SMS group 2017: order intake slightly increased, adjustments in personnel and capacity on the wayVolker Karow
SMS group looks back to a business year 2017, which was characterized by a slightly increased order intake and slightly decreased sales. The company intends to adapt to the globally low market volume in metallurgical plant construction by cutting back on personnel, reducing overcapacities and implementing efficiency-boosting measures, thus positioning itself more competitively.
The order intake in 2017 amounted to 2,870 million euros. This was 190 million euros up on the previous year. Sales, at 2,887 million euros, were lower than in the previous year by 165 million euros. The order backlog of SMS group totalled 3,472 million euros, which was at the level of the previous year.
SMS group recorded a net result of 23 million euros, slightly higher than the previous year’s figure (€14m). Included in this total are accruals for restructuring to the amount of 73 million euros.
SMS group employed an average of 14,305 people in 2017 (2016: 13,903). Compared to the previous year, this was an increase of 402 employees, due in particular to the expansion of service activities abroad.
Efficiency-boosting programme aims to improve competitiveness
In order to adjust competitively to the lower global market volume in metallurgical plant construction, SMS is cutting overcapacities and reducing equipment and materials costs. By 2020, the company will scale back 500 of the current 4,150 jobs in Germany, with 300 jobs affected in 2018. This necessary personnel adjustment is being carried out in a socially responsible manner, largely avoiding redundancies and concentrating instead on semi-retirement arrangements and individual contractual solutions.
The focus of the efficiency-boosting programme is on the competitiveness of the products, in terms of both properties and price, says SMS. With an innovation campaign and high investment in technologies, products and new business fields, the company is extending its technological edge even further.
Service business and digitization to be expanded
The company continues to pursue its strategy of growth in services. The medium-term goal is to expand the service volume to around a third of the total business volume. Apart from the classic spare parts business, this includes modernization packages designed to boost the performance of customers’ plants. In line with its partnership approach, SMS is increasingly offering consultancy and providing extensive maintenance and repair services for its customers.
Possibly the most important area of development is enabling customers to meet their challenges with the performance-boosting ‘learning factory’ strategy. In this area, SMS group already supplies its customers with extensive service packages. For the customer Big River Steel in the US, SMS successfully commissioned an entire plant complex in the form of a Learning Steel Mill in 2017. Developed jointly with the customer, the concept fulfilled all expectations. As a result, SMS recently received a confirmation for an expansion stage.
New Horizon growth programme strengthened
SMS is also investing more in the production and processing of new high-tech materials and efficient, intelligent green technologies. To increase growth in adjacent markets and industries, all activities come together in the company-wide New Horizon strategy programme. The first customer projects have already been successfully completed.
SMS group has built and commissioned an innovative, industrial-scale pilot plant for producing high-purity metal powder and new materials used in additive manufacturing – or 3D printing with laser technologies. The metal powder consists of microscopic, homogenous particles that form the basic materials for customized or novel-design products. The company is also building a demo centre for the entire additive manufacturing process chain – from metal powder to the high-quality finished product.
SMS group’s extensive know-how in handling heavy loads in rolling mills was the starting point for an innovation in port logistics. A new type of storage system for containers enables operators to fully automatically stack or handle more containers on a smaller floor space with greater speed and flexibility.
Burkhard Dahmen said: “Quality workmanship and innovative drive are our most important hallmarks. Our customers expect precision results and creative solutions to highly complex problems. And we are using those same strengths to further develop SMS group itself. With New Horizon and our digitalization offensive, we have launched a sophisticated growth programme that will sustainably strengthen our company’s leading position.”