"2009 WILL BE DIFFICULT – BUT WE ARE WELL-POSITIONED FOR 2009"

The 2008 financial year was characterized by the global economic and financial crisis, which has impacted practically all areas of the real economy. Wolfgang Leitner, President & CEO of ANDRITZ AG, discusses the effects of the global financial and economic crisis, the expectations and strategies of the Andritz GROUP for 2009, as well as the successes achieved during the year 2008.

The global economy is continuing to cool off, and the world’s large economic regions have either already slipped into recession or are seeing a clear slow-down of their economic growth. Experts expect the effects of this crisis to become even more heavily felt by most industries in the course of 2009 and, thus, to have a negative influence on the development of the real economy. What are the effects of this crisis on ANDRITZ?

Wolfgang Leitner: The effects of the worldwide economic slowdown have indeed been strongly felt during the past few months by some of our business areas, mainly PULP & PAPER and METALS, where we have experienced delays in order awards and order execution on the customer side. The other business areas have not, or only partially, been affected by the economic slump. Especially in the HYDRO business area, order intake developed very favorably, and there have been no delays in order execution either.

It is very difficult to predict how business will develop during the coming months and the full year 2009. We are prepared for significant decreases in project activity in one business area or the other. In the PULP & PAPER and METALS business areas, in particular, investments are likely to remain at a low level during the first half of 2009, if not longer. The other ANDRITZ business areas should be less affected by the economic weakness. 2009 will be difficult – but, in general, I believe we are well-positioned  to cope with the effects of the financial and economic crisis.

Many industries have been impacted by the global financial and economic crisis already in 2008. What were the essential developments of ANDRITZ in 2008?

Despite the heavy economic turmoil we can be satisfied with the development during the 2008 business year. We were able to continue our growth both through organic expansion and further important acquisitions, and to consolidate our market position in many areas. In particular, we achieved a very positive order intake development in the HYDRO business area, and we have further strengthened our competitive position in the rapidly growing hydropower market by acquiring General Electric’s hydropower activities. I would also like to stress the very good development of the pumps business, where 2008 has been another record year. In the METALS area, we have purchased Andritz Maerz, a company with a very good reputation in the industry. It has considerably extended our product portfolio for furnaces for the steel and copper industry. With an order intake of more than 150 million Euros and very good profitability, the company, which became a member of the Andritz Group in March 2008, has developed better than expected.

In the PULP & PAPER area, we acquired  major assets of Andreas Kufferath GmbH & Co. KG, Düren, Germany, including the affiliates in Slovakia and China, thus considerably extending our product portfolio in the services area by paper machine fabrics.

What are the goals and strategies for 2009?

The main goal is the rapid and successful integration of the newly acquired companies. Only quick integration into the existing ANDRITZ organization will allow utilization of existing synergies and, thus, create added value for the ANDRITZ GROUP. We must continuously look for opportunities to become yet more competitive by introducing structural and operative measures – several operative measures were taken in 2008 already to adjust ANDRITZ to the changes in the general economic situation. We are watching the economic development very closely and will immediately take further measures if necessary. ANDRITZ is prepared for a comparatively rapid recovery of the global economy beginning in 2009 – but also for a continuation of the recession beyond 2009.

We will continue to investigate potential acquisitions in 2009 to further enhance our product and technology portfolio through the purchase of complementary companies. Our high cash position provides us with the necessary funds to be able to continue our external growth strategy.

Another important goal for 2009 is to process the high order backlog – especially in the HYDRO and METALS areas – according to schedule and in conformity with the customer requirements. Unless we execute all orders to the full satisfaction of our customers, we will not be able to stand our ground and retain our good market position in an environment that has become even more competitive than before due to the current financial and economic crisis.

On behalf of the Executive Board, I would like to thank all employees of the ANDRITZ GROUP for their outstanding performance in 2008, and all customers, business partners, and shareholders for the confidence placed in us in 2008. We will continue to do our utmost in 2009 and in the future to promote the success of ANDRITZ in the best possible way, despite  the global economic weakness.