Andritz AG

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Andritz AG

Stattegger Strasse 18
A-8045 Graz
Austria
Telephone: +43 316 6902 0
Fax: +43 316 6902 415
Web site: http://www.andritz.com

Public Company
Incorporated: 1852
Employees: 4,498
Sales: EUR 1.32 billion (US$1.17 billion) (2001)
Stock Exchanges: Vienna OTC
Ticker Symbol: ANDR
NAIC: 333291 Paper Industry Machinery Manufacturing; 333294 Food Product Machinery Manufacturing; 333298 All Other Industrial Manufacturing; 333516 Rolling Mill Machinery and Equipment Manufacturing; 333611 Turbine and Turbine Generator Set Unit Manufacturing; 333911 Pump and Pumping Equipment Manufacturing; 333999 All Other General Purpose Machinery Manufacturing; 541330 Engineering Services

Graz, Austria-based Andritz AG engineers and manufactures high-tech production and processing systems. The company has pursued a targeted acquisition program to become one of the world’s leading suppliers of pulp and paper production machinery, as well as other industrial and environmental production machinery and systems. Andritz’s operations are grouped under four Strategic Business Areas: Pulp and Paper; Rolling Mills and Strip Processing Lines for the steel industry; Environmental and Process Technologies; and Feed Technology. The company’s largest segment is its Pulp and Paper unit, which accounted for 67 percent of Andritz’s sales of EUR 1.32 billion in 2001. Andritz manufactures a full range of systems, plants, machinery, and processes covering all types of pulp production, as well as production equipment and systems for specialized tissues. Rolling Mills and Strip Processing Lines accounted for 13 percent of the company’s sales in 2001 and includes the manufacturing and installation of plants for producers of different types of steel, including cold-rolled carbon steel, high-grade steel, and nonferrous metal strip. Environmental and Process Technologies, which includes systems for wastewater and sewage treatment plants, and industrial sludge treatment and drying systems, adds approximately 12 percent of the company’s revenues. Andritz is also a leading manufacturer of Feed Technology equipment for the production of animal feeds; the company has captured a 50 percent share of the market for salmon feed equipment. That segment added 8 percent to the company’s sales in 2001. Andritz is a globally operating company, with a focus on the European and North American markets, which represent 46 and 38 percent of the company’s sales, respectively. Andritz operates 18 manufacturing plants in Austria, Finland, Germany, the United States, France, Canada, China, and Denmark. The company has been listed on the Vienna stock exchange since 2001. In January 2002, the company was added to that exchange’s ATX listing. Andritz is led by president and CEO Wolfgang Leitner.

Steel Foundry Founding in the Mid-19th Century

Andritz’s roots traced back to the mid-19th century when Josef Kòròsi established a foundry and machine plant in Graz, Austria. In 1900, the company went public, which led, in 1957, to a takeover by Vienna-based Credietanstalt-Bankverein. By then, Andritz had begun engineering and manufacturing equipment for the forestry industry, which led increasingly to the development of products for the pulp and paper industry. Among Andritz’s earliest products were equipment and systems for pulp pumping. The company then went on to develop machinery for paper manufacturing as well as wire presses for removing the water from pulp stock. In 1983, the company formed the basis of its later Environmental and Process Technologies division when it began adapting the dewatering and drying technologies it had been using for its pulp and paper industry systems for use in industrial sludge treatment.

Andritz remained under the control of Credietanstalt-Bankverein until 1987. Under Credietanstalt-Bankverein, much of Andritz’s activity involved the production of machinery under license. In the mid-1980s, however, the company adopted a new strategic direction set on redefining the company as a supplier of proprietary, high-technology manufacturing machinery and systems. As such, the company sought to build up its engineering and development component. As part of its strategic change, Andritz found itself under new management, when AGIV AG, an investment company based in Frankfurt, Germany, acquired the company. At that time, the company was placed under the leadership of Wolfgang Leitner, who led the company’s transformation.

Through the end of the 1980s, Andritz concentrated on developing its own in-house products. The 1990s, however, were to mark the true start of Andritz’s transformation into a globally operating manufacturer. Although the pulp and paper industry was to remain the company’s core customer segment—accounting for more than two-thirds of its revenues—Andritz looked to establish itself in other industrial areas. The company’s first expansion came in 1990, with the acquisition of Sprout-Bauer, based in Muncy, Pennsylvania.

Sprout-Bauer had been formed in 1986 through the merger of two companies that traced their roots to the late 19th century. The acquisition of Sprout-Bauer by Andritz not only extended Andritz’s pulp systems operations, as well as its environmental technologies division, notably with Sprout-Bauer’s line of screening and seizing equipment, but also gave Andritz an entry into the mechanical feed production market.

High-Tech Engineering Group for the 21st Century

The Sprout-Bauer acquisition had given Andritz a jump-start in its drive to redefine itself as a diversified yet focused engineering and manufacturing group. The company continued building up its environmental and process technologies division with the acquisitions of TCW in 1991 and a 50 percent stake in France’s Guinard Centrifugation, which had started operations in 1950. By then, the company had made another significant purchase, that of Durametal, based in Oregon in the United States. Durametal had originally been founded in 1948 as Brake Drum Supply Company, but had grown to become a major manufacturer of refiner plates and other components for mechanical pulping systems and other industrial applications. The purchase significantly enhanced Andritz’s U.S. presence.

Andritz turned to Finland, one of Europe’s major forestry markets, in 1994, acquiring the Kone Wood Group. The addition of that company’s manufacturing operations, which included wood processing and related equipment, helped strengthen Andritz’s position as a major supplier to the European and global pulp industry. The following year, Andritz turned to Denmark, where it bought up Jesma-Matador, a company that had developed a strong position in the Danish market for feed mill machinery and systems, especially for the production of salmon feed.

Jesma-Matador’s history dated back to the founding of Jesma in 1895, initially as a transporter of grain and other feed products, before turning to the manufacturing of equipment for the production of animal feed. In 1986, Jesma merged with Matador, also from Denmark, which had been founded in 1931.

The acquisition of Jesma-Matador led Andritz to form a dedicated Feed Technology Division and merge its main operations into a new company in 1995. Called Sprout-Matador, the new subsidiary encompassed the company’s feed mill and equipment manufacturing activities in the United States and Denmark.

Andritz took a break from making new acquisitions in the mid-1990s. In 1998, however, the company returned to external expansion with not only a new acquisition, but a new operating division as well. In that year the company purchased a 75 percent stake in Sundwig Eisenhütte Maschinenfabrik GmbH & Co. based in Hemer, Germany. That company’s origins reached back to its founding as an ironworks in 1650, before turning to machinery production in the 1850s. By 1920, Sundwig had become a specialist in machinery and plant equipment for the steel industry.

Andritz quickly followed the Sundwig acquisition with those of Thermtec, based in The Netherlands, which specialized in thermal processing applications, and Ruthner, which focused on processing engineering applications. The company then bundled the three companies into a new Rolling Mills and Strip Processing division.

Andritz itself found itself under new ownership in 1999 when AGIV sold the company to a consortium consisting of the Carlyle Group and Unternehmens Invest AG, an Austrian investment group that specialized in acquiring stakes in private companies in order to prepare them for an initial public offering (IPO). Joining the consortium taking control of Andritz was president and CEO Wolfgang Leitner and other members of Andritz’s management.

The new financial backing enabled Andritz to set its sights on a new target: in March 2000, the company made its largest acquisition to date, that of a 50 percent stake in Finland’s Ahlstrom Machinery Group from the A. Ahlstrom Corporation, a manufacturer of chemical pulp plants and other pulp processing machinery. As part of the purchase agreement, Andritz also received the option of purchasing full control of Ahlstrom Machinery in the event of Andritz going public. In the meantime, Ahlstrom Machinery was renamed Andritz-Ahlstrom and placed under Andritz’s Pulp and Paper division.

The Ahlstrom acquisition helped boost Andritz’s sales past the EUR 1 billion mark, and also cemented the company’s worldwide leadership in a variety of pulp and paper processing machinery categories, including that of chemical pulp plants. Andritz also began preparing a public offering in earnest, in large part in order to complete the Ahlstrom acquisition. Yet the company was forced to postpone its IPO, initially set for October 2000, due to poor market conditions.

Company Perspectives:

Corporate Mission: A Global Market Leader in High-Tech Production Systems for Pulp and Paper, Steel and Other Specialized Industries.

Instead, the company made another acquisition, of Universal Milling Technology, which had been the feed technology division of the United Kingdom’s Tate & Lyle Plc. The purchase, made in November 2000, boosted Andritz as the world’s leading manufacturer of systems, processes, and machinery for animal feed production. The company’s Feed Technology division now represented nearly 10 percent of the company’s annual sales.

Andritz finally went public in July 2001, listing on the Vienna Stock Exchange. The IPO represented somewhat of a disappointment, however, as the company listed on half the number of shares it had originally expected to sell in October of the previous year; meanwhile, the stock failed to meet its initial share price after its first day of trading. Nonetheless, many analysts remained optimistic about the stock and the company. By the beginning of 2002, Andritz had proved them right, when it was added to the Vienna exchange’s ATX blue-chip index.

Following the IPO, Andritz made good on completing its acquisition of full control of Andritz-Ahlstrom, buying up the rest of that subsidiary in July 2001. As it turned to the new century, Andritz sought fresh international expansion opportunities. The overwhelming majority of the company’s sales, which topped EUR 1.3 billion in 2001, remained focused on Europe (at 46 percent of sales) and the United States (at 38 percent of sales). The company now targeted growth in Asia, specifically in the vast Chinese market, adding two new production facilities in that country to bring its total to 18 manufacturing plants worldwide.

Principal Subsidiaries

Andritz Denmark A/S; Sprout-Matador A/S; Andritz (USA), Inc. ; Andritz Inc. (U.S.); Andritz-Ruthner, Inc. (U.S.); Durametal Corporation (U.S.); Guinard Centrifugation S.A. (France, 50%); Andritz S.A. (France); Andritz Ingenieria S.A. (Spain); Andritz GmbH (Germany); Sundwig GmbH (Germany; 75%); Andritz Ltda. (Brazil); Andritz Oy (Finland); Andritz Ltd. (Canada); Andritz AB (Sweden); Andritz Ltd. (U.K.); Andritz-Kenflo Foshan Pump Co. Ltd. (China; 60%); U.M.T. Limited (U.K.); U.M.T. Deurne B.V. (Netherlands); U.M.T. Boxtel B.V. (Netherlands); Universal Milling Technology S.A. (France); Andritz-Ahlstrom Ltda. (Brazil); Andritz-Ahlstrom Oy (Finland); Andritz-Ahlstrom Holdings USA Inc.; Andritz-Ahlstrom Inc. (U.S.A.); Kamyr Canada Inc. (Canada); Andritz-Ahlstrom AB (Sweden); Andritz-Ahlstrom GmbH (Germany); Andritz-Ahlstrom KK (Japan).

Principal Competitors

Kvarner ASA (KVIB); J.M. Voith GmbH; Stork NV; Thermo Electron Corp.; BTR Inc.; Joy Global Inc.; Kvaerner E and C Plc; Sacmi Cooperativa Meccanici Imola Seri; Jagenberg AG; Firth Rixson plc; Tetra Pack Italiana SpA; Wanderer-Werke AG; Metso Paper Sundsvall AB; Simon Group PLC; Paper Converting Machine Co.; Windmoller und Holscher; Kadant Inc.; Winkler + Dunnebier AG; Lindauer Dornier Gesellschaft mbH; Black Clawson Company Inc.; Schur International a/s; Brodrene Hartmann A/S.

Key Dates:

1852:: Josef Körösi founds a steel foundry and machine works in Graz, Austria.
1900:: Andritz, which has begun producing equipment for the pulp and paper industry, becomes a public company.
1957:: Andritz is acquired by Credietanstalt-Bankverein, based in Vienna, and continues expanding its pulp & paper industry operations.
1983:: Andritz begins developing its Environmental and Process Technologies Division by extending its dewatering and drying technology to industrial sludge treatment.
1987:: Andritz is acquired by AGIV AG, an investment firm based in Frankfurt, Germany, and adopts new strategic direction to become an engineering firm and manufacturer of proprietary systems.
1990:: The company acquires Sprout-Bauer, in the United States, adding feed systems manufacturing.
1992:: The company acquires Durametal, in the United States, to boost position in North America.
1994:: The company acquires Kone Wood Group.
1995:: The company acquires Jesma-Matador A/S, of Denmark, which is then combined with Sprout-Bauer to form Sprout-Matador.
1998:: The company acquires 75 percent of Sundwig, based in Germany.
1999:: AGIV sells Andritz to a consortium, including the Carlyle Group and Andritz management.
2000:: Andritz acquires 50 percent of the Ahlstrom Machinery Group, which is renamed Andritz-Ahlstrom.
2001:: Andritz lists on the Vienna stock exchange and completes the acquisition of Andritz-Ahlstrom.
2002:: Andritz is admitted to the Vienna exchange’s ATX blue chip index.