andritz hydro power capital market days 2008,...

Hydro PowerCapital Market Days 2008, Austria

Slide No. 2Capital Market Days 2008/Hydro Power_Friedrich Papst

Certain statements contained in this presentation constitute ‛forward-looking statements.’ These

statements, which contain the words ‛believe’, ‛intend’, ‛expect’ and words of similar meaning, reflect

management’s beliefs and expectations and are subject to risks and uncertainties that may cause

actual results to differ materially.

As a result, readers are cautioned not to place undue reliance on such forward-looking statements.

The Company disclaims any obligation to publicly announce the result of any revisions to the forward-

looking statements made herein, except where it would be required to do so under applicable law.

Disclaimer


Contents

ANDRITZ HYDRO POWER – OVERVIEW

Hydro power market and growth drivers

Strategy and outlook 2009


Andritz Hydro Power at a glance

Offers the whole range of electro-

mechanical equipment for large new

installations and large rehabilitations.

Large Hydro

Provides solutions, products, and

services over the entire life cycle of

hydro power plants.

Service & Rehab

Offers the entire production line and

service spectrum for small and

medium hydroelectric power plants

with unit output <15 MW.

Compact Hydro

Turbo generators and steam turbine

generators in the range of 20 to 350

MVA.

Turbo Generators

Pumps for water transportation,

energy industry, and pulp and paper

industry.

Pumps

Hydro Power core business: 82%Others: 18%

Split of sales


Strong growth through organic expansion and acquisitions

32.4 29.6 22.7 29.426.0 32.0 43.8 52.7

319.8245.9

444.6 429.8473.3 496.2

544.3 566.8

752.6

910.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Andritz Hydraulic Machines VA TECH HYDRO

2006 VA TECH HYDRO

2007 Tigép

2008 GE Hydro business

2008 GEHI (JV)

Acquisitions

Europe: 52%

Asia: 28%

North America: 8%

South America: 8%

Others: 4%

Sales Andritz Hydro Power 2007:910.0 MEUR – sales by region:

AcquisitionSulzer

AcquisitionVA TECH HYDRO

AcquisitionGE Hydro

*

* Pro forma incl. VA TECH HYDRO

Sales Andritz Hydro Power (MEUR)


2.7

17.2

-0.4

19.8

10.38.7

4.9 5.4 5.4

9.3

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Long-term development of profitabilityEBITA margin Andritz Hydro Power* (%)

AcquisitionVA TECH HYDRO

Average EBITA margin 2003-2007: 6.9%Average EBITA margin 1998-2002: 9.7%

EBITA Andritz Hydro Power* (MEUR)

* 1998-2005 includes besides hydro also some other businesses, thus not comparable with Andritz Hydro Power today

3.0

49.5

25.1

2.63.83.35.8

-0.13.9

0.8

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

9.7%

6.9%


A perfect match: GE Hydro + GEHI + Andritz Hydro Power

Substantial human resources available.

Access to ~1.5 million manufacturing hours.

Growth somewhat hampered by lack of

technical experts.Resources

Huge installed base of GE turbines and

generators in Canada, Sweden, Finland, as

well as in other markets.

Bar shop in Lachine.

High market share in Europe and various other

markets.

Many service shops, especially in Europe;

none in North America.

Service

Local player in Canada and Brasil.

Strong base in Sweden and Finland.

Strong presence in Europe, India, and US.Market areas

Strong expertise and reputation for large (>

400 MW) Francis turbines and generators.

Very good coverage of all technologies, except

large Francis plants.Technology

Andritz Hydro Power GE Hydro + GEHI


Global presence

Mexico City

Hangzhou

Melbourne

AnkaraTeheran

Beijing

Hanoi

Jakarta

Bhopal

Jevnaker

Ravensburg

FaridabadCharlotte

Morelia Foshan

Johannesburg

Bogota

Moscow

Stoney Creek

Caracas

Sao Paulo

Grenoble

Zurich, Vevey, Kriens

SchioMadrid

KiewVienna, Weiz, Linz,Graz

Vancouver

Santiago de Chile

Nälden

Praha

Local Set-upsLocal Set-ups

Local Set-ups with ManufacturingLocal Set-ups with Manufacturing

Tampere

Kristinehamn

Pointe ClaireLachine

Peterborough

AraraquaraCampinas

Doncaster

GE Set-upsGE Set-ups

GE Set-ups with ManufacturingGE Set-ups with Manufacturing

Hydro Powercore business: 89%

Others*: 11%

Employees 2007: 4,390

Europe: 70%Asia: 23%North America: 5%South America: 2%

Employees 2007 by region

* Others: turbo generators, pumps, Andritz China, Andritz Kft.


Important references (I)

Cleuson Dixence, Switzerland:

The power plant Cleuson Dixence with a gross head

of 1,880 m is the hydropower station with the world’s

highest head. The three Pelton turbines with 423

MW output each also represent world record for

output of Pelton turbines.

A big step in technology –two world records

Guri/Simon Bolivar, Venezuela:

The hydro power plant Simon Bolivar in Guri with

10,300 MW installed capacity is one of the one of

the world’s largest hydropower stations of this type.

Each of the five Francis turbines has a max. output

of 770 MW and belongs to the most powerful

turbines worldwide (~double the size of the total

capacity of the Danube power plant Greifenstein).

Largest Francis turbine rehabilitation


Important references (II)

Tsankov Kamak, Bulgaria (2 x 43 MW):

The project has got several awards as climate

protection project (Austria’s first joined

implementation project in the frame of the Kyoto

mechanism). Emission reduction certificates for

200,000 tons CO2 p.a. are transferred to the CO2

reduction targets of the Austrian Republic.

Financial Deal Of The Year (Euromoney, 2003)

Sihwa, Korea (10 x 26 MW):

The erection of the tidal power station Sihwa is

planed to revitalize the ecological system and to

contribute to the improvement of the water quality of

the Sihwa lake. It will also serve as a driver for the

local economy and will supply electricity for about

100,000 people.

World’s largesttidal plant


Important references (III)

Sanxia, China:

The Three Gorges Project is presently the largest

hydropower plant in the world (26 x 700 MW =

18,200 MW). GE Energy supplied six turbines and

six generators.

World’s largest hydropower plant

Tarbela Dam, Pakistan:

For the Tarbela Dam a 370 m penstock was

supplied. The max. flow is 1,700 m3/s. The

bifurcation no. 11 with a height in the central area of

16.34 m is the largest bifurcation ever built and

made it even to the Guinness Book Of Records.

World’s largestmanifold


Contents

Andritz Hydro Power – overview

HYDRO POWER MARKET AND GROWTH DRIVERS

Strategy and outlook 2009


Share of renewable energy ~20%, thereof hydropower ~90%.

Current energy production (tripled since 1970): 17,530 TWh/year.

OECD growth: < 3%, non-OECD growth: ~5%

Split of energy production

Sources: IHA/IEA,2006; REN21,2006

65%

15%17%

0.2%

1%

1.7%

0.1%


North America: 167 GW

South America: 138 GW

Europe: 239 GW

Near MiddleEast Africa: 31 GW Asia: 273 GW

Capacities

Turbines installed:

Andritz VA TECH HYDRO: 245,000 MW

GE Hydro: 152,000 MW

Installed hydro capacities worldwide: 850 GW

Generators installed:

Andritz VA TECH HYDRO: 51,000 MVA

GE Hydro: 107,000 MVA


239

167

138

273

31

Europe North America South America Asia Near and MiddleEast, Africa

Hydro world market development by region: 5 years forecast

Sources: Hydro Power & Dams, World Atlas 2008

Current installed base in GW

14 6 11

119

1422

9

33

97

2136

14

44

216

35

Europe North America South America Asia Near and MiddleEast, Africa

5 years forecast: 345 GW under construction and planned

FC under construction FC planned FC total

182 GW planned:

Based on the current customer’s

average investment of ~200

MEUR/GW (excl. construction) and on

Andritz’s current market share of 19%,

Andritz’s potential order intake within

this 5 years forecast amounts to at

least ~1.4 bn. EUR/y.


Regional market trends (I)


9 GW6 GW167 GW

North America:

Continuous service and rehabilitation business on high level in the USA and Canada.

Due to increasing wind and nuclear activities, singular large projects (pump storage) will emerge.

Growing potential in Canada for Compact Hydro (green certificates) as well as for Large Hydro.

22 GW14GW239 GW

Europe:

Rehabilitation of existing plants.

Investment in pumped storage.

Investment in compact hydro plants.

Turkey: presently the most active market in Europe.

Planned(next 5 years)

Underconstruction

Installed


Regional market trends (II)


182 GW164 GW848 GWTotal

21 GW14 GW31 GW

Near and Middle East, Africa:

Spot markets.

New service and rehabilitation opportunities in Southern African countries.

97 GW119 GW273 GW

Asia:

China will remain on a high level of investment.

India is a strongly growing market with clear focus on hydro power.

South East Asia: high increase of investments in hydro power.

33 GW11GW138 GW

South America:

Brazil: starting to regain the position as one of the world’s most active hydropower markets.

New projects in Central and South America.

Planned(next 5 years)

Underconstruction

Installed


Hydro Coal* Nucl. Wind

Comparison of energy resources (I)

* excl. combined cycle; sources: Parlamentarischer Abend, Berlin 12. 11. 2003 Heimerl, Strauß & Göde

Efficiency (%) Life time (years)

Hydro Coal Nucl. Wind

Operating hours (hours/year)

Hydro Coal Nucl. Wind

7,000h/a

1,750h/a

6,500h/a

6,500h/a

60-90years

20-25years

35-40years

35-40years

90%

35%40%40%

Oil and gas:

Estimated reserves for the next 50-70 years.

Coal:

Highest CO2 emissions of all electricity sources.

Nuclear:

High investment costs.

High divestment costs.

Politically sensible.

Hydro/pump storage: seconds

Example: Kops II Austria, regulation of

+/- 500 MW within 20 seconds.

Wind: unpredictable

Gas and oil: 20-30 minutes

Coal: hours

Peaking power as highest demand in grids –

short term availability:

Nuclear: day


Comparison of energy resources (II)

Wind power is – in contrast to hydro – still only feasible with subsidies/funds;example US: ~60% of the average capital costs of a wind energy project is ‛paid’ by the federal government, another 10% is ‛paid’ by the state and local governments.

Wind and hydro supplement each other – example Europe:

> Main wind installations in Germany and Denmark with only very limited hydro resources.

> Installations in Spain and Portugal need hydro back-up and are therefore driving hydro investments (example Portugal, Bemposta 191 MW).

500 EUR/kW

(incl. civil)

1.250 EUR/kW

(incl. development)

Costs:

+6% = 50GW+25% = 20 GWIncrease 2007:

800 GW80 GWInstalled capacities:

HydroWind

Comparison wind and hydro


Growth drivers for investments in hydropower

Economic growth:

Mainly in emerging countries, especially in India, China, and Brazil.

Climate change:

Investments mainly in developed countries.

Kyoto Protocol awareness supports investments in CO2 free renewables.

Political and regulatory initiatives:

Examples: Funding of renewables has led to booming hydro markets in Italy and Canada.

Investments in hydropower are long term and therefore seldom reacting on market fluctuations.

Sources: RWE Trading; European Energy Exchange (EEX)


0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

World market development hydropower

Energy demand forcasts till 2030 show a global growth of ~2% p. a.

Electricity demand growth even higher due to forcasted fuel switches (e.g. electro cars).

Hydropower has shown constant higher growth.

Between 2005 and 2007 the global market for electro-mechanical equipment has increased

sharply – main reasons:

High oil and gas prices have increased ROI of hydropower projects and have driven private investments.

Increased public discussion about emissions led to more stringent environmental regulations for energy

production, thus pushing hydropower.

Facing supply problems (blackouts) and high costs for fossil energy sources, countries increasingly focus on

independency of energy supply.


Contents

Andritz Hydro Power – overview

Hydro power market and growth drivers

STRATEGY AND OUTLOOK 2009


Strategy and goals

Increase EBITA margin to >7%.

Full integration of GE Hydro and Andritz Hydro Inepar

into global Andritz VA TECH Hydro organization.

Average sales growth including GE acquisition of 10%

p.a.; increase market share.

Strengthen global set-up and improve product costs.

Focus on technological leadership.

Regional balanced project portfolio.

Continued development of sustainable long-term

service business for own installed base.

Optimization of processes and human resources

development to manage strong growth.

=


Outlook 2009

Very strong project pipeline.

Little impact of financial turmoil expected; could even lead to higher

infrastructure investments

Broaden market coverage (mainly for large Francis turbines) by

utilizing GE’s experience and references.

Set up of new or additional resources in . . .

> Brazil: accomplished via GE Hydro/GEHI acquisition;

> India: extension in Bhopal and Faridabad;

> China: based on available structure in Beijing, Hangzhou,

and Foshan;

> North America: partly accomplished with GE Hydro

acquisition;

> Turkey, South East Asia: increase presence to cope with

high market growth.

Integrate low cost locations in global business.

OUR VISION:World market leader for high-tech production systems

and services for pulp, paper, hydropower, steel,and other specialized industries.

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