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BÖHLER-UDDEHOLM AG

Modecenterstrasse 14/A3
A-1030 Vienna
Austria
Telephone: +43 1 798 69 01
Fax: +43 1 798 69 01
Web site: http://www.bohler-uddeholm.com

Public Company
Incorporated: 1991
Employees: 11,800
Sales: EUR 1.93 billion ($2.2 billion) (2004)
Stock Exchanges: Vienna
Ticker Symbol: BUD
NAIC: 333992 Welding and Soldering Equipment Manufacturing; 331111 Iron and Steel Mills; 331221 Cold-Rolled Steel Shape Manufacturing; 331491 Nonferrous Metal (Except Copper and Aluminum) Rolling, Drawing, and Extruding; 332111 Iron and Steel Forging; 332116 Metal Stamping

BÖHLER-UDDEHOLM AG (Böhler-Uddeholm) is a world-leading specialty steels and materials manufacturer focused on four core niche markets: High-Performance Metals; Welding Consumables; Precision Strip; and Special Forgings. The company's largest division is its High-Performance Metals division, which is the world's leading producer of tool steel—used in the creation of tooling dies and molds—and the world's number two producer of speed steel, used for drill bits and other related applications. The company's Precision Strip division holds top global positions for the production of bimetallic strips, cutting and creasing rules and rule die steel, which the group's Welding Consumables division ranks third worldwide. Formed through the merger of Böhler in Austria and Uddeholm in Sweden at the beginning of the 1990s, Böhler-Uddeholm operates additional production facilities in the United States, Mexico, Brazil, Italy, Germany, and Belgium. The company distributes its products to more than 100 countries, generating revenues of EUR 1.93 billion ($2.2 billion) in 2004. Böhler-Uddeholm, formerly controlled by the Austrian government's BO industrial holding company Osterreichische Industrieholding AG (OIAG), has been listed on the Vienna Stock Exchange since 1995 and completed its privatization in 2003.

Merging Steel Histories in the 1990s

The merger of Austria's Böhler and Sweden's Uddeholm in 1991 brought together more than six centuries of experience in metals production. Uddeholm grew from the first iron forge in Sweden's Värmland region, built in Stjärnfors in 1668. That forge was already known as Uddeholms Bruk and led to the later formation of Uddeholm AB.

Two years after the launch of the Stjärnfors forge, another forge appeared in Munkfors, built by Johan Bjesson. The Munkfors site grew into one of the country's major iron and steel producers. Uddeholm acquired the Munkfors mill in 1829.

Uddeholm added to its growing steel empire with the creation of a new steel mill at Hagfors in 1873. The Hagfors mill added a rolling mill in 1882, and Uddeholm expanded into the tool steel market, producing steel products for tool and die machinery. Under subsidiary Uddeholm Tooling, the company grew into a major global tool steel producer. By 1886, Uddeholm began experimenting with newly developed methods for producing cold-rolled steel at Munkfors. That facility then became specialized in the production of steel strips, and grew into one of the world's largest producers of thin and ultra-thin steel strips. In 1905, the Munkfors site constructed a dedicated cold-rolling mill. The boost in production enabled Uddeholm to begin targeting the foreign market, especially the booming U.S. market. Among the company's most prominent customers was the fast-growing Gillette company, which specialized in razor blades.

Uddeholm grew into one of the world's leading names in its specialty steel niches through the 20th century. The company also expanded internationally, acquiring steelworks in a number of foreign markets, such as Belgium's Stora in 1978. Closer to home, Uddeholm added AGA AB to its operations in 1985.

In 1988, Uddeholm itself was purchased by privately held Trustor Industrier AB. Soon after, however, Trustor put Uddeholm back up for sale. In 1991, Uddeholm was acquired by Böhler of Austria. Böhler's operations proved complementary to Uddeholm's, as both companies had developed a strong presence in specialty steel niche markets. The combined company, known as Böhler-Uddeholm, took its place among the world's leading specialty steel groups.

Böhler's own history reached back even further than that of Uddeholm. The earliest part of the Böhler group stemmed from the opening of a hammer forge in Kapfenberg, part of the early Austrian empire, by Arnold Taubenprunner in 1446. The Kapfenberg site played host to an important center of the Austrian empire's steel industry, developing into a modern steel mill by the mid-19th century. That era also saw the arrival of a new range of competitors, one of which appeared in 1854, with the founding of a hot-rolling mill in Bruckbach on the river Ybbs by Josef Liebl. The Bruckbach site launched production in 1855.

In 1870, Albert and Emile Böhler purchased the Bruckbach mill, laying the foundation for one of Austria's major steel producers. The company's original name was Gebrüder Böhler & Co. Over the next decades, Böhler expanded strongly, in part through acquisition—in 1894, for example, the company acquired the Kapfenberg mill. In 1940, Böhler acquired the Gerstlmill, which specialized in the production of cold-rolled strip steel and galvanized steel.

Böhler played a significant role as an Austrian steel industry innovation leader. In 1900, the company introduced Böhler Rapid, one of the first high-performance, high-speed steels. Then, in 1908, Böhler became the first in Austria to build an electric arc furnace. Whereas that furnace was rated at just three tons, in 1910 the company opened a new hammer forge with a hammer weight of 30 tons.

The need to boost production during World War I led Böhler to build a new facility boasting six 30-ton furnaces in 1916. In that year, the company expanded its rolling mill as well. Following the war, Böhler began developing new products, such as blank welding wire, introduced in 1926. Welding consumables then became an important part of Böhler's operations, particularly after the company developed a new type of welding wire, called core wire, in 1927.

The buildup to World War II led Böhler to open a new facility, a steelworks at Deuchendorf, in 1938. By 1944, the company had expanded its capacity again, installing a press with a force of 1,200 tons. Yet World War II, and especially its aftermath, were to have far-reaching consequences for Böhler.

Following the war, the Soviet Union launched a policy of confiscating the "German-owned" businesses within its zone of control. Because of Austria's active participation in the Nazi alliance, a large number of Austrian companies, including Böhler and other members of the country's steel industry, now fell under the Soviet Union's definition of a German-owned company. This definition included all businesses founded in Austria following the Anschluss of 1938, as well as companies that had been taken over during the war years by the German-Austrian government. Altogether, the businesses threatened by the Soviet Union's confiscation program—which involved the stripping bare of these businesses, transporting their machinery and equipment for use inside the Soviet empire—accounted for some 20 percent of Austria's total economy. In addition to the steel industry, the "German" definition targeted the country's banking industry, including its three largest banks, as well as its coal and metals mining industry, its oil refining and extraction businesses, as well as the country's leading industrial companies.

The Austrian government reacted quickly, passing new legislation in 1946 nationalizing all of its "German" companies. Yet the first Nationalization act, while protecting the businesses in the zones controlled by the British, French, and Americans—which respected Austria's claim—remained ineffectual in the Soviet zone. The nationalization of the remaining industries and businesses nonetheless gave the Austrian government oversight of the distribution of reconstruction aid provided by the United States in particular. In this way, the government was able to subsidize its nationalized businesses and aid in the reconstruction. Over the next decades, government control proved less than efficient; after a number of crises, the government instituted a series of reforms in the 1960s, leading to the creation of a new public limited company, Osterreichische Industrieverwaltungs AG (later Osterreichische Industrieholding AG, or OIAG), in 1970.

In the early 1970s, the OIAG began restructuring its vast holdings, which included the creation of industrial giant VOEST. The specialty steel sector's turn came in 1975, when Böhler and two other specialty steel producers, Schoeller-Bleckmann and Steirische Gusstahlwerke, were combined into a single company, known as Vereinigte Edelstahlwerke AG (VEW). Schoeller-Bleckmann, which traced its own history back to the founding of a forgery guild in 1496, had developed a specialty as a stainless steel producer. In 1988, the OIAG decided to split VEW's operations into two, creating Böhler on the one hand, and Schoeller Bleckmann on the other. By then, the OIAG, which faced losses in many of the businesses under its control, was under pressure to begin restructuring its holdings, including the privatization of many of its companies. The passage of new legislation in 1993 established a strict timeline for carrying out OIAG's privatization effort.

Company Perspectives:

Shared Values: We are the leaders in quality. BÖHLERUDDEHOLM regards profitability and financial stability as a sound basis for growth and business development, and as a means of establishing long-term partnerships with our customers. BÖHLER-UDDEHOLM anticipates and identifies the needs of its customers and provides materials, products and services that demand consistent leadership in quality. This goal requires superior knowledge of processes, products and applications based on state-of-the-art technology. Quality leadership means continuous improvement across the entire value chain.

Global Niche Leader in the 21st Century

The acquisition of Uddeholm by Böhler in 1991 set the stage for the combined company's privatization in the mid-1990s. Before that event took place, however, Böhler-Uddeholm launched a thorough restructuring in an effort to cut its losses. By 1994, the company's reorganization had succeeded in transforming Böhler-Uddeholm into a streamlined and profitable company.

The first step in Böhler-Uddeholm's privatization came the following year, when the OIAG listed more than 25 percent of the company's shares on the Vienna Stock Exchange. In the meantime, Böhler-Uddeholm's restructuring continued, until, by the end of 1996, the company had sold off its noncore holdings and regrouped around four core businesses: High-Performance Metals; Precision Strip; Special Forgings; and Welding Consumables. The company then capped its restructuring with a secondary offering, which reduced the OIAG's stake in the company to just 25 percent, in 1996.

Böhler-Uddeholm then began a new growth phase, launching a number of major acquisitions. In 1997, the company purchased fellow Austrian firm Martin Miller GmbH, a producer of strip steel. Founded in 1782 in Vienna, Martin Miller had been behind the invention of steel piano wire in 1840, before adding cold-rolling mill capacity at the beginning of the 20th century.

Böhler-Udderholm became the world's second largest highspeed steel producer in 1998, when it acquired Allegheny Teledyne. The Virginia-based company had been created in the early 1970s, and had risen to become the U.S. leader in the high-speed steel segment.

Into the beginning of the 21st century, Böhler-Uddeholm launched an expansion of its international sales network, setting up or consolidating subsidiaries in markets including Germany, the United Kingdom, Switzerland, The Netherlands, and elsewhere. The company also invested in expanding its own production capacity, opening electro-slag re-melting plants in Austria and Sweden, as well as a powder metallurgy steels facility in Kapfenberg in 1999. The company then built a new vacuum re-melting plant at the Kapfenberg site in 2000.

Despite the global slowdown following the September 11, 2001 terrorist attacks in the United States, Böhler-Uddeholm continued its expansion. In 2002 the company formed a number of joint ventures, including one with Fileur S.A. of Italy, and another with Dan Spray A/S, a Denmark-based spray forming specialist. In 2000, in addition, Böhler-Uddeholm had formed a joint venture with the Thyssen Group to form the 50–50 joint venture Thyssen Schweisstechnik GmbH. By 2003, however, Böhler-Uddeholm had acquired full control of the joint venture, making it the world leader in welding consumables.

The year 2003 also marked Böhler-Uddeholm's full privatization, as OIAG placed the last of its holdings on the Vienna Stock Exchange. Soon after, the company turned to a new part of the world, South America, buying up Brazil's Villares Metals S.A. That acquisition, completed in 2004, gave Böhler-Uddeholm the leading share of the South American tool steel and speed steel markets.

Böhler-Uddeholm showed no sign of slowing down into the middle of the 1990s. In 2005, the company returned to the acquisition trail, buying up Germany's Edelstahlwerke Buderus. That purchase gave the company production facilities in Germany, while boosting its specialty steels capacity. With operations dating back to the 15th century, Böhler-Uddeholm had forged a solid foundation for the future.

Key Dates:

1446:: A hammer forge is founded in Kapfenberg, in Austria, by Arnold Taubenprunner.
1668:: The first iron forge, known as Uddeholm, is built in Sweden's Värmland region, in Stjärnfors.
1670:: An iron forge is built at Munkfors, in Sweden.
1829:: Uddeholm acquires the Munkfors mill.
1854:: A hot rolling mill is founded in Bruckbach, Austria.
1870:: The Böhler brothers acquire the Bruckbach mill.
1900:: Böhler introduces Böhler Rapide, the first high-speed steel.
1905:: Uddeholm constructs a cold rolling mill at the Munkfors site and launches thin and ultra-thin steel production.
1926:: Böhler develops welding wire, launching the Welding Consumables operation.
1946:: Böhler is nationalized by the Austrian government.
1975:: Böhler is combined with two other Austrian steel producers to form VEW.
1988:: VEW is broken up, with Böhler taking over the specialty steel component.
1991:: Böhler and Uddeholm merge, forming BÖHLERUDDEHOLM (Böhler-Uddeholm).
1995:: The Austrian government lists 25 percent of Böhler-Uddeholm's stock on the Vienna exchange in the first step of privatization.
1996:: Böhler-Uddeholm's free float now tops 75 percent.
1997:: The company acquires Martin Miller GmbH of Austria.
1998:: The company acquires Allegheny Teledyne of the United States.
2000:: The company forms a welding consumable joint venture with Thyssen Group.
2003:: Böhler-Uddeholm's free float reaches 100 percent; the company acquires full control of the Thyssen joint venture.
2004:: The company acquires Villares Metals of Brazil.
2005:: The company acquires Edelstahlwerke Buderus in Germany.

Principal Subsidiaries

ASSAB Pacific Pte. Ltd.; BÖHLER Bleche GmbH; BÖHLER Edelstahl GmbH; BÖHLER International GmbH; BÖHLER Schmiedetechnik GmbH & Co. KG; BÖHLER Schweisstechnik Austria GmbH; BÖHLER THYSSEN Schweisstechnik Deutschland GmbH; BÖHLER THYSSEN Schweisstechnik GmbH; BÖHLER-UDDEHOLM (UK) Ltd.; BÖHLER-UDDEHOLM Deutschland GmbH; BÖHLER-UDDEHOLM France S.A.S.; BÖHLER-UDDEHOLM Iberica S.A.; BÖHLER-UDDEHOLM Italia S.p.A.; BÖHLER-UDDEHOLM North America; BÖHLER-UDDEHOLM Precision Strip AB; BÖHLER-UDDEHOLM Precision Strip GmbH & Co. KG; BÖHLER-UDDEHOLM Specialty Metals, Inc.; BÖHLER-UDDEHOLM Strip Steel LLC; BÖHLER-YBBSTAL Profil GmbH; BÖHLER-YBBSTALWERKE GmbH; ESCHMANNSTAHL GmbH & Co. KG; FONTARGEN GmbH; MARTIN MILLER GmbH; SOUDOKAY S.A.; UDDEHOLM Machining AB; UDDEHOLM Tooling AB; UTP Schweissmaterial GmbH; VILLARES Metals S.A.

Principal Competitors

Corus Nederland B.V.; Chongqing Special Steel Group Company Ltd.; Cargill Inc.; Aceros Chile S.A.; Arcelor S.A.; United States Steel Corporation; BHP Billiton Ltd.; ACINOX S.A.; JFE Steel Corporation.