy, to third parties. No information contained herein shall be used in any way either commercially or for any purpose other than internal viewing, reading, or evaluation of its contents by the recipient, and the ANDRITZ GROUP disclaims all liability arising from the recipient’s use or reliance upon such information. Title in and to all intellectual property rights embodied in this presentation and all information contained therein is and shall remain with the ANDRITZ GROUP. None of the information contained herein shall be construed as legal, tax, or investment advice, and private counsel, accountants, or other professional advisers should be consulted and relied upon for any such advice. All copyrightable text and graphics, the selection, arrangement, and presentation of all materials, and the overall design of this presentation are © ANDRITZ GROUP 2018. All rights reserved. No part of this information or materials may be reproduced, retransmitted, displayed, distributed, or modified without the prior written approval of the owner. All trademarks and other names, logos, and icons identifying the owner’s goods and services are proprietary marks belonging to the ANDRITZ GROUP. If the recipient is in doubt whether permission is needed for any type of use of the contents of this presentation, please contact the ANDRITZ GROUP at [email protected].

DISCLAIMER


ANDRITZ RS presentation - May 2018

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