core sector communique

SMS group

Order intake increased- stable profit-continued investment in German and foreign locations—further expansion of growth areas electrics and automations, service, energy and green technologies

The SMS group, an amalgamation of companies in metallurgical plant and machinery construction, attracted orders in business year 2011 totaling EUR 3.423 billion (2010: EUR 2,931 billion) and reached sales of EUR 3.070 billion (2010: EUR 3,036 billion).

The net group result of 265 million (2010: EUR 262 million) is slightly above that of the previous year.

The two Business Areas, SMS Siemag and SMS Meer, profited from a further recovery of the markets. As a result, order intake by SMS Siemag was EUR 2,007 billion (2010: EUR 1,892 billion) and SMS Meer won orders of EUR 1,365 billion (2010: EUR  1,039 billion).

In 2011, the number of employees in the SMS group totaled 10,477 (2010: 9,209). Capacities in the companies of the SMS group are fully booked into the second half of 2012.

Industrial Participation Elexis AG

In 2011, SMS Holding GmbH took over more than 90 percent of the shares in Elexis AG, Wenden, Germany. It’s a company that operates in the Industrial Participation unit of the SMS group, and that, in 2011, achieved an order intake of EUR 174 million, or 15.5 percent more than the figure for the previous year. The Elexis group with its subsidiaries deals in the fields of production automation, drive technology, and quality assurance systems.

Future prospects

Dr. Heinrich Weiss, Chairman and CEO of the SMS group, said: ‘’Despite a decreasing willingness among our customers to invest in major projects, we expect to maintain order intake in 2012 at a level comparable to the previous year. Considering our high order backlog, we are also confident that sales and results in the coming two years will remain at a similar volume to that of 2011.’’

Market situation

The market for metallurgical plant and machinery construction recovered slightly in 2011,. However, the high economic uncertainty in the euro-zone and on some other markets means many customers are postponing or completely canceling investments.

The main sales markets remain China, India, and South-East Asia. There is increased demand for plants for the aluminum industry in China. For many years, business from China has made up around 20 percent of overall business volume in the SMS group.

Business with new plants continues to be slow in the industrialized countries. But, on the other hand, the technological trend toward higher steel qualities has boosted modernization orders.

There was also an increasing demand for innovative environment protection products and solutions for  improved energy efficiency.

Generally, the SMS group expects futher growth in India, China, South—East Asia, and the  Middle East. With the exception of China, these regions have a comparatively low per capita steel consumption.

However, the unsolved debt crisis in Europe and the USA, political instability in the Middle East, and highly volatile raw materials prices make the development of these markets uncertain.

Competitiveness improved again

Dr. Heinrich Weiss, Chairman and CEO of the SMS group, stated.

‘’We can count on our innovative power, a core workforce that unites experience with continuous further qualification, and a cautious financial strategy. All this has, in recent years, ensured we have the means to constantly invest in our future. To be able to offer our global customers technologically and economically attractive plant and machinery designs, our group follows a twin strategy. On the one hand, we invest steadily in expanding and upgrading our German production location in Hilchenbach and Monchengladbach. This is where we develop and produce highly complex and therefore quality determining core components for our plants and machinery.

On the other hand, we continue to expand our presence on major markets such as China and India by hiring qualified personnel as well as building manufacturing and service workshops. That is how we guarantee the local supply and service shares demanded by customers on these markets in the usual SMS quality. Following the 2010 completion of the SMS Meer workshop in Shanghai, we recently inaugurated the SMS Siemag workshop we built in Zhangjiagang, China.’’Simultaneously, we sharpen our competitive edge by developing even better energy and environment technologies, optimizing designs for easier production, improving efficiency in logistics, and increasing the productivity of our engineering and production departments.

SMS group

New recruitment, support for career-starters, and global investment in training

To maintain a leading market position, the SMS group relies on constant innovations and highly qualified employees. On average in 2011, 451 apprentices were employed in the SMS group in Germany. That means its apprentice quota was once again higher than the industry average. Close cooperation with schools and universities, the SMS scholarship program, tailored job integration assistance for new engineers, and the SMS AKademie with a broad educational program for all employees are evidence of the value the company were hired.

To support the strong international outlook of the business, employees must offer special intercultural skills, a high willingness to cooperate, and a focus on reliability.

Therefore, SMS constantly invests in the standardization of work processes on an international level. That is true particularly in China and India, where the number of employees will grow even more in the coming years. This is how the SMS group achieves its special closeness to customers on their markets. Today already, more than 40 percent of SMS group employees work outside Germany.

SMS CONCAST

Micro Steel Mill for of Al-Qaryan  Steel

Al-Qaryan Steel Company from the Kingdom  of Saudi Arabia (KSA) has placed  an order with SMS Concast for the design, manufacturing and commissioning of a Micro Steel Mill to be installed in Dammam. With the process route to be realized in Phase 1 consisting of induction furnace, ladle furnace and continuous caster, Al-Qaryan will make its first step into the value adding production of commercial billets. The overall layout considers further expansions by adding a second steel shop and caster as well as a rolling mill for re- bars with a final production of 600, 000 tpy.

The scope of supply by SMS Concast is covering all technological equipment. Apart of above specified key components it includes  water treatment plant, dust collection system, shop cranes, material handling equipment and related supervision services.

The signing ceremony for Phase 1 of the investment took place on June 7, 2012 attended by, Mr. Mohammed Qaryan Al-Qahtani, chairman of Al-Qaryan Steel Ltd and executive representatives of the group together with Stefan Rutishauser, Group Managing Director from SMS Concast. ‘’We are delighted to support Al-Qaryan with excellent technology,’’ says Dr. Joachim Schonbeck, CEO of SMS Concast and the business area SMS Meer.

Saudi Arabia represents one of the fastest growing steel industries in the Middle East. Over the past few years, the rapuid economic development has led to skyrocketing growth in the construction and infrastructure industry, which has boosted steel demand in the country and caught the attention of global steel giants. Saudi Arabia steel consumption has rapidly surged over the past few years on the back of construction boom and growing investment.

Al-Qaryan Steel  Company is part of the Al-Qaryan Group. The company was established in 1988 and is a leading enterprise specialized in metal trading, processing, and recycling business in the Kingdom of Saudi Arabia. These activities of Al-Qaryan Group in scrap and secondary metals trading, industry, and recycling, and thus the group is considered one of the foremost companies in this field, which has matched the growth and prosperity of the Kingdom. As a part of the group horizontal and vertical integration strategy, Al-Qaryan is continuously expanding the working fields and production lines for larger and more comprehensive into new business activities.

SMS Concast-being a leading supplier of steel meltshops for long products and the pioneer in continuous casting technologies-is part of the German SMS group’s business area SMS Meer where in the activities in the fields of steelmaking and continuous casting, tube plants, long products, forging technology, NF metal plants and heat treatment are bundled.

The order for this specific micro mill concept from Al-Qaryan steel company adds a further important project to SMS Concast and SMS Meer reference base in the Kingdom of Saudi Arabia and GCC region.