Germany’s SMS group generated an order intake in business year 2012 of €2.835bn down 17% on the 2011 intake of €3.423bn. Sales, however, increased by 5% to €3.237bn (2011: €3.070bn).

The acquisition of a majority share in Luxembourg company Paul Wurth at the end of 2012 meant that the group added roughly €500M to the total order volume. This produced a net group result of €258M (2011: €265M), almost matching the previous year’s level.

Both Business Areas, SMS Siemag and SMS Meer, clearly felt the impact of customers’ restraint in placing orders. Order intake by SMS Siemag contracted 24% €1.519bn (2011: €2.007bn). SMS Meer experienced a decrease of 16% to €1.152bn (2011: €1.365bn). The elexis automation and engine group in which SMS increased its holding to 88.95% in August 2011, contributed an unchanged order intake of €180M to the group.

On average the number of employees in the SMS group – including apprentices – was 11822 in 2012, (2011: 10477). Due to the acquisition of the majority share in Paul Wurth, the number of employees in the SMS group increased to 13588 at the end of 2012.

Paul Wurth will continue to operate as an independent company within the SMS group. Numbering more than 1500 employees and 25 subsidiaries, it ranks among the world’s leading producers of blast furnaces, coke oven plant, and green technology for metallurgical plants. The product ranges of Paul Wurth and especially SMS Siemag complement each other perfectly. The merger creates a solid basis for future growth.

Future prospects

Dr Heinrich Weiss, Chairman and CEO of the SMS group, stated: “Despite a persistent reluctance of our customers to invest, we expect a slight recovery on the market by the end of the year. Based on the continued high level of orders in hand, and taking into account the effects of the first full year of consolidation of the Paul Wurth group this year, we anticipate a modest increase in sales compared to 2012, but a decline in profit."

Market situation

The market for metallurgical and rolling mill plants in 2012 was in a cautious mood. Struggling with a difficult profit situation, many steel producers waited to see how the market would develop and postponed project investment. Furthermore, on-going purchasing processes for existing metallurgical plants in North America and Brazil are blocking other investment decisions by some key accounts.

The main areas of sales remain the developing and threshold countries.

Global manufacturing

To ensure high quality, SMS remains committed to producing the most complex components of its machinery and plants in Germany. The company invested heavily in recent years in expanding and upgrading its facilities in Hilchenbach and Mönchengladbach. Parallel to these measures, SMS group expanded its production capacity in China with the aim of supplying an improved customer service on the ground as well as special products designed for the Chinese market. These can be produced at a lower price locally.

Overall, the aim is to further cut manufacturing costs by focusing on production-optimized design, greater efficiency in logistics, plus increased productivity in both engineering and production. Using the same strategy as that pursued in the years after the first financial crisis, the company will make the most of the weaker order intake to drive technological development. Equally important to the management is intensifying on-the-job training and qualification of experienced core personnel as well as training new staff.

SMS are further expanding their presence outside Europe by hiring qualified personnel as well as building production and service facilities in the key markets of China and India. A growing number of its employees work outside Germany. This creates challenges the company meets by devising and implementing uniform human resources development programmes and structures around the world, while still taking into account national and cultural differences. All the HR managers in the SMS group are in regular contact with each other to discuss issues including recruitment, talent and performance management, and training.

The SMS Akademie invites employees to voluntarily attend a broad-based educational programmes in their free time. It covers not only technical subjects, but also intercultural topics, personal development seminars, and sporting activities. In 2012, 3464 participants attended a total of 268 events.

To promote structured knowledge transfer, SMS founded its ‘WERT’ programme to ensure employees shortly due to retire pass on their expertise to their successors in a structured transition process.

The SMS group, under the roof of SMS Holding GmbH, is a group of global players in machinery and plant construction in steel and nonferrous metals processing. Its workforce of more than 13500 employees generates sales worldwide totalling €3.3bn.