Increase in Sales

Sales of the Andritz Group in 2004 developed very favorably.  As a result of the execution of the high Order Backlog as of the end of last year, the growth of the services business, and Sales contributions from the companies acquired in 2004, Sales increased by 20.9% to 1,481.3 MEUR (2003: 1,225.0 MEUR).  In particular, the Pulp and Paper, Rolling Mills and Strip Processing Lines, and Environment and Process Business Areas increased their Sales significantly compared to 2003.  Sales of the Feed Technology Business Area were only slightly higher than in the previous year, mainly as a result of weak market conditions and the decline of the US dollar against the Euro, which led to negative translation effects, especially for this Business Area.

Sales of the companies/business areas acquired in 2004 (Bird Machine, NETZSCH Filtration, Kaiser, and VA TECH WABAG’s fluidized bed drying systems Business Area), which were not included in the financial statements of 2003, added approximately 96 MEUR to the Group’s total Sales in 2004. Organic Sales growth of the Group therefore was approximately 13%.

Order Intake and Order Backlog at record levels

Order Intake of the Andritz Group reached an historic record level in 2004.  Due to the very favorable business development in almost every Business Area, Group Order Intake surged from 1,394.4 MEUR in 2003 to 1,837.0 MEUR in 2004, an increase of 31.7%.  Order Intake in the Fourth Quarter of 2004, at 768.5 MEUR, reached an extraordinarily high value.  In particular, the Pulp and Paper Business Area received several large orders (including the large order from CMPC in Chile at approximately 320 MEUR, and the supply of two new recovery boilers to SCA and Weyerhaeuser at approximately 130 MEUR). Order Intake of the Environment and Process Business Area also increased significantly compared to 2003, mainly due to contributions from newly acquired companies, and the favorable development of the centrifuge business.

Order Intake of Bird Machine, NETZSCH Filtration, VA TECH WABAG’s fluidized bed drying systems Business Area, and Kaiser, which were not included in the Order Intake figure of last year, amounted to approximately 106 MEUR in 2004.

As a consequence of excellent Order Intake, the Group’s Order Backlog reached a record level of 1,439.2 MEUR at the end of 2004 (31.12.2003: 1,053.6 MEUR).  This provides a solid workload for the Andritz Group in 2005.

Significant increase in Earnings

As a result of increased Sales, ongoing cost optimization programs, and positive Earnings contributions from some of the newly acquired companies, the Group’s Earnings Before Interest, Taxes, Depreciation, and Amortization of Goodwill (EBITDA) surged from 84.4 MEUR in 2003 to 115.4 MEUR in 2004.  With the exception of the Feed Technology Business Area, whose Earnings were affected by internal restructuring costs and weak market conditions, every Business Area increased its Earnings and profitability compared to last year.  Group profitability expressed as EBITDA margin improved from 6.9% in 2003 to 7.8% in 2004.

EBIT (Earnings Before Interest and Taxes) increased by 55.6% to 76.1 MEUR (2003: 48.9 MEUR).  The lower tax rate compared to 2003 results from lower deferred taxes due to the Austrian 2005 tax reform. Net Income after the deduction of Minority Interests amounted to 53.4 MEUR (2003: 29.1 MEUR).

Cash flow and CAPEX

Cash flow from operating activities amounted to 208.0 MEUR in 2004, increasing significantly compared to last year (2003: 4.6 MEUR).  Investments in tangible and intangible assets amounted to 29.4 MEUR (20.5 MEUR).

Net worth position and capital structure

The balance sheet as of 31.12.2004 shows no major changes compared to 31.12.2003.

Net liquidity (cash and cash equivalents minus interest-bearing financial liabilities) as of 31.12.2004, at 219.6 MEUR, almost quadrupled compared to the reference date of last year (31.12.2003: 55.0 MEUR).  With an equity ratio of 23.4% as of 31.12.2004 (24.0% as of 31.12.2003), the Andritz Group has a solid and balanced financial structure.  

Effects from exchange rates

In 2004, approximately 35% of the Andritz Group’s Sales were denominated in US dollars.  Although the Group attempts to hedge the net currency exposure of each individual order to mitigate the risk of currency fluctuations, changes in exchange rates could result in the recognition of exchange losses in the Group’s financial statements and in translation effects on Order Intake, Sales, and Earnings.

In 2004, the strength of the Euro against the US dollar (the average exchange rate increased by 9.9% in 2004) led to a shortfall in Group Sales of approximately 24 MEUR and in Order Intake of approximately 32 MEUR. At unchanged Euro/US dollar exchage rate, EBITA would have been approximately 1 MEUR higher.