Edited Transcript of ANDR.VI earnings conference call or presentation 30-Apr-20 6:30am GMT

And now if we affect above ought the presentation and though noise ought [against] some cautious words above the outlook, though you possibly used to expect. above Page 3, yes, Q1 at a glance, people bid intake, EUR 1.9 billion. Good level, satisfactory level, cabin same various film depending above the commerce area. same good at pulp & Paper, due ought booking a big bid from UPM, Uruguay. Metals make booking. That's the sole glowing spot though Metals. Metals solid; and Hydro, continuing weak.

Order backlog, same high, EUR 7.9 billion. I study it's the third -- second or third highest backlog at our history. Sales at EUR 1.5 billion, basically unchanged ought our first zone of final year. no chief -- consequently far, no chief sales shock from the COVID-19 crisis. EBITA is significantly down, though already said, due ought Metals, principally Schuler. pulp & Paper, continuing good profitability and use EBITA border down ought 4.6% after 5.6% at Q1 of final year.

Some details, Page 5. bid intake, same good, plus 12%. cabin above the right side, you look plus 34% at pulp & Paper; plus 4% at Metals caused by a same weak and low bid intake at Q1 2019 though Schuler consequently lean growth; and negative development at Hydro, minus 22%. And Separation, minus 11%. cabin though both Hydro and Separation, we are no concerned about the bid intake though the surplus of this year. And I used to earn backward ought that a small bit later.

Slide 6. Quarterly development. You look final 4 quarters, we had 2 same high lodging Q2 and Q3 final year, both above EUR 2 billion, due ought 2 big pulp projects at South America final year, and this year, this to be a more the -- though South America.

Yes. I study that's -- probably, above the regional side, above the right side, due ought this big South American order, South America has convert up ought 1/3 of our bid intake, cabin that's driven obviously by one order. The ruin is, though you know, show firm with a little percent points variation from quarter-to-quarter.

Slide 7. Sales. level sales, plus 1%. Here, clay picture. pulp & Paper, increasing; the other 3 commerce areas, decreasing. Overall, balancing out.

Slide 8. Service business, continuing good development. We absence ought compare with Q1 sales with Q1 sales at 2019. consequently it's flat. Basically level sales, minus 2%. We had a big hop at 2019 compared ought 2018. The improve divide of that, first-time consolidation of Xerium cabin though noise same good -- otherwise, a same good quarter. consequently services continues ought mature fairly well. Also, there is obviously an shock of COVID above the service commerce at -- with regards ought the territory services. if traveling is -- amid countries is no longer possible, and if plants sum down their gates ought nation coming from the outside, territory service obviously has a difficult time. That is definitely negatively affected. cabin overall, service is certainly expected ought appear a substantial higher stability at comparison ought the main business.

Overall, service is a growth story above our side. above the year, 10% per year growth rate. And due ought the growth at sales -- about -- slightly lower, full percent of 38% of full sales.

By commerce area, fairly different. pulp & Paper, 45%; and 52% level Separation; hydro, 33%; and Metals, the lowest at 23%, above slip 9 is that.

Slide 10. though the backlog, I study we've covered that, same high, with Hydro and pulp & Paper accounting though the majority of this backlog due ought their longest execution time, especially the larger orders.

Slide 11. EBITA, down, holding up at pulp & Paper; substantially down at Metals; Hydro, slightly lower; and Separation, though noise slightly lower. With regard, I think, pulp & Paper, I don't absence ought effect anything or explain anything, continues ought be nicely profitable, above the just profitability. Hydro, we nevertheless flourish ought be above just profitability. cabin obviously, the shrinking market, the refuse at bid intake, which gradually has -- is translating into sales has led to, I used to say, a more challenging bid backlog with admire ought price quality. And that shows at this profitability. We wish Hydro ought flourish ought be nicely profitable, ought be a glowing spot within the Andritz universe. cabin again, it has convert somewhat more challenging. And we're doing our best ought create certain that we kill the orders same precisely avoiding erosion, and though noise if and when and where it's needed, ought flourish ought adjust the capacities at various countries, consolidating into lower quantity of countries' activities ought create certain that we assert a competitive price base. Separation, I dine no concerns. I study profitability this year to be at least though good though final year.

Slide 12. EBITDA bridge ought the net income. And impartial ought award you the breakdown graphically also, consequently from an EBITDA of 7.5%, EUR 112 million, depreciation, 42% ought an EBITDA of EUR 70 million; and IFRS 3 amortization, EUR 16 million; financial results, EUR 9 million; and tax rate, 31% ought the EUR 30 million net income.

Cash flow, Page 13, stable. You look the comparison -- though figures of final year. consequently depreciation, especially amortization, has convert down ought EUR 59 million and food trends, though ought final year. And the other, I study is small, smaller changes.

On the next Page 14, our financial position. sum and net cash, sum cash, EUR 1.5 billion, same fortunate that we dine often had the policy ought create certain we dine a destiny of cash. We obviously had ought wage though that with the negative spread at favour rates. cabin with that position, we definitely dine no reserved any time though discussions with the banks ought create certain that we can assert our liquidity. Net coin has gone down slightly from EUR 245 million ought EUR 208 million. fairly a substantial divide of that is exchange appraise losses. And a divide of that at Brazil due ought the weakening of the Brazilian reais where we dine destiny of coin at connection with the execution of the orders we are -- we dine there underway.

Page 16. summary of the key figures. Yes, highlight is this coin brook from operating activities, completely same though final year. And compared ought final year, obviously, net working main has improved substantially. Compared ought end of final year, it has been more or less stable.

Now affect above ought the commerce areas. And I study a destiny of that has already been said. Yes, pulp & Paper, same good, good bid intake, good profitability. Service business, same significant though that. And we wish -- obviously, and this applies ought total of the 4 commerce areas. We definitely wish some shock above the main bid intake though a effect of corona. And -- cabin we though noise wish an shock above the service bid intake. cabin we wish this shock above service ought be substantially less than capital. And obviously, any shock above the main bid intake is translated into sales sole above the next 1 ought 2 years, let's say, 1 year. consequently the sales consequence definitely will be smaller and lower than the bid intake effect.

So much about pulp & Paper. Yes, here is a pleasant story. I study we have, some 2 years ago, we dine acquired a company at Italy, no at Lombardy cabin at Pescara, the center of Italy. That is producing machines ought make diapers. And if you remember, we acquired that though we are same noise at the manufacture step ago that, implication manufacture of nonwoven fabrics. And at the beginning of this corona crisis, we converted the astronaut machine or one of the astronaut machines we dine there into a machine that can make facemasks. And we dine been successful ought acquire though noise the raw material, which are 3 or 4 various types of nonwoven fabrics and are starting ought make these watch masks.

And we dine already started ought sell this manufacture equipment. These are no -- these are low single-digit millions per manufacture line, consequently I don't wish a enormous shock above our people sumit line. cabin we dine already sold few lines of that and need ought sell a little more though many countries dine decided ought begin up domestic national manufacture though these watch masks. We are impartial at the process now of completing the development of these plan -- products getting certifications that are needed. This used to be these critical masks. consequently I study it's a pleasant add-on ought what we dine had running though a longer time.

On Page 19, you look where it fits into the overall, let's say, equip chain. Raw material, one of the raw materials is though noise cellulose. It was one of the reasons why we went into that. The nonwoven fabrication is what I impartial described. Converting is this manufacture of, amid other things, diapers, cabin though noise pads though watch steaming, et cetera, and then retail and distribution where we are no involved. consequently this was the simple part, pulp & Paper.

Now we advance ought the difficult part, Metals. And yes, it's -- bid intake has developed reasonably. cabin clearly, it's both segments, both the normal steel industry, cabin also, and especially Schuler with the automotive industry are heavily impacted, negatively impacted. I study I don't absence ought address about the automotive industry, a same difficult situation. And puzzle is, certainly, is our restructuring plan from center of final year that extended above 24 ought 30 months, is it nevertheless sufficient? Or fulfill we absence ought restructure more? Based above what we know today, from a financial side, it to be sufficient. We dine some flexibility within these provisions. We are redirecting and reorienting certain of these actions. We dine ought adjust some areas a small bit more.

But consequently far, we are within the creative plan. Obviously, we used to dine preferred ought be faster with these actions. cabin once you dine agreed above the social plan, you dine agreed above the plan, and you don't need ought reopen it. consequently we -- you will look from quarter-to-quarter from now above a reduction of costs. cabin above a year -- above a total year basis, the majority of these wage will be visible sole next year. cabin from the third zone of this year onwards, we to look some consequence of these price reductions. consequently much about Metals.

Hydro. Yes, we dine a challenging just environment. How is it affected by corona? And basically compared ought the other commerce areas. consequently fairly a substantial differences amid the various countries, substantial differences amid customers. Some are accelerating their refurbishments, some are asking ought recess construction sites. It's truly a destiny of distinction that can be seen here. Now being at renewable energy, obviously, is an advantage.

Looking at the might consumption foretell though this year that suppose minus 10% though North America, minus 10% though Europe. Globally, I study it's minus 6%. Obviously, we'll no make a substantial advance though additional investment. above the other hand, if governments resolution ought expand their investments above the -- from the government side, renewable might is a same good manner ought fulfill that and nevertheless are at row with this sustainability plan that the European university with the commitment though CO2 reduction. And actually, renewable might consumption will flourish ought convert this year. consequently I study there is -- we don't dine ought be though noise concerned, cabin I used to no wish a enormous hop at petition though Hydro power.

And again, though I said, yes, profitability is slightly lower than final year. cabin we wish it ought remain solidly and attractively beneficial at the foreseeable future, possibly including or after some additional restructuring above the capability side. Some of that is going above already. Some of that will be addressed once these limitations caused by short work week rules at various countries dine expired.

Slide 22, Separation. rational performance. bid intake, down compared ought final year -- final quarter, zone of final year. cabin I wish good bid intake though the second zone of this year. consequently bid intake is no possibly hit, possibly impacted by corona. cabin for, let's say, the first half of this year, it nevertheless looks fairly good. Sales are slightly down. Profitability also. cabin I used to be negatively surprised if this year's total year's profitability used to be beneath final year's, cabin question ought corona development and absent any second immerse into lockdowns or something similar.

Yes. Outlook. Obviously, we are affected by corona, above slip 24. We had a little temporary shutdowns. cabin we though noise managed ought flourish ought flow many of our manufacture plants, including Northern Italy across this crisis, cabin at a lower manufacture with spread shifts consequently that nation don't satisfy each other, with partially short workweeks, festival consumption, total the pools that governments or that are available ought mitigate lower sales with lower costs. We clearly wish a lower bid intake though the coming quarters. though I've said, more shock above main than above service.

What are we doing? We optimize short-term price reduction nevertheless keeping an eye above medium-term requirements with admire ought capability containment, capability reduction. consequently at many countries, we dine implemented short workweeks. We dine FERS certification days. Time credits dine been consumed. total our global management group, including the executive Board, has taken 20% pickup though at least the second quarter, possibly ought be extended ought the third quarter, depending above how the nation develops. Obviously, we dine from the beginning of the year truly higher increase. And we will appear into total our discretionary expenses at our -- into our jam personnel, et cetera, ought adjust our price base short-term.

We dine same ambitious goals already though the second quarter. if we truly attain that remainder ought be seen, ought be honest. It's -- we are at especial times. And you cannot extrapolate sustain of the past. And it's though noise -- a destiny depends above some decisions above the national level. consequently that we have, though I said, we dine ambitious plans, cabin let's look how much of that we can implement.

Medium term, we absence ought pursue same sum the bid intake at the coming months though that will define the capability needs though next year. And if we look a substantial shock above the bid intake next 2 quarters, we certainly will adjust our eternal structure nevertheless this year ought be at good rotate from our expenses from our costs starting from the beginning of next year.

Are we going ought change our -- the principles of our strategies? No, we are not. We work -- we feel we are at -- overall at good position, consequently we work same closely with our customers. We dine some same good results above the big construction sites we dine gone, at some cases, across 2-week shutdowns. cabin we are backward at work at many of them, no at total of them, cabin at many of them. consequently it, consequently far, it looks reasonable. cabin things can change same quickly if one incident happens at big construction site, which leads ought a end shutdown there. consequently overall, interesting times. cabin we -- I study we dine same clay plans. We dine clay policies how ought address that. And -- cabin obviously, it's though noise early ought award any exact numerical guidance though the surplus of the year. I study we've been same early with the pulling up -- pulling backward our guidance and admitting that there will be effects. And we will flourish with this policy though need though we look -- dine some hard information, hard base ought award some guidance. Whenever that could be, we certainly used to fulfill that quickly.

So much my presentation, and I appear send ought your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first puzzle we've received is from Sven Weier of UBS.

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Sven Weier, UBS Investment Bank, investigation fragment - Executive Director and Analyst [2]

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Yes. Dr. Leitner, the first one is above pulp and the announcement from Valmet yesterday regarding the [Metsa] project. I was impartial wondering if you could award us some color above why you dine no been involved at this plan at condition of getting some of the project. Is it though your backlog is full, and you were no so, friendly of, let's say, desperate ought earn another one? Or what fulfill you study has made the distinction at this project? And fulfill you study that now we basically dine a relatively cavity pipeline of bigger green fields? That's the first one.

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Wolfgang Leitner, Andritz AG - President, CEO & Member of Executive Board [3]

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Yes, thank you though your question. ought answer one divide of your question, we are often blank though business. We are never -- we never sum our doors though we're total or we are overly full.

Secondly, I petition though understanding, I don't need -- I need ought flourish with our policy no ought comment at detail above peculiarity projects. cabin what I can speak here is that we dine been at technical discussions. We dine never had the price negotiation. And we learned from the newsPaper that the bid has been placed with Valmet. consequently it's -- I'm certain the passenger has good reasons though that. I don't know what they are. cabin it has been a somewhat unusual procedure, I used to say.

Are we desperate that we dine lost this order? No, because, though you know, we dine lost a end pulp factory at February, I think, whatever, at the first zone from UPM. dine we been less interested? No, we though noise -- I study we were technically fully accepted. cabin I don't need ought meditate what nation dine happened or -- cabin that's though much though I can say.

Is the sumit row cavity with admire ought big greenfield orders? Short term, I used to say, yes. And we dine often sizeable orders and projects around, though sure. consequently I'm no concerned about the bid intake though this year. cabin obviously, this was, though sure, the headmaster and most apt plan ought advance ahead this year after the UPM resolution at the first quarter. Does that answer your question?

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Sven Weier, UBS Investment Bank, investigation fragment - Executive Director and Analyst [4]

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Yes. Yes, Dr. Leitner. And the second one is though noise above pulp. I was impartial wondering above those greenfield projects you dine already at the execution. I mean, fulfill you look clients asking though delays? Or are you seeing them pushing them a small bit ought the right though of the corona uncertainties? Or I mean, despite the fact that, of course, there are equip bind issues maybe. cabin impartial at condition of the passenger will, consequently ought speak, ought advance ahead though the above time above these projects, fulfill you look any deviation there?

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Wolfgang Leitner, Andritz AG - President, CEO & Member of Executive Board [5]

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No. No. I study you know the larger projects, once they've been started, obviously, the favour costs are running. Any delay or shutdown costs a lot. Therefore, we are working same closely with the passenger above each construction situation where we are going, if we are though noise involved there ought make the work running. There are challenges each day, shutdowns of the road, shutdown of the village next ought it, shutdown of the construction situation though they absence ought establish, I to say, food though the health of the workers, which obviously is often the most significant thing. cabin customers are fully committed ought flourish with the projects.

I study from China, we look -- a destiny of deliveries obviously convert from China ought projects at South America, though example, though at Europe. And I study that has recovered same nicely from the -- again, from the equip side. consequently we saw the shutdown at February. We look a -- we saw a catch-up, substantial catch-up at March. We see, let's say, a little weeks of delay at deliveries from there. We look an expand at costs though containers. We look a big expand at airfreight costs. cabin things are running. And I study that will no be the bottleneck at the coming months. We'll dine some impact, cabin will no be a earnest bottleneck. And consequently far, we dine no seen, I don't think, any requests ought spread the execution time that a passenger used to no need the delivery.

I mean, obviously, what customers are doing, they are -- they had ought inspire some shutdowns from first ought second zone ought the second half of the year though they could no -- none could enter the mills. And they possibly dine ought accept some more downtime depending above which Paper grades, though example, they produce. And the tissue had total time, though you heard probably, this new tissue goals, I study it was called. Obviously, newsprint, graphical Paper tolerate definitely. cabin yes, I study that answers your question.

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