The Covid 19 pandemic is also leading to reduced forecasts and order intake in the steel market. Following the 2019 financial year, in which both order intake volume (€3.15 billion) and sales (€2.94 billion) were up again, the SMS Group is reducing its outlook for the coming years.
The Group’s management expects incoming orders this year to be about one third below the original plan, but reaffirms its growth strategy and refocusing on future issues.
Plant construction is the sector most affected by the current downturn and is expected to see a long-term decline in order intake. The service and digitalization business is proving much more stable and will continue to grow, thanks to a combination of Big Data technologies and new business models such as “Equipment as a Service”, where customers can turn their capital expenditure (capex) into operating costs (opex).
In addition to strengthening the growth areas of service, digital and electrics/automation, SMS’ growth strategy is built “on a global leadership position in the decarbonisation of industry”. The core elements are the use of hydrogen inCO2-free steel production (Green Steelmaking) and a project offensive in the field of battery and electronic scrap recycling. A profitable core business forms the basis for all growth areas.
In addition to introducing new technologies in the metals industry – such as 3D metal printing or the recovery of precious metals from electronic scrap – SMS Group is transferring its expertise to other industries – such as the production of environmentally friendly synthesis gases for the manufacture of fuels, for example, or energy from sewage sludge. By means of this “New Horizon” strategy, SMS Group is diversifying its product portfolio outside its core business.
The most recent example is the commissioning of a high-bay warehouse for shipping containers in Dubai. This facility of the SMS joint venture Boxbay not only offers three times the capacity of a typical container storage facility in the same space, but also realizes a significantly higher handling speed, more safety for the workers and a CO2 neutral footprint.
In order to be able to act even faster and better in the market, organic growth will continue to be supplemented by acquisitions of suitable start-ups or established specialists. In order to create the optimum conditions for increasing market success, SMS Group will adjust its corporate structure.
Central components of the planned new organisational structure are a cross-divisional and international focus on customer projects. For this purpose, project responsibility in sales and processing will in future lie in six regions, unlike today. Instead of the current business units, Centers of Excellence (CoEs) will emerge to deliver their services and technologies to the projects.
The entire organization is supported by worldwide Global Support Functions. There will be discussions with the boards in the coming weeks about the new structure, which will be implemented globally from spring 2021.
SMS Group is a group of internationally active companies in plant and mechanical engineering for the steel and non-ferrous metals industry. Around 14,000 employees worldwide generate sales of more than €2.9 billion. The sole owner of Holding SMS GmbH is the Weiss family foundation. supported by global support functions worldwide. There will be discussions with the boards in the coming weeks about the new structure, which will be implemented globally from spring 2021.