- Order intake increases from EUR 2,680 million to EUR 2,870 million
- Sales decrease slightly from EUR 3,052 million to EUR 2,887 million
- Net result increases to EUR 23 million
- Efficiency-boosting program takes effect and enables targeted investment in growth fields
Sound financial situation
SMS group order intake in the past business year totaled EUR 2,870 million. This was EUR 190 million up on the previous year (2016: EUR 2,680 million). Sales, at EUR 2,887 million, were lower than in the previous year by EUR 165 million.
The subsidiaries of SMS group were able to boost orders. Order intake by manufacturing technology company elexis exceeded the previous year’s figure (EUR 184 million) by EUR 26 million and totaled EUR 210 million. Induction technology specialist Elotherm generated EUR 73 million (2016: EUR 66 million). SMS group recorded a net result of EUR 23 million, slightly higher than the previous year’s figure (EUR 14 million). Included in this total are accruals for restructuring to the amount of EUR 73 million.
The equity ratio remained unchanged at 19 percent, having now maintained this level for several years. A liquidity of EUR 1.1 billion continues to secure the company’s financial independence. The regional breakdown of SMS group sales remained balanced: Asia 33 percent (2016: 34 percent), Europe: 31 percent (2016: 30 percent), America: 25 percent (2016: 28 percent), Russia: 7 percent (2016: 6 percent), Africa: 4 percent (2016: 2 percent).
The order backlog of SMS group totaled EUR 3,472 million, which was roughly at the level of the previous year (EUR 3,566 million). In business year 2017, SMS group had an average of 14,305 employees (2016: 13,903). Compared to the previous year, this was an increase of 402 employees, due in particular to the expansion of service activities abroad.
Burkhardt Dahmen, CEO: “SMS group is the global market leader in plant and machinery construction for the steel and nonferrous metals industry. We’ve worked hard to sustainably strengthen our position as the most modern, high-performance company in the industry. This is above all thanks to the outstanding efforts of our employees.”
Efficiency-boosting program takes effect and enables targeted investment
In order to adjust competitively to the lower global market volume in metallurgical plant construction, SMS is cutting overcapacities and reducing equipment and materials costs. By 2020, the company will scale back 500 of the current 4,150 jobs in Germany, with 300 jobs affected in 2018. This necessary personnel adjustment is being carried out in a socially responsible manner, largely avoiding redundancies and concentrating instead on semi-retirement arrangements and individual contractual solutions.
The essential focus of the efficiency-boosting program is on the competitiveness of the products, in terms of both properties and price. With a targeted innovation campaign as well as high investment in technologies, products, and new business fields, the company is extending its technological edge even further.
Torsten Heising, CFO: “Maintaining and strengthening the leading position of SMS group is our most important goal. All areas of the company have achieved significant improvements in efficiency and processes, working in close partnership with the employee representative bodies. This enables us to continue to invest in important growth segments.”
Expansion of service business on track
The company continues to pusue its strategy of growth in services. The medium-term goal is to expand the service volume to around one third of total business volume. Apart from the classic spare parts business, this includes modernization packages designed to boost the performance of customers’ plants. In line with its partnership approach, SMS is increasingly offering consultancy and providing extensive maintenance and repair services for its customers.
Leader in digitalization
Possibly the most important area of development is enabling customers to meet their challenges with the performance-boosting “learning factory” strategy. In this area, SMS group already supplies its customers with extensive service packages.
For the customer Big River Steel in the US, SMS successfully commissioned an entire plant complex in the form of a “Learning Steel Mill” in 2017. Developed jointly with the customer, the concept fulfilled all expectations. As a result, SMS recently received a confirmation for an expansion stage.
New Horizon growth program strengthened
The company is also investing more in the production and processing of new high-tech materials and efficient, intelligent green technologies. To increase growth in adjacent markets and industries, all activities come together in the company-wide New Horizon strategy program. The first customer projects have already been successfully completed.
For example, SMS group is currently constructing the world’s first “UrbanGold” plant. With this completely innovative plant, it is possible to cost-effectively recycle valuable and high-purity metals from electronic scrap such as PCBs. The recovered materials include copper, nickel, gold, silver and platinum.
SMS group has built and commissioned an innovative, industrial scale pilot plant for producing high-purity metal powder and new materials used in additive manufacturing – or 3D printing with laser technologies.
The metal powder consists of microscopic, homogeneous particles that form the basic materials for customized or novel-design products. The company is also building a demo center for the entire additive manufacturing process chain – from metal powder to the high-quality finished product.
SMS group’s extensive know-how in handling heavy loads in rolling mills was the starting point for an innovation in port logistics. A new type of storage system for containers enables operators to fully automatically stack or handle more containers on a smaller floorspace with greater speed and flexibility.
Paul Wurth group, which also belongs to SMS group, has developed a new solution for the use of decentralized energy generation. This utilizes eco-friendly, resource-saving energy sources such as W2E (waste-to-energy), B2E (biomass-to-energy) and cogeneration plants.
Burkhard Dahmen: “Quality workmanship and innovative drive are our most important hallmarks. Our customers expect precision results and creative solutions to highly complex problems. And we are using those same strengths to further develop SMS group itself. With New Horizon and our digitalization offensive, we have launched a sophisticated growth program that will sustainably strengthen our company’s leading position.”