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Description:
Andritz is an international technology and manufacturing group with headquarters in Graz, Austria. It employs around 23,000 people worldwide. Andritz is a leading manufacturer of equipment and services for hydro-power stations, as well as the pulp and paper industry. It also offers technologies to separate liquids and solids, which are mainly applied in the municipal and industrial sectors; technologies to automate the production of animal feed and biomass pellets; and pumps, steam boiler plants and gazification plants for the energy generation sector.   

Andritz operates internationally; its main business activities are in the pulp and paper sector, which generates about 40% of sales and 36% of EBITA, and the hydro pump sector, which generates about 39% of sales but 44% of EBIT.  Andritz has a long and strong track-record in company acquisitions and integrations. Ever since 1990, the company has successfully integrated more than 60 smaller companies, hence constantly reinforcing its business model. Historic growth rates are above the market average. On average, the company’s sales have increased annually by 17%. The latest acquisition (Schuler AG) is expected to improve revenues by 15% through synergies.  
Andritz also devotes a large part of its revenues to R&D, hence improving its opportunity for long term organic growth, currently accounts for about 50% of sales. 

Strengths and weaknesses analysis:
Strengths:

• The company has a strong track-record of organic growth,
• The company has a strong track-record of  generating high value from an effective cash deployment strategy (e.g. acquisitions),
• The profitability and EBIT margins of the company are good, at 7.0% and 7.2% respectively,
• The company retains its high-value manufacturing business in-house, while lower value projects are outsourced.

Weaknesses:

• The company has announced a €50m charge (write-down) in relation to a project in Latin America; it is the first of such, and could result in the company’s long-term track-record of strong and consistent project execution coming to an end,
• The company is exposed to a variety of acquisitions which are still in the process of being integrated. The time required to integrate could damage the long-term growth rate,
• Through the pulp and paper sector, the company is exposed to low-cost regions which are increasingly developing their own technologies. Can the company offer suitable solutions to maintain its business share there?

Investment profile and investment opportunity:
Operational risk: Average
Expected sales growth: Above average
Investment orientation: Group “Global Strategies” and “Best-in-Class” investment themes
(European Capex Winners, Shale Gas Basket).