C Si Ni Cr V Ti Ta Sc Li Sr Zr Fe Cu Zn Sn B Al Ce U Mn Mo Nb Sb

Although the market environment for the
Engineering Systems Division remained
volatile in 2010, the division generated
EBITDA of $37.5 million, 15% of revenue.
The division’s late cyclical markets have begun to recover from depressed levels
of activity that existed from 2009 through mid-year 2010. The division typically
follows economic and market trends by a twelve month time lag due to the long
lead time for investment decisions for its complex furnace systems. By the end
of 2010, requests for quotation returned to pre-crisis levels resulting in a yearover-year
order intake increase of 53% from 2009 to $280.8 million in 2010. This
very positive development is also reflected by the growth in order backlog by
13% from $162.0 million to $183.3 million. This strong year end development
indicates a positive development for 2011 and beyond.
Low levels of order intake in 2009 and early 2010 lead to a 23% decline in 2010
revenue to $245.6 million. EBITDA was 15% of revenue or $37.5 million. As a
result of increased competition especially in the Asian markets, gross margins
declined to $70.1 million or 29% of revenue from 33% of revenue in 2009.
Rigorous cost reduction measures and improved efficiency helped to reduce
SG&A by 20% from $58.1 million to $46.6 million, in line with our declining
sales volume. In a truly difficult stage of the business cycle our return on
capital employed was still strong at 52%. The division proved its ability to adapt
to changing market conditions and end market demand through its diverse
portfolio and considers itself well positioned to benefit from growing demand in
virtually all markets served.
Operations
In 2010 the Engineering Systems Division focused on improving operations
and entering new geographic markets. In particular, the division expanded the
internally manufactured products beyond the solar DSS furnaces. In order to
better respond to market demands and lead time requirements, we accelerated
our insourcing activities, which will help reduce costs beginning in 2011. The
other benefit of this process is an increase in product portfolio that will help to
ensure an optimal capacity to achieve economies of scale and shorten delivery
lead times and lead to improved profitability.
Engineering Systems
320.5
245.6
09 10
Revenue
105.8
70.1
09 10
62.9
37.5
09 10
Gross Profit EBITDA
Accomplishments
Acquired interest in an experienced
vacuum technologies
company in Mumbai, India
Acquired equity interest in
nuclear furnace specialist
Thermique Industrie Vide,
Grenoble, France
Acquired innovative Mono2 solar technology and launch of
the next generation of DSS
solar furnaces
Developed of Single Piece Flow
Technology for integrated heat
treatment processes
Report of the Management Board | Engineering Systems Division 27