ANDRITZ GROUP Company presentation February 2017 Contents 1 ANDRITZ - - PowerPoint PPT Presentation

Company presentation February 2017 ANDRITZ GROUP

1 ANDRITZ GROUP overview

2 Business areas: market update 3 Outlook, Group strategy, and long-term goals

Contents

KEY FINANCIAL FIGURES Q1-Q3 2016 AND 2015

3

Unit*

Q1-Q3 2016 2015 Order intake

MEUR

4,036.5 6,017.7 Order backlog (as of end of period)

MEUR

7,043.6 7,324.2 Sales

MEUR

4,239.3 6,377.2 EBITA

MEUR

292.1 429.0 Net income (including non-controlling interests)

MEUR

194.3 270.4 Employees (as of end of period; without apprentices)

• 25,547

24,508

ANDRITZ is a globally leading supplier of plants, equipment, and services for hydropower stations, the pulp and paper industry, the metal-working and steel industries, and solid/liquid separation in the municipal and industrial sectors. Headquarters: Graz, Austria Global presence: over 250 production sites and service/sales companies worldwide Sales by region 2015 (%)

Q1-Q3 2016 2015 2014 Europe 38 38 41 North America 21 19 16 South America 15 14 15 China 11 12 13 Asia (ex. China) 10 13 11 Others* 5 4 4

* Africa and Australia

Europe & North America: 57% Emerging markets: 43%

6,377

MEUR

* MEUR = million euro

The ANDRITZ GROUP Overview

Company presentation February 2017

4

Company profile Worldwide leading position in four business areas

Product offerings: electromechanical equipment for hydropower plants (turbines, generators); pumps; turbo generators Product offerings: equipment for production of all types of pulp, paper, tissue, and board; energy boilers Product offerings: presses for metal forming (Schuler); systems for production

• f stainless steel,

carbon steel, and non- ferrous metal strip; industrial furnace plants Product offerings: equipment for solid/liquid separation for municipalities and various industries; equipment for production of animal feed and biomass pellets

Company presentation February 2017

* Average share of ANDRITZ GROUP’s total order intake

30%* 35%* 25%* 10%*

Strengthening of market position Growth through organic expansion and acquisitions

Acquisitions by business area since 1990

1,744 2,710 3,283 3,610 3,198 3,554 4,596 5,177 5,711 5,859 6,377 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales (MEUR) Order intake (MEUR)

Compound Annual Growth Rate (CAGR) of Group sales 2005-2015: +14% p. a. (thereof approximately half organic growth)

2012 AES 2013 MeWa 2015 Euroslot 2016 SHW Casting Technologies METALS 1997 Sundwig 1998 Thermtec 2000 Kohler 2002 SELAS SAS Furnace Div. 2004 Kaiser 2005 Lynson 2008 Maerz 2012 Bricmont 2012 Soutec 2013 Schuler (> 95%) 2013 FBB Engineering 2014 Herr-Voss Stamco 2016 Yadon (51%) 2016 AWEBA SEPARATION 1992 TCW Engineering 1995 Jesma-Matador 1996 Guinard 2000 UMT 2002 3SYS 2004 Bird Machine 2004 NETZSCH Filtration 2004 Fluid Bed Systems 2005 Lenser Filtration 2006 CONTEC Decanter 2009 Delkor Capital Equipment 2009 Frautech 2010 KMPT 2012 Gouda 2013 Shende Machinery HYDRO 2006 VA TECH HYDRO 2007 Tigép 2008 GE Hydro business 2008 GEHI (JV) 2010 Precision Machine 2010 Hammerfest Strøm (59%) 2010 Ritz 2011 Hemicycle Controls PULP & PAPER 1990 Sprout-Bauer 1992 Durametal 1994 Kone Wood 1998 Kvaerner Hymac 1999 Winberg 2000 Ahlstrom Machinery 2000 Lamb Baling Line 2000 Voith Andritz Tissue LLC (JV) 2002 ABB Drying 2003 IDEAS Simulation 2003 Acutest Oy 2003 Fiedler 2004 EMS (JV) 2005 Cybermetrics 2005 Universal Dynamics Group 2006 Küsters 2006 Carbona 2006 Pilão 2007 Bachofen + Meier 2007 Sindus 2008 Kufferath 2009 Rollteck 2010 Rieter Perfojet 2010 DMT/Biax 2011 AE&E Austria 2011 Iggesund Tools 2011 Tristar Industries 2011 Asselin-Thibeau

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Company presentation February 2017

1 ANDRITZ GROUP overview

2 Business areas: market update

3 Outlook, Group strategy, and long-term goals

Contents

HYDRO Challenging market environment

7 Modernizations/rehabilitations

Slow project activity due to unchanged low electricity and energy prices, especially in Europe

Outlook: New hydropower plants

Some new projects in advanced planning phase, however awards only expected in the medium-term

Outlook: Small-scale hydropower and pumps

Satisfactory project activity, especially in emerging markets

Outlook: Competition

Challenging market conditions for some selective projects

Main competitors:

GE/Alstom, Voith

Long-term average growth potential:

3-4% p.a.

Stable - Stable +/- Stable +/-

Company presentation February 2017

Planned projects Country MW Total plant Time frame

Inga 3 Congo 4,800 Medium to long term Swansea Bay United Kingdom 352 Government decision in 2017 Koralm Austria 918 Effective within next 2-3 years Grand Coulee Units G19-G21 Turbine upgrade/rehabilitation United States 1,800-2,310 Effective within next 2-3 years Upper Cisokan Indonesia 1,040 Expected to be effective within 2017 McNary – Runner Replacement United States 980-1,127 Effective within next 2-3 years Dasu Pakistan 2,160 Effective within next 2-3 years Caculo Cabaca Angola 2,100 Effective within next 2-3 years Rogun Tajikistan 2,400 Effective within next 2-3 years Koysha (Gibe IV) Ethiopia 2,300 Effective within next 2-3 years Toktogul (phase 2) Kyrgyzstan 1,440 Effective within next 2-3 years Pfaffenboden Austria 300 Effective within next 2-3 years Polavaram India 960 Effective within next 2-3 years

Large-scale hydro projects with potential order values

• f > 100 MEUR for electro-mechanical equipment

Advance work agreement signed. ANDRITZ HYDRO share ~ 250 MEUR. Expected to be booked as order intake in 2017

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Company presentation February 2017

Global hydropower potential by region To date, only about 25% has been developed

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Source: Hydropower & Dams World Atlas, 2016

36% 64%

1,910 TWh/year

24% 76%

2,803 TWh/year

7% 93%

1,646 TWh/year

47% 53%

1,200 TWh/year

41% 59%

2,720 TWh/year

China 15% 85%

5,463 TWh/year

Asia (ex. China)

■ Not developed hydropower potential (%) ■ Developed hydropower generation (%)

Technically feasible hydropower potential : ~ 15,700 TWh/year Existing hydropower generation: ~ 3,962 TWh/year

Europe Africa South America North America

Company presentation February 2017

Biggest hydro potential in Asia

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8% 11% 15% 10% 17% 39%

Europe North America South America Africa China Asia (ex. China)

Company presentation February 2017

19% 39% 11% 9% 22%

Asia Europe Africa / Middle East North America South America

Regional split of total value of ANDRITZ

• ffers outstanding

Not developed hydropower potential by region

19% 33% 13% 20% 15%

Asia Europe Africa / Middle East North America South America

Regional split of number of ANDRITZ

• ffers outstanding

~12,000 TWh/year

PULP & PAPER Satisfactory project and investment activity

11 Modernizations

Satisfactory project and investment activity for modernization/refurbishment projects (increase capacity, efficiency, and profitability of existing mills)

Outlook: Competition

Stable competitive environment

Main competitors:

Valmet, Voith

Greenfield

Investments in greenfield pulp mills to continue; mid- to long-term good project activity for greenfield pulp mills

Outlook:

Stable +/-

Service

Solid demand should ensure further

• rganic growth; Focus on enlarging

IIoT product offerings (eShop, ANDRITZ OPP)

Outlook:

Company presentation February 2017 Long-term average growth potential:

2-3% p.a.

Stable +

Mozambique: Chile:

Owner – project Capacity/a.* Planned start-up

Arauco – MAPA 1.6 2020

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* Annual capacity in million tons (may change over time); source: Pöyry. Capacity/year refers to added gross capacity (i.e. relevant as accessible market) without taking into account possible shut-downs of existing capacities

Brazil:

Owner – project Capacity/a.* Planned start-up

Eldorado – Três Lagoas 2.3 2021 Veracel – Eunápolis 1.8 2022 et seq. Braxel – Peixes 2.0 2022 et seq. CRPE Holding S.A – Ribas do Rio Pardo 2.2 2022 et seq. Suzano – Imperatriz 1.3 2022 et seq. Fibria – Aracruz 1.7 2022 et seq. Eldorado - Três Lagoas 2.3 2022 et seq. CMPC Brazil – Pelotas 1.8 2022 et seq.

Owner Capacity/a.* Planned start-up

Portucel 1.5 2022 et seq.

Finland:

Owner – project Capacity/a.* Planned start-up

Finnpulp – Kuopio 1.2 2020

China:

Owner – project Capacity/a* Planned start-up

Guangxi Jingui – Qinzhou City 1.2 2020

PULP & PAPER Good project pipeline for greenfield pulp mills

Company presentation February 2017 Owner – project Capacity/a* Planned start-up

Siberwood 0.9 2019 Sveza Group 1.2 2020 Segezha 1.3 2022 et seq.

Russia:

METALS Satisfactory project and investment activity

13 Metal forming

Satisfactory project activity; some medium-sized order awards by car manufacturers and suppliers Stable demand from other industries

Outlook: Carbon steel / Stainless steel

Unchanged low project activity,

• nly selective investments in emerging

markets

Outlook: Aluminum

Project and investment activity below the favorable level of the previous year Outlook:

Competition

Stable competition at challenging level

Competitors:

Metal forming: main competitors from Japan and China Carbon, Stainless, Aluminum: Danieli, SMS, Primetals (Mitsubishi/VAI)

Stable + Stable - Stable +/-

Company presentation February 2017 Metal processing:

2-3% p.a.

Metal forming:

4-5% p.a.

Long-term average growth potential

14

Light vehicles production (in million units) Further growth expected until 2020, especially in China

20.6 20.5 23.2 21.2 21.9 24.3 21.0 21.4 25.1 23.3 25.5 31.7 2.1 2.2 3.0 2015 2016E 2020E

88.2 107.3 91.5

Source: PwC, Autofacts, October 2016

CAGR 2015- 2016E CAGR 2016- 2020E ■ Americas

• 0.5%

+3.1% ■ Europe +3.3% +2.6% ■ Asia (ex. China) +1.9% +4.1% ■ China +9.4% +5.6% ■ Others +4.8% +8.1%

Company presentation February 2017

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SEPARATION Mixed development of markets

Municipal

Investment activity at reasonable levels, mainly in developed markets

Outlook: Industrial

>> Reasonable demand in chemicals >> Low project activity in food and mining/minerals

Outlook: Feed and biomass pelleting

Solid project activity

Outlook: Competition

Very fragmented market with global and regional competitors

Stable +/- Stable +/-

Long-term average growth potential:

2-3% p.a.

Company presentation February 2017

Stable +/-

1 ANDRITZ GROUP overview 2 Business areas: market update

3 Outlook, Group strategy, and long-term goals

Contents

17

Outlook for 2017 Investment activity expected to remain at last years‘ levels

Project activity for modernizations and new hydropower stations to continue at subdued level; satisfactory market activity for pumps to continue Good project activity for modernizations and capacity increases to continue; good pipeline for greenfield pulp mill projects in Brazil and Russia Unchanged slow market for stainless steel equipment; satisfactory project activity in metal forming to continue Low project activity in mining to remain; solid project activity in environment, food, chemicals, and feed/biomass pelleting

Company presentation February 2017

stable +/- stable +/- stable + stable +

ANDRITZ GROUP 2017E:

• Satisfactory business development
• Slight increase in Group sales
• Improvement of profitability

Global Footprint

• Balanced global presence
• Emerging markets expansion
• Further shift of manufacturing

capacities to emerging markets

Group strategy and long-term goals

Technological Leadership

• Achieving the status of preferred supplier

by virtue of its technology, quality and references

• Offer best ROI for customer
• Sustainability in development of innovative technologies
• Focus R&D: IIoT, environmental protection, enhancing

energy efficiency, clean power generation Growth

• Focus on growth markets with higher growth
• pportunities
• Expansion of product portfolio through R&D

and acquisitions

• Achieve long-term growth of 5–8 % p.a. depending
• n market growth and acquisitions

Profitability

• Service: increase share of service sales to 35-40%
• EBITA margin: regain 7% and improve to 8% with top-line

sales growth

• Dividend: payout ratio at least ~50% and mid-term

increase to ~60%

Global market leader

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Company presentation February 2017

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Company presentation February 2017

Target to continue long-term profitable growth Goal: further improve profitability with top-line sales growth

Average EBITA margin Sales CAGR: 12.1% Sales CAGR: 16.4% Sales CAGR: 13.3% Sales CAGR: 5-8% p.a.

How to achieve long-term profitable growth:

• Launch of new service products (OPP, eShop)
• Focus on further acquisitions
• Continued cost optimization