Erste Bank and Andritz: High profits despite a difficult environment

Statistics Austria announced today, Thursday, that economic output in Austria fell by 0.8 percent in real terms in 2023. The two economic research institutes Wifo and IHS had forecast -0.8 and -0.7 percent respectively.

The main reasons for the decline were a decline in goods production of 2.7 percent, the stricken trade with a decline of almost six percent, and traffic – in some cases the volumes transported and freight prices fell. In the construction industry, the decline in construction projects led to a decline of 1.1 percent.

Despite this modest overall economic development, two stock market flagships announced high profits today: Erste Group benefited from the sharp rise in interest rates, and the plant manufacturer Andritz has settled for large projects. Although they work in different fields, both have a broad international presence and benefit from the (better) economic development outside Austria.

Erste Group, which has a strong presence in Central and Eastern Europe, benefited greatly from the enlargement of the EU 20 years ago. That is one “real success story”said Erste boss Willibald Cernko. For example, the Czech Republic has already overtaken some Western European countries such as Spain in terms of GDP per capita (adjusted for differences in purchasing power).

The plant manufacturer Andritz gained almost an annual turnover in new orders last year and is expecting good business outside Europe. There is particularly good demand for equipment for hydroelectric power plants.

The Siemens Austria subsidiary is almost falling behind with real stagnating business – but the operating results improved.

Erste Group: Big profit increase

The interest rate increases were fertilizer for the balance sheet of the financial institution Erste Group. The listed company presented its preliminary annual figures on Thursday. 2023 was therefore a “very strong year” in which “despite the economic downturn, an excellent result was achieved thanks to credit volume growth and an advantageous interest and risk environment,” said CFO Stefan Dörfler.

The bottom line was a net profit of 2.998 billion euros, which was 38.5 percent more than in the previous year. The shareholders should also participate in the result, which is why the board of directors is proposing a dividend of 2.70 euros per share. For 2022, 1.90 euros were paid out per title.
This year, the institute expects greater demand for loans and greater investment activity by industry in the second half of the year.
Chairman Willibald Cernko expressly welcomed the housing package announced by the government this week, but urged speed. “We can’t wait until autumn; construction will take place in spring and summer.” Promoting private residential construction is now very important because there is a lack of ready-to-build projects in large-scale building and residential construction.

Siemens: “Solid result”

Yesterday Patricia Neumann, Managing Director of Siemens Austria, spoke of a “solid result despite challenging conditions” when presenting the figures for 2022/23 (as of September 30th).

Nominal (not adjusted for inflation) sales rose by 7.6 percent to 1.41 billion euros. The operating result increased from 72.7 to 74.5 million euros. The financial result fell from 127.4 to 54.1 million euros. Order intake was 1.197 billion euros (2022: 1.66 billion).
Siemens Austria, a subsidiary of the German Siemens Group, is also responsible for 25 other countries in Central and Eastern Europe: Group sales rose by 14 percent to 7.3 billion euros. There are also locations in Linz. Neumann named the modernization and expansion of an intelligent security system at Vienna Airport and the hybrid power plant in Trumau as flagship projects.

Andritz: Record follows record

The Styrian plant manufacturer Andritz reported sales of 8.7 billion euros (plus 15 percent) and a significant jump in profits from a quarter to more than 500 million euros. Because 2023 was the second record year in a row, the dividend will also be increased significantly. The shareholders receive 2.50 euros per share certificate. CEO Joachim Schönbeck points to a dividend increase of 50 percent since 2019.
Regarding the expected course of business, Schönbeck says that major topics such as decarbonization, digitalization and more customer service will have a positive influence on development. The hydropower division – Andritz manufactures turbines and generators for huge hydroelectric power plants – will continue to benefit from the energy transition. In Linz, Andritz has 220 employees for this division and the most complex test bench for the most difficult simulations, explains Schönbeck. Linz is one of the “core locations” for this division.

Projects for battery producers would also contribute to growth. Andritz is supplying a turnkey cell assembly system for the first large-scale factory in Germany.

The development in textile recycling is exciting: the situation there can be compared to the paper industry in the 1970s, when recycling was just beginning. The market is currently setting up. Andritz’s contribution is tearing and sorting systems. These achieve a variety and color purity of 85 percent. “The prerequisites for a circular economy are present,” says Schönbeck. Ten lines are going to the Turkish textile company Sanko, five are already in operation. In the medium term, this business could reach a mid-three-digit million amount, said Schönbeck.