Outlook

Leading economic research institutes (OECD, WIFO) expect global economic activities to improve in 2004.  Most notably, the USA is predicted to continue its growth trend shown in the second Half of 2003 and to reach a GDP growth of 4.2% in 2004.  In Euroland, GDP is likely to grow by only 2.3% as a result of continued weak domestic demand and the increased exchange rate of the Euro versus the US dollar, which should have a dampening effect on European exports.  No major changes compared to 2003 are expected for Japan, where economic activities are forecast to remain very subdued.  Japan’s GDP is forecast to grow by only 0.2% in 2004.

The relevant markets for Andritz - pulp, paper, and steel - should develop satisfactorily in 2004, with investment activities increasingly improving in the course of the year.  According to the leading research institutes, higher project activity is expected for greenfield pulp mills and modernizations of existing installations in the Southern hemisphere.  

Market activities in Europe and North America are likely to remain subdued, in part due to the high exchange rate of the Euro against the US dollar.  

In the area of Rolling Mills and Strip Processing Lines, the brisk investment activity in China and Asia, particularly in the stainless steel area, is likely to continue in 2004.  For Environment and Process, market conditions are expected to improve in the course of the coming year.

Integration of newly acquired companies and continued pre-emptive restructuring measures in every Business Area to lower the Group’s fixed cost base are key targets for the Andritz Group in 2004.

Based on these factors, given the high level of Order Backlog as of 31.12.2003, and the somewhat optimistic forecasts for global economic development by researchers, Andritz expects its business results to develop favorably in the coming year.  Sales and Net Income in 2004 are forecast to increase compared to 2003.  However, if the improvement in the global economy expected by economic researchers does not materialize, Sales and Earnings of the Andritz Group may be adversely affected.

Sources: OECD, WIFO, RISI, Paperloop

Disclaimer

Certain statements contained in this report 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.