SMS group expects moderate growth in the future

At the press conference on annual results, Burkhard Dahmen (photo), Chairman of the Managing Board of SMS group, presented the results of the business year 2016. Despite tough market conditions, SMS group gave an optimistic view of the future: Cost-cutting measures take effect and the return to moderate growth is planned in the medium term. For 2017, better results are expected. Moreover, SMS further expands the growth fields digitalization, modernization, service, electrical and automation systems, energy and green technology.

In business year 2016, the order intake dropped slightly to € 2.680 billion, while sales reached € 3.052 billion (2015: € 3.310 billion). The net operating result increased marginally to € 14 million. Parallel with the generally weak market, there were further expenses for restructuring that depressed the result for 2016.

The company generated orders for metallurgical plant and machinery construction totaling € 2.432 billion. While plant business decreased to € 1.815 billion, service business grew to € 617 million (2015: € 594 million).

As a result of project postponements, the Elexis group experienced a downturn in order intake to € 184 million EUR (2015: € 214 million). At Elotherm, order intake contracted from € 81 million to € 66 million due to a decline in demand in the metallurgy industry.

The number of employees on the reporting date of 31 December 2016 decreased by 788 to 13,423. Personnel adjustment will continue according to plan until the end of 2017. The scheduled expansion of the service business included an increase in staff from 2,601 to 2,657 employees who support customers on site, especially in the foreign service companies. There are plans to recruit another 1,000 employees in the foreign service companies over the current business year.

Faced with a sustained global crisis in the steel, copper, and aluminium industry plus an associated decline in orders, the management of SMS group GmbH in 2014 announced plans for a two-stage capacity reduction in its core business of plant and machinery construction in Germany. As a result, the company has reduced capacity in Germany from 5,250 employees at the beginning of 2014 to some 4,050 by the end of this year.

“Our customers’ problems from global overcapacities have eased a little. Due to individual protectionist measures, both capacity utilization and price levels have increased over-proportionally in some countries. As a result, we are receiving new project inquiries from producers there, especially in the area of rolling special steels and high-strength grades”, says Burkhard Dahmen, Chairman and CEO. “We are confident there is unbroken potential in modernizations to make plants greener and more energy efficient. Other growth areas are digitalization and the whole spectrum of services. We expect the slight upturn in demand to translate into higher order intake as from 2018. This positive outlook is based above all on the higher prices for steel products. Furthermore, our customers are increasingly reactivating shelved investments in revamps and upgrades of their existing plants.”

(Source: SMS group)

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