in thousand tonnes
197 204 203 193
257
99/00 00/01 01/02 02/03 03/04
Reliability is especially important for wind power plants. The stators in Enercon’s wind turbines contain large quantities of copper. (photo: ENERCON GmbH)
After a weak first quarter in the fiscal year, production in the following three quarters showed a considerable uptrend. In some months the comparable figures for the previous year were exceeded by more than 50 %. The high production output was only possible due to a significant increase in productivity and considerable flexibility and dedication on the part of the workforce. In the continuous casting sector we also succeed- ed in substantially cutting costs further by several measures taken.
After strong demand for wire rod and shapes in early summer, demand has stabilised at an increased level. The first quarter of the new fiscal year is usually affected by Christmas stoppages and reduced levels of stocks at many of our customers. How- ever, for the fiscal year as a whole
we are again expecting production to be high.
PRYMETALL GMBH & CO. KG (PRYMETALL), STOLBERG
While the other sectors of the Copper Processing Segment pro- duce mostly starting materials for the semis industry, Prymetall has provided NA with important direct access to the end customer mar- ket. By working closely together within the Segment, market trends at Prymetall’s customers can be directly observed, in particular in the strip sector but also as regards brass wires and profiles. The com-
bination with NA permits trends on the markets to be used to develop new products.
Prymetall produces strip products in copper and copper alloys from the pre-rolled strip supplied by Schwermetall Halbzeug- werk for almost all sectors of the industry. The most important customer industries are the electrical engineering and electron- ics, telecommunications, automotive, consumer goods and the construction industry. In the wire production sector, the billets made from various brass alloys in the company’s own foundry are processed into round and shaped wires. These are used, for instance as wrap connections, mainly in the electrical engineer- ing industry but increasingly also in the electronics industry. With an output of about 73,000 tonnes, Prymetall’s production was about 15 % up on the previous fiscal year (64,000 tonnes). This was mostly achieved in the strip sector, where production rose from 52,000 tonnes to some 61,000 tonnes. The output of wire increased from 12,100 tonnes to 12,500 tonnes.
With a market share of more than 20 % Prymetall is the fourth largest rolled material producer in Europe. Due to its market share of some 25 % for brass wires and profiles, the company is one of the three joint market lead- ers in this segment.
The difference between the first quarter and the remaining three quarters was even more pro- nounced than in NA’s other prod- uct sectors. While the first quarter – due as well to major restructur- ing steps as part of the cost cut- ting programme Top Plus – still fitted in the poor overall picture of the previous year, the order intake and production picked up significantly from the end of 2003 onwards.
The harmonious architecture of the roof on a house in north Hamburg shows the possibili- ties of copper.
The reason for this was the general economic recovery and Prymetall‘s clearly improved market position with its enhanced marketing activities. The service offer was expanded overall. Today Prymetall’s customers are increasingly classing it as their main or second supplier.
Apart from targeted marketing activities, cost reductions and increased productivity are the most important factors for Prymetall’s success due to the competition worldwide.
Last year we made further progress in all areas:
• The potential for cutting costs resulting from the Euro- Copper project has been almost completely realised. This also included a significant reduction in the workforce. • Production scrap was minimised.
• Energy consumption, in particular in the wire sector, sub- stantially declined as a result of targeted investments. Improvements were also achieved in marketing activities: • Prymetall is now one of the first semis producers to be cer- tified in accordance with the demanding standards of the automotive industry (TS 16949).
• The first step in the production of strip from wire rod has been successfully concluded.
• The co-operation with slitting centres has been significantly enhanced. As a result, it is much easier to fulfil customers’ wishes for small amounts.
In contrast to the other sectors of the Copper Processing Seg- ment, the order intake at Prymetall has weakened in the last few months. We are, however, assuming that – as was the case last year – order receipts will pick up again at the beginning of the new calendar year.
As part of our strategy to intensify the co-operation with slit- ting centres and to secure our market share in the United King- dom, Prymetall is acquiring the English company, E.I.P., effec- tive 1 January 2005, the market leader in the UK with which we have previously worked closely together.
Prymetall had 389 employees on 30 September 2004.
SCHWERMETALL HALBZEUGWERK GMBH & CO KG, STOLBERG NA via Prymetall holds 50 % of the shares in Schwermetall Halbzeugwerk. The other 50 % is held by Wieland-Werke. Schwermetall Halbzeugwerk produces pre-rolled strip for the copper semis industry. The most important customers are the shareholders Prymetall and Wieland-Werke. In addition, how- ever, significant quantities are sold to third parties.
Schwermetall Halbzeugwerk is the largest hot rolling mill in the world with a capacity of more than 300,000 tonnes p.a. By processing pure copper billets weighing up to 25 tonnes supplied by NA or alloyed copper billets from its own foundry, the company is able to produce very large rings in pre-rolled strip which can be cost-effectively and efficiently processed by the customers.
In contrast to all the other production sectors in the Copper Processing Segment, Schwermetall Halbzeugwerk recorded a drop in sales. The capacities could not be fully utilised despite the economic uptrend.
While sales to Prymetall were substantially increased, there was a decline in business with third parties. There were several reasons for this:
• At the end of last year major economic difficulties at some customers forced them to discontinue production or signifi- cantly reduce the quantities ordered.
• In the last few years the coin business was a main source of sales. This again significantly declined
last year due to the low global demand and economic difficulties experienced by major customers.
• Schwermetall Halbzeugwerk’s export business was more difficult due to the weak U.S. dollar despite high produc- tivity.
Decisive measures were taken to tackle these structural difficulties in sales:
• The cost cutting project started last year is currently being implemented. The resultant cost savings will make a signifi- cant difference in the new fiscal year.
• Risk management was substantially improved in close col- laboration with NA and Wieland-Werke.
• In collaboration with Wieland-Werke, all the sectors not directly concerned with production, such as metal manage- ment, material procurement and finances are being opti- mised.
• The acquisition of new customers is being accelerated, especially in the strongly growing regions in Eastern Europe and Asia.
The order intake has not substantially improved since the end of the fiscal year. Nevertheless, the first positive signs in the form of additional orders are coming from Eastern Europe and the coin industry.
At Schwermetall Halbzeugwerk there were 262 employees as per 30 September 2004. The NA Group consolidates 50 % in its number of personnel.
Schwermetall Halb- zeugwerk produces pre-rolled strip for the copper semis industry and is an important supplier of Prymetall.
The Central Services sector was created as part of the reorganisation of the NA Group effective 1 April 2004. It has not only a supporting function but should also make a significant contribution to earnings. The aim is to optimise interfaces by the integration of Group-wide services, avoid duplication of effort and cut costs. Central Services has 850 employees divided up into seven sub-sectors.
MATERIAL PROCUREMENT
In fiscal year 2003/04 the procurement for the Lünen works was integrated in the central Material Procurement. As a result, performance could be significantly enhanced despite requiring less personnel. In the year under review 48,000 orders were processed with a purchasing volume of e 154.5 million. A major task of Material Procurement is the procurement of energy at competitive prices. It is very difficult to cover NA’s energy requirements due to the dominance of the four main suppliers on the German energy market. According to the Monopoly Commission (15 surveys dated 7 July 2004), the sharp rise in energy prices is due to the lack of any real competition.
The price reductions after the liberalisation of the German energy market in 1998 have been eaten up by additional state levies and drastic price increases made by all the suppliers. The price used by all the energy suppliers as a reference on the Leipzig Energy Exchange (EEX) for deliveries in 2004 increased by 42 % between January 2002 and December 2003. According to the energy suppliers, the increase is due to rising raw mate- rial costs although there has been no serious price changes for either brown coal or nuclear fuel, which together make up more than 50 % of the German power supply.
The procurement of price-effective energy from abroad is also hampered because the capacity of the transmission points in German inland is too low to allow significant imports of electricity.
Nevertheless, in order to counter the energy price trend in Germany, we have been able to conclude a new energy sup- ply agreement for the Hamburg site with the Belgium energy supplier, Electrabel.