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Ladies and Gentlemen,
Dear Shareholders, All in all, the Andritz Group succeeded in developing its business in a satisfactory
manner during 2003. Despite persistent difficult economic conditions in most of the world, with only a slow improvement towards the end of the year, we were able to achieve the highest Order Intake in the Group’s 150-year history. We
see two main contributions to this favorable development of our business. The first is the continued strong focus on the development of new custom-tailored products through intensive R&D. The second reason is the continuation of our
strategy to acquire companies that complement our existing product and technology range. Pursuing both goals has significantly improved our profile during the last years and has made us a leading supplier in all our Business Areas. In
this context, special mention must be made of the largest contract in the chemical pulping segment awarded this year, the greenfield pulp mill of Veracel (Joint Venture of Stora Enso and Aracruz) in Brazil. In July 2003, Andritz won the contract for
supplying a complete market pulp fiberline - from the digester to finished market pulp bales, including the white liquor plant. This reference demonstrates the attractiveness
of our technology, our systems capabilities, and our project management experience to two of the most sophisticated and demanding pulp producers in the world (Aracruz and Stora Enso). Not only were we selected as the preferred supplier but we were
also able to offer competitive prices without overly sacrificing our long-term profitability targets. Our extensive efforts to reduce the costs of our systems and components, as well as our fixed costs, are paying off. Both
issues - technological leadership and a competitive cost structure - will continue to be clear goals in the coming year. We will intensify R&D to develop new products that are
both technically and economically superior. Our initiative today is to add functionality by using more efficient technology, and at the same time reduce complexity. New Andritz products shall precisely fit customer needs and reduce the overall
cost of producing the end product. Customers will also save money during installation, in daily operation, and in maintenance. In 2004 we aim at continuing our strategy of
acquiring companies with complementary products and technologies in order to strengthen our profile as an overall supplier of complete systems and services in all our Business Areas. By purchasing IDEAS Simulation, Acutest, Fiedler, and Bird Machine,
we have significantly expanded the high-value services we offer our customers. In addition we have further complemented our product capabilities in the Pulp and Paper as well as in the Environment and Process Business Areas. Our aim is to quickly integrate
all four business into the Group so that we benefit from existing synergies and know-how available. In the Rolling Mills and Strip Processing Lines Business Area, full integration of the Selas furnace business, which was acquired in October 2002, is
one of our major goals for 2004. We see Selas as a very important strategic complement to our product range. It offers superior process know-how and technologies for continuous hot-dip galvanizing and carbon steel strip annealing systems for high-end
applications in the automotive industry. We will continue with the expansion of our services business in all four Business Areas. This goal shall be achieved through continued
focus on in-house R&D as well as through strategic acquisitions of service companies. With regard to the fast growing Chinese economy, Andritz will continue with its careful
expansion strategy. All Business Areas of Andritz have been increasingly active in this region. Having served Chinese customers for decades, over the last several years we have continuously expanded our local presence in China through the
successful establishment of the Andritz-Kenflo Joint Venture in 1998 and the foundation of Andritz Technologies Ltd. in 2001. Due to the successful business development of both companies, Andritz decided to expand capacities and recently opened a new
state-of-the-art manufacturing facility in Foshan. The combination of rapidly growing demand in developing countries and the availability of modern production equipment with substantial
cost advantages should drive customer demand for Andritz products in the future. Internally, we are proactively encouraging initiatives to lower our overhead costs through pre-emptive
restructuring and selective outsourcing. Our structure is flexible enough to quickly integrate the complementary acquisitions without missing market opportunities or disrupting customer relationships. Wherever possible, we are eliminating
redundancies and minimizing the associated overheads. One of our major goals for 2004 is the continued outsourcing of non-proprietary production tasks. A very important milestone in the
Andritz Group's progress in 2003 was the successful Secondary Public Offering. Despite comparatively weak financial markets in the first Half of the year, we were able to conclude the Secondary Public Offering of Andritz shares via a public offering in Austria
and a private placement with national and international institutional investors. Nearly 6.1 million shares from our existing institutional shareholders - Carlyle, UIAG, GE Capital, and Deutsche Beteiligungs AG - were placed at 22.75 Euros per share. This
transaction increased the free float of our shares from 16% to 62%, making Andritz a real public company with significantly improved liquidity on the stock exchange. Through this successful transaction, Andritz increased its credibility and reputation
in the financial markets, with a large number of renowned institutional investors now becoming shareholders or increasing their holdings. The successful SPO and the 100 million
Euro bond issue in May 2002 have created a solid base for future growth of the Group. Our solid financial position is a strength recognized by customers and suppliers as well. The
Managing Board would like to take this opportunity to thank all employees for their contributions and performance during the year under review. We have been able to hold and, in many cases, improve our position in a very difficult economic environment.
This is a direct result of the contribution and diligence of each employee in the worldwide Group. We also thank our customers and business partners for the confidence they have placed in us, and assure them that we will perform to their
requirements fully during the year to come. The Managing Board
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