Annual Report 2001 - Bohler Uddeholm materializing visions

Directors’ Report 2001
Earnings before tax in m€
98.4
Employees as at 31 December
9,238 9,315 9,238 9,092 9,071 9,298
1996 1997 1998 1999 2000 2001
Value-added per employee
in k€
77.8
83.6
89.0
63.0
83.1
82.7 81.5
101.3
1996 1997 1998 1999 2000 2001
18 BÖHLER-UDDEHOLM Annual Report 2001
106.9
1996 1997 1998 1999 2000 2001
93.3 92.9
INVESTMENTS, RESEARCH
AND DEVELOPMENT.
Capital expenditure by Group companies
rose from 97.9 m€ by 42% to 139.0 m€
in the reporting year. This figure represents
104% of cash flow from operating activities,
which equalled 133.6 m€. Capital expenditure
compares with depreciation of 71.2 m€
for the same period.
The increase in investment activity over
the previous year was related to projects in
both production and sales companies. The
number of electro-slag remelting plants in the
Special Steel Long Products Division was increased
to 12 by the addition of two new units
in Kapfenberg (Austria) and Hagfors (Sweden).
In addition, a new TRIO rolling line was installed
in Mürzzuschlag (Austria). The Group
also invested in on-site machining and heat
treatment centres at sales companies to extend
the value added chain to customers.
In the Strip Steel Division, production capacity
was increased at Böhlerwerk (Austria)
and activities at Munkfors (Sweden) focused
on investments in production facilities and the
implementation of SAP. Capital expenditure in
the Welding Consumables Division centred on
processing technology for high-alloy filler wire,
sheathed electrodes, and stick and wire electrodes
for nickel-based materials. In the Forging
Technology Division, corporate spending
was directed towards modernizing production
capacity and construction of a new headquarters.
Capital expenditure projects to increase
production capacity in this division were tem-
porarily postponed because of the current slowdown
in demand from the aircraft industry.
Research and development expenses rose
from 15.6 m€ to 16.0 m€ in the reporting
year. This represents more than one percent of
total sales for the BÖHLER-UDDEHOLM Group.
Major projects included research to improve
material properties for existing and new products,
the development of computer simulation
programs for the production of special steels
and alloys, and participation in research programs
for new process technologies.
OUTLOOK.
BÖHLER-UDDEHOLM expects a further slowdown
in economic activity during the 2002
Business Year to create a much more difficult
operating environment than in 2001. Demand
for both Special Steel Long Products and Strip
Steel will continue to weaken, especially during
the first half of 2002, for the following
reasons:
• Demand by the US manufacturing industry
for special steel products is not expected to
improve substantially. A slight rally could
begin at the end of the 2002 Business Year,
but this will be dependent on general economic
developments. The events of 11 September
2001 have created long lasting uncertainty
on the part of US manufacturers
and consumers. It should also be noted that
the US government introduced measures to
protect the domestic steel industry (”Section
201“) in 2001. It is feared that the admini-