Ahlstrom unveils major restructure

Ahlstrom unveils major restructure

ISSUE 49 JANUARY 2000 ISSN 1359-6128 --,-- UNVEILS MAJOR RESTRUCTURE Finnish industrial group Ahlstrom is planning a major reorganisation, which wil...

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ISSUE 49 JANUARY 2000 ISSN 1359-6128

--,--

UNVEILS MAJOR RESTRUCTURE Finnish industrial group Ahlstrom is planning a major reorganisation, which will see the group divest its pump operations to focus on fewer business areas.

Ahlstrom’s initial aim is to transform itxclf into two new entities: an industrial group Ahlstrom Industries - and a separate private company New FamCo. The first will eventually be publically listed to broaden its ownership and equity base. The second will remain a IOO% family-owned company. These moves are expected to take place over a period of two to three years. Ahlstrom Pumps is one of the world’s leading suppliers ol pumps to the pulp and paper industry. However Ahlstrom says that its pump business requires substantially more resources for its future development and feels that it could have greater opportunitics for profitable growth under another industrial owner with core interest in this hector. Ahlstrom Pumps reported a net loss of FM.33 million in 199X on sales of FX’l770 million. The company is a leading supplier of process pumps. MC pumps and equipment. vacuum systcm\ and agitators for the pulp

and paper industry, employing I I40 people worldwide. Ahlstrom presently operates through four divisions: Ahlstrom Paper Group: Akerlund & Rausing Group; Ahlstrom Pumps and Ahlstrom Machinery Group. Ahlstrom Paper Group currently accounts for 50% of Ahlstrom’s business and it is said to have the best potential for both organic growth, and for strategic acquisitions and alliances in selected segments. Therefore it will form the core of Ahlstrom Industries. The new business will compete in its strong areas - specialty papers and advanced fiber web materials ~ exploiting the company’s expertise and technology. r\kerlund & Rausing Group is the leading manufacturer of food packaging in Northern Europe. The company will concentrate on flexible packaging. which Ahlstrom regards as an attractive and growing business. In order to strengthen its European base in flexible packaging, Ahlstrom considers that closer cooperation or an alliance with another player will offer the best opportunities for profitability, growth and industry ~ leadership. Together with the

private equity investor CapMan. Ahlstrom will turn the A&R carton business into a European-scale operation. As for Ahlstrom Machinery, the company says, that it has been working to find a global partner to meet the changing customer requirements. Ahlstrom will continue to develop its Machinery business as a stand-alone entity while simultaneously seeking a structural solution that would serve the best longterm interests of its customers. owners and personnel. The planned reorganisation will only begin following approval from the company’s shareholders.

In terms of pumps, it’s a case of invest or divest, as Ahlstrom repositions itself through a dramatic and ambitious reorganisation programme. Given the cyclical nature of the pulp and paper industry, timing will be a crucial factor in any deal. n

STERLING REALIGNS EUROPEAN ACTIVITIES Sterling Fluid Systems is to reorganise its European operations, dedicating each of its main European factories to the production of individual pump types.

The move will separate the production of engineered and standard pumps. A number of engineering centres are being created across Europe. These centres, which will be staffed by specialists, will handle the modification of pumps and pump sets for local customers. Sterling will also use the centres to design and build standard vacuum systems. More complex systems will be designed at the SAT facility based at the Itzehoe, Germany plant and will be built at a focused factory at Toenning. near Itzehoe. Pump maintenance, repair and spare parts will be handled by Sterling’s growing European network of service centres. The dedicated service centre at Ludwigshafen. Germany, with its own test field. will handle the largest pumps. The transfer of products will he completed by April 2000. This is the latest phase of a programme introduced in December 1998, when an integrated team drawn from operations across the region was established to run Sterling’s European pump operations. That new structure was introduced in response to the increasingly pan European approach of Sterling’s customers. Sterling believes that these changes will offer CUStomers shorter lead times. improved on time deliveries and better respone to technical enquiries.

COMPANY PROFILE 5-6 11 DIVIDENDS 11 FEATURE

12-13

January 2000

Pump Industry Analyst

Pump Company Index &BS 4hlslrom Pumps 4lfa Lava1 4PV 4tlantic Fluidics 3611hoff Verfahrenstechnik 3ran+Leubbe 3utterworth Jetting 3ardo Srane 3ryostar Hydrocarbon Pump 3uma Ierlan

Industries

Ieutsche Vortex 3resser Industries !bara Energy Machine Service Insival Ensival-Moret fssef llojet zlowserve Gardner Denver 3raco 3rundfos ialliburton iayward Tyler ioward Anderson dex DP ngersoll-Rand TT Flygt TT Industries lohnson Pump (SB .CI daag Pump Systems darley Pump deller Pumps doret Jloyno dyson Pumps Iilgear

13 1,12 12 13 12 13 12 13 11 11 13 12 8 13 12 13 13 12,16 12,16 13,16 12

lO,ll,

13 13

11,13 10.13 8 13 13 9 12 8, 12 11 10, 12, 13 7, 10 12,16 13 13

13 11 12,16 5 10. 12, 16 11 12 Ismonics ‘entaii 10, 13, 16 pullen Pumps 13 Puraqua 13 QVF Engineering 13 Robbins & Myers 5, 11 Roper industries 7, 11 12 Simer Pump 6 Spirax-Sam0 l,lO, 13 Sterling Fluid Systems 13 Sundstrand Sundyne 13 Textron 12, 13, 16 Torishima 11 Tuthill Corporation 12 United Dominion 12 United Technologies 13 11 USFilter VDMA 10 Warman International 11, 12, 13, 16 6 Watson Marlow Bredel 10, 11, 12, 13, 16 Weir Western Dispensing Technologies 12 Wicor 9, 12. 13 10 Wilden Pump 10 Wilo Salmson 11 WorldWater

CONOCO CHAIRMAN BACKS E-COMMERCE The energy industry is indispensable to society, but must adapt itself to changes brought about by the explosion of information technology, says Archie Dunham, chairman and Conoco’s CEO. Dunham told the annual Arthur Andersen Energy Symposium that successful energy companies must be fast, nimble and aggressive and must embrace new technologies like e-commerce to become more competitive and profitable. Dunham said information technology was connecting companies to all their stakeholders in ways unimagined a decade ago, building important electronic links to suppliers in order to increase productivity, cut cycle time and improve customer satisfaction.

has drilled and tested a fourth successful well on a large anticline in Block ll/OS of China’s Bohai Bay. Immediate plans are to drill three additional appraisal wells on the PL 19-3 field, using two drilling rigs, to delineate the productive area of the southern portion of this large feature.

TOTALFINA EXPANDS IN LIBYA

TotalFina and its partners Repsol YPF, OMV and Saga have signed an agreement with Libya’s National Oil (NOC) to Corporation explore the M-4 block in the Murzuk region of southwestern Libya. TotalFina holds a 24% interest while Repsol YPF has 32%. OMV 24% and Saga 20%. Block M-4 covers an area of around I2 300 square kilometers in the northern region of the Murzuk oil basin. Repsol YPF will operate it during the exploration phase. The new agreement fits EXXON, MOBIL ~ with TotalFina’s strategy to strengthen its positions in MERGER North and West Africa. TotalCOMPLETED Fina is already present in the Following approval from the Murzuk Basin with a 30% US Federal Trade Commisinterest in the NC-I 15 block sion (FTC), oil giants Exxon and has been a partner on Corporation and Mobil Corblocks NC-186 and NC-l 87 since November 1997. poration have merged. However the FTC says Exxon Mobil Corporation ESSO EXTENDS must divest a number of assets BRAZILIAN including gasoline stations, ACTIVITIES pipeline interests and the Benicia refinery near San FrancisEsso Brasileira de Petroleo co. The new company will Limitada has signed a joint have nine months to satisfy venture agreement with Brasileiro SA most of the FTC’s conditions. Petroleo (Petrobras) for an interest in but will have 12 months to sell deepwater explothe Benicia refinery and the a third ration block in the Amazon California marketing assets. Mouth Basin. Esso now has an interest in PHILLIPS’ seven deepwater blocks offSUCCESS IN CHINA shore Brazil. Under the terms Phillips China Inc, a unit of of the agreement, Esso will have a 20% interest in BFZ-2. Phillips Petroleum Company,

Co-venturers in the block include British Petroleum Brasil Limitada, with 35%; Elf Petroleos do Brasil Limitada with 15%; and Petrobras with 30%.

MAJOR ENERGY COMPANIES REPORT STRONG Q3 According to figures from the US Energy Information Administration, overall net income for the 17 major petroleum companies nearly doubled between the third quarter of 1998 and the third quarter of 1999 to US$6.4 billion, rebounding from declines in the previous two quarters. The growth in earnings was attributable to the majors’ worldwide upstream operations. Earnings for domestic and foreign oil and gas production increased primarily due to improved crude oil and natural gas prices while the majors’ earnings from worldwide downstream operations declined. Domestic operations were hit by narrower marketing margins while foreign ,earnings declined mainly due Ito depressed margins in the industry. Earnings from chemi,cal operations also fell as feedstock prices rose faster than commodity prices. Crude oil prices increased almost USSS per barrel, rising 67% in the third quarter this year compared with a year ago. Prices increased as a result of production cutbacks and increased world demand.

HALLIBURTON VESSEL SERVES PEMEX Halliburton de Mexico SA de CV, a wholly owned subsidiary of Halliburton Energy Services Inc, is to provide Pemex with well stimulation services throughout 2000, i

January 2000

using its new vessel, Cape Hawke. Under an US$I 8 million contract, the Cape Hawke will provide stimulation, frac-acid, nitrogen and pumping services in the Gulf near Campeche. Mexico. Cape Hawke is a state-of-the-art vessel built to pt-ovide services to the acidising market. Some of its features include below deck storage of bulk additives, dynamic positioning capability; and 6750 hydraulic horsepower pumping capability. In addition. Cape Hawke has automatic remote controls of high pressure pumping and fluid blending and proportioning.

ICF KAISER DESIGNS TURKISH HYDRO PLANT A US/l’urkish consortium, led by ICF Kaiser International Inc, has won a contract from the Turkish State Hydraulic Works for the US$6.98 million design phase of the Alpaslan II Dam and Hydroelectric Power Plant Project. The consortium expects to negotiate another contract for the US$SOO million construction phase of the prqject. This i\ one of nine hydroelectric projects included in the USTurkey Energy Protocol signed in February 1998. Headed by Kaiser. the consortium involves Harza Engineering Company International LP and ABB Power Generation Inc. Subcontractors include GeneraI Electric. Voith Hydro Power Gcncration and Duke Engineering and Services.

COMBINED CYCLE PLANT FOR ARIZONA Reliant Energy Desert Basin LLC has selected BVZ Power

Pump Industry Analyst

Partners-Casa Grande, a joint venture between Black & Veatcb and Zachry Construction Company, to provide engineering, procurement and construction services for the 500 MW Desert Basin generation facility. The gas fired combined cycle plant will be located 40 miles south of Phoenix in Casa Grande, Arizona. In addition to a 2x1 F class combined cycle power block, the project includes a transmission line extending from the plant substation to the Arizona Public Service interconnect. Commercial operation is scheduled

Perini Corporation has received a US$300 million five-year contract from Commonwealth Edison Co of Illinois to supply construction management services for maintenance and moditication work required for all of ComEd’s nuclear plants. Newberg-Perini, a division of Perini Corporation, will perform the work under an existing SO/SO joint venture with Stone & Webster incorporated in support of ComEd’s nuclear services programme. Under the agreement, the Newberg/Perini and Stone & Webster team will provide construction, maintenance and support services to ComEd’s Braidwood, Byron, Dresden, LaSalle and Quad Cities nuclear generating stations.

DYNEGY DEVELOPS ORLANDO POWER PLANT Dynegy Inc is developing its first merchant power plant in the state of Florida. The 500 MW natural gasfired peaking facility will be located in Osceola County,

approximately 30 miles southeast of Orlando. Dynegy will sell the power generated at the Palmetto Power Project in the wholesale electricity market to public utilities, electric cooperatives and municipalities throughout Florida when commercial operations begin in the summer of 2002. The power plant will include three advanced technology combustion turbines operating in simple cycle. Natural gas delivered through the Florida Gas Transmission gas pipeline will be used as fuel to generate electricity, and a 230.kilovolt interconnection between Florida Power Corp and Florida Power & Light will provide transmission access for power transactions.

REPOWERING POLAND Foster Wheeler Corporation subsidiary companies are part of a consortium led by ABB Alstom Power, that will rehabilitate Units 4, 5 and 6 at the Turow Power Station in Bogatynia, Poland. The consortium’s contract is valued at US$667 million. Foster Wheeler will supply three circulating tluidised-bed (CFB) boiler islands, each having an output of nearly 260 MW of electricity. The three CFB boilers will replace the three older units at Turow. The turbine island, electrical and control systems and other auxiliary equipment will be supplied by ABB Alstom. The project will be totally commissioned in 2005. The turnkey rehabilitation project of Units 4, 5 and 6 is the third phase of Turow’s six power unit rehabilitation plan. The first phase was the rehabilitation of Units 1 and 2, which were commissioned in 1998. The second-phase Unit 3 is under construction with provisional acceptance contractually scheduled for 3 July 2000.

CROATIAN POWER PLANT OPENS The hard-coal-fired power plant Plomin 2, a joint venture between RWE Energie and the Croatian energy utility Hrvatska Elektroprivreda (HEP), has been officially commissioned. The power plant unit is the single largest investment in Croatia since the recent conflict. Construction work on Plomin 2 was started in 1985 and was interrupted in 199 1 by the war. Erection of the 210 MW unit started up again in 1997.

GE ENERGY TO OPERATE INDIAN PLANT GE Energy Services is to operate and maintain a new cogeneration plant built by Larsen & Toubro Ltd (L&T) for India Petrochemicals Corporation Ltd (IPCL) in Gandhar, Gujarat, India. Based on two GE LM6000 aeroderivative gas turbines and two supplementary fired heat recovery steam generators. the plant is scheduled to begin commercial operation in early 2000 and will supply electricity and steam to IPCL. Under the agreement with L&T, GE will provide all operation and maintenance (O&M) services for the plant for eight years. L&T is the EPC contractor and the O&M contractor and also manufactured and supplied the two heat recovery steam generators. Ricardo Artigas, president and chief executive officer of GE Energy Services. said the O&M agreement is expected to be a stepping stone for additional contracts in India.

CALPINE DEVELOPS 500 MW ENERGY CENTRE Independent power company Calpine Corporation has

Pump Industry Analyst

acquired the development rights to build, own and operate the Towantic Energy Center, a 500 MW natural gas-fired power plant to he located in Oxford, Connecticut. Calpine purchased the development rights from Arena Capital Ltd, which had originally announced the project in April 1998 and will continue to have an ongoing relationship with the project. The facility, which will cost approximately US$250 million to construct. has received its certificate from the Connecticut Siting Council and has obtained all local zoning approvals. Calpine anticipates that it will obtain the remaining regulatory approvals early next year and expects to place the facility in commercial operation by late 2002.

January 2000

AKZO NOBEL PLANS MCA PLANT IN CHINA In a +Z20 million investment, Akzo Nobel’s Functional Chemicals business unit is building a 25 000 ton per annum monochloracetic acid (MCA) plant in Jiangsu, China. Construction will begin in June 2000, with the plant supplying the local market from early 2002 onwards. Akzo Nobel is the leading MCA producer in the world with plants in Sweden and the Netherlands.

DOW EXPANDS IN EUROPE

The loan is expected to cover the entire cost of construction of the marine diamond mining system Nam II, a IO0 tonnes per hour processing plant, additional vessel equipment, commissioning costs and financing fees. Namco is the project manager for the design, construction and commissioning of the project, which is scheduled to start in the third quarter of 2000. Construction of the Nam II mining system is well advanced in Cape Town, South Africa. Nam II, weighing 160 tonnes, is based on the same design principles as the present NamSSol, which has been operating off the Namibian coast since April 1998. Nam II’s enhancements include a I .8 MW dredge pump, two rotating cutters and water jets to access diamond bearing material in varying geological terrain.

Dow Polyurethanes is to increase its production of ~ polyols methylene diphenyl diisocvanate (MDI) in BELOIT Europe. A new reactor and flexible RECONFIGURES GLOBAL STEEL slab polyols finishing train will PAPER MARKET be built at Terneuzen. the MACHINERY Netherlands, and will start-up IMPROVES in November 2000. BUSINESS The OECD Steel Committee At Delfzijl. also in the foresees a 2% increase in In order to conserve cash, Netherlands, Dow will add a steel consumption Harnischfeger Industries Inc’s in the new distillation unit to an existBeloit Corporation is resealing OECD area during 2000. its paper machinery group to ing monomeric MD1 (MMDI) In other parts of the world plant, increasing capacity by an even stronger pick up is include only the aftermarket 60%. Start-up will also be in expected due to the considerbusiness and portions of the November 2000. At Estarreja, tissue business. able increase in domestic steel Harnischfeger continues to Portugal, Dow’s MD1 capacity demand taking place in Russia. actively pursue the sale of will be expanded from 75 000 the Ukraine and Asia. The to 90 000 metric tons and will Beloit, in whole or in part. Newly Independent States of start up in early 2000 Beloit has discontinued fundthe former Soviet Union (NIS) ing its operations in the UK. are in the process of restructurItaly and Austria and accelerating their steel industries. Howed previously announced cloever. equipment and installasures of certain facilities in tions are often obsolete in these NAMCO SECURES Wisconsin and Illinois. Paper countries though they are gradmachinery operations in CanaMARINE DIAMOND ually being replaced and severda. Brazil, Poland. Michigan FUNDING al moderate programmes of and Mississippi remain operaNamibian Minerals Corpomodernisation are underway. tional. Other business groups ration (Namco) has finalised Trade tensions remain high within Beloit, including Beloit a US$25 million project loan despite anticipated improveManhattan, Pulping, Woodfacility for a second marine ments in the steel market, yard. Finishing and OASIS, diamond mining system for ~ because prices for steel products are not affected by this action off the coast of remain low, import penetration and continue to be marketed as operation Namibia. rates in several OECD countries ongoing businesses.

are high, and global excess capacity remains a problem, particularly within the NIS.

SHIPPING COULD BE SAFER In spite of the significant advances that have been made in recent years, shipping can and should become safer than it is now. This was the message from Willem de Jong, managing director of the Marine Division of Lloyd’s Register (LR), in his keynote speech, which opened the proceedings at the recent Shiprepair & Conversion exhibition in London. To help achieve this, de Jong says the scope of the activities covered by classification societies may well become wider and more varied in the future. Although checks on the condition of ships, their machinery and equipment will continue, according to de Jong, classification societies are expected to focus increasingly on management systems and risk assessment and the way in which these activities determine the effectiveness and efliciency of safety management and the prevention of pollution.

HHI CARRIER RECOGNISED A 30 000 DWT chemical carrier, Bunga Melati 4, built by Hyundai Heavy Industries (HHI), has been selected as the 1999 World’s Best Vessel by Maritime Reporter and Marine Log shipping journals. Built for the Malaysian International Shipping Corporation, Bunga Melati 4. which was delivered in July 1999. has separate pumps and pipe-laying nets on 34 cargo. Each year USA-based Maritime Reporter ad Mtrrirw Log select the best ship in terms of technology, design and function.

Pump Industry Analyst

January 2000

Robbins & Myers Inc, USA Profile Robbins & Myers manufactures fluids management products and systems servin g a range of process industries including specialty chemicals, pharmaceuticals, oil and gas exploration and production, food and beverage, wastewater treatment and pulp and paper. Primary product platforms are reactor systems, energy systems, industrial mixing equipment, industrial pumps and corrosion-resistant products. Analysis Robbins & Myers’ Industrial Pumps product platform Moyno serves a variety of process industry applications with a strong presence in the water treatment sector. The company estimates that it holds a 15-200/c share of the global progressing cavity technology market. Moyno’s internal growth is coming from product line extensions, which expand the specific application of progressing cavity pumps. An important introduction during fiscal 1999 was the Ultra Pro 23 rotor and stator design, which generates higher flow and pressure capabilities from a more compact progressing cavity pump clement. Other new products include the world’s largest progressing cavity pump, a new range of wastewater treatment \crcens and a line of sanitary high-pressure pumps. In terms of pumps, additional growth will come from geographic expansion, primarily in Mexico, Latin America and Asia.

Robbins & Myers has identified Industrial with major growth opportunities.

Pumps as an area

1999 has been a particularly difficult year for Robbins & Myers. Weak end-user markets - particularly oil and gas lie behind the sales and earnings declines reported in fiscal 1999. The challenge for 2000 will be to strengthen market demand in a recovering oil sector. Recognising that internal growth is critical to the future of the company, Robbins & Myers’ stated goal is to increase the new product contribution from 4% of sales in fiscal 1998 to an ambitious 12.5% of sales by 2000. n

Key Figures (US$ million) Robbins & Myers Inc

Year ended

31.8

1999

1998

1997

1996

1995

Sales

400.1

436.5

385.7

351 .o

303.0

Orders

373.1

417.0

375.0

353.5

334.9

11.6

23.0

22.1

16.5

10.1

136.2

158.7

138.8

119.0

101.3

11.8

31.2

28.9

19.5

13.2

3244

3071

2947

2459

2337

Capital

Expenditures

Gross Profit Net Income No of Employees Contact Details President and Chief Executive Ofticer: ;\ddress:

Gerald L Connelly 1400 Kettering Tower Dayton Ohio 45423 USA

Tel: +I 9.17 222 2610 Web: www.robn.com

Kecent Events A work stoppage at Moyno’s Springtield, Ohio unit. which started in February 1999, was resolved after 10 weeks. During 1999. Robbins & Myers developed a new business unit ~ R&M Energy Systems, which was created from the former Moyno Oilfield Products and Flow Control Equipment units. Moyno de Mexico. an alliance between Robbins & Myers and its Mexican progressing cavity pump distributor AFF Industrial SA de CV was formed during 1999. On I6 December 1997. the company’s stock began trading on the New York Stock Exchange under the symbol RBN.

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Pump Industry Analyst

January 2000

Spirax-Sarco Engineering plc, UK Profile Spirax Sarco provides knowledge, service and products for the control and efficient use of steam and other industrial tluids wide. The group focuses on businesses which supply and service the industrial and commercial steam systems market ( Sarco) and the peristaltic pumping market (Watson Marlow Bredel). Analysis Watson Marlow Bredel is one of the world’s largest manufacturers of peristaltic pumps. The acquisition of Bredel at the end of 1996 expanded the range which can now handle flows from 0.0002 millilitres per minute to 80 000 litres per hour and pressures up to 16 bar. Applications for Watson Marlow Bredel peristaltic pumps include chemical processing, water and waste treatment, food processing, pulp and paper, biotechnology, pharmaceuticals and printing. The Watson Marlow Bredel peristaltic pump business achieved good progress in sales and profits during 1998, partitularly in Europe and the USA, helped by new product introductions. In the Americas, Watson Marlow Bredel had a good year, particularly in the USA where the company says the peristaltic pumping principle is taking business from other pump types. Both Spirax Sarco and Watson Marlow Bredel made progress on sales and profits during 1998 in continental Europe. In the UK, Spirax Sarco and Watson Marlow Bredel experienced Key Figures Spirax-Sarco

(f million)’ Engineering

While Spirax Sarco described 1998 as an unusually d cult year for the Group, interim results for the first ha1 1999 show some sound progress for worldwide busin es. The peristaltic pumping principle is increasing its sl of the positive displacement pump market, allowing : rax Sarco to grow in a generally difficult world econo Turnover in the first half of 1999 was El27 million, up In particular, the Watson-Marlow Bredel operatior North America continued to expand its presence ant sales, and has been picking up some good orders for s ment in the second half of 1999. n

plc

Year ended

31 .12

1998

1997

1996

1995

249.0

265.6

272.0

251.3

42.4

48.6

48.2

44.0

Profit before Tax and Exceptionals

42.3

47.7

47.1

43.1

Profit after Tax

20.1

31.2

31.0

27.2

Earnings per Share before Exceptionals

34.5p

38.3~

38.0~

33.8p

Dividends

16.5~

15.8~

14.8~

13.2~

136.2

128.8

119.9

122.5

Turnover Operating

Profit

per Share

Net Assets ’ Except

per share

data.

Contact Details Chairman: Address:

Recent Events At the end of 1998. Spirax-Sarco

l

slightly quieter trading in the second half of 1998 than earlier, as some customers adopted a more cautious a and outlook for 1999.

TB Fortune Charlton House Cirencester Road Cheltenham Gloucestershire CL53 8ER UK acquired the UK distribution

Tel: +44 1242 521361 Fax: +44 1242 581470 Web: www.spirax-sarcocom Web: www.watson-marlowcom

business of the Bredel range of peristaltic pumps for f I .O n

Pump Industry Analyst

January 2000

Johnson Pump International AB, Sweden1 Key Figures (SKr million) Nine months ended 30.9 1999 Net Sales Cost of Goods

Sold

Gross Profit Sales, Admin,

R&D

Other Operating and Expenses Operating

Key Figures (US$ million) Three months ended 31 .lO 1998

1999

1998

474.9

462.6

105.7

275.6

267.2

199.3

195.4

Net Sales Of Which: Fluid Handling

113.6 25.7

22.8

193.7

184.4

Gross Profit Of Which: Fluid Handling

59.7

48.8

12.9

10.6

0.4

0.8 11.2

Operating Profit Of Which: Fluid Handling

25.2

14.3

3.9

7.8

5.7

Net Earnings

14.7

7.4

Income

Profit

Profit after Financial and Costs

Income

Profit/( Loss)

Johnson Pump will be disappointed with this performance. While net sales of SKr475 million showed a SKrl2 million increase on a year ago, a loss of 6.3 million for the first nine months of 1999 is cause for concern. In Europe, which is the Group’s main market for poor industrial pumps, demand has hit invoicing and orders received. Positive developments at the marine units in Sweden and the USA, where sales were up significantly on 1998, could not offset the effects of a weak European industrial market, the costs of the ongoing and behind schedule implementation of the new business system, and disruptions to production of the new rotary lobe pump. Product development during 1999 has concentrated primarily on the new rotary lobe pump, TopWing. This programme will be largely completed during 1999. With the June market launch of this Top Wing pump firmly behind it, Johnson Pump can

Roper Industries Inc, USA

(2.9)

4.2

(6.3)

(0.9)

focus attention on its soon to be launched Vision pump. Johnson Pump estimates that the total market for this new pump is around SKrl.5 billion, with one third of the market in Europe. While the installation of the new business system, which covers all European companies, is running behind schedule, the SKr30 million investment should enable significant efficiency gains to be achieved when it comes into full operation in the year 2000. Work on the new business system has demanded a greater level of internal resources than had been expected and this work is set to intensify further during the fourth quarter. In terms of outlook for the rest of 1999, there are signs that industrial pump demand is picking up. However, this will not compensate for the third quarter performance and Johnson Pump expects an overall loss for the year, with the fourth quarter result hit by nonrecurrent costs. 1

Year ended

31 .lO 1999

1998

Net Sales Of Which: Fluid Handling

407.3

389.2

98.3

99.5

Gross Profit Of Which: Fluid Handling

210.5

191.0

47.7

45.2

85.1

72.0

27.4

24.1

Operating Profit Of Which: Fluid Handling Net Earnings

Roper Industries’ seventh consecutive year of growth in net sales and earnings since the company’s IPO in 1992, should be applauded. The company says that this year’s earnings gains were largely a result of proactive cost control measures taken in response to difficult business conditions in the oil and gas and semiconductor equipment markets over the past two years and the recent recovery in the semiconductor equipment business. The June 1999 acquisition of Varlen Instruments also contributed

to the increase in sales and earnings. Roper says it is experiencing higher inquiry levels in the oil and gas markets in recent months. Derrick Key, president and CEO, believes that the high level of inquiries could mark a tuming point for Roper companies that supply the oil and gas markets. However, he stressed that it was still too early to tell if the increase in inquiries would result in higher orders in fiscal 2000 and would depend on the budgets of the major oil companies for calendar 2000. n

i

Pump Industry Analyst

January 2000

Halliburton Company, USA

Derlan Industries Limited, Canada

Key Figures (US$ million) Three months ended 30.9

Key Figures (C$ million) Three months ended 30.9

1999

1998

3533

4224

Group

560

681

Operating Income/(Loss) Of Which: Dresser Equipment Group

114

(577)

Revenues Of Which: Dresser Equipment

Net Income/(Loss) Nine months

33

71

58

(527)

ended 1999

Revenues Of Which: Dresser Equipment

11 127

Sales Of Which: Pumps Manufacturing

Expenses

Income (Loss) from Continuing Operations Discontinued

1998

1998

38.6

36.0

22.4

20.8

27.7

25.8

0.5

WV

0

(24.4)

0.5

(25.3)

Operations

Net Income/(Loss)

30.9

1999

Nine months

13064

ended

30.9

1999

1998

123.1

108.8

68.1

58.2

88.8

76.9

Group

1840

2070

Operating Income/(Loss) Of Which: Dresser Equipment Group

462

220

Sales Of Which: Pumps

140

187

Manufacturing

Net Income/(Loss)

203

(81)

Income from Continuing Operations

1.6

0.2

Discontinued

0.4

(22.6)

2.1

(22.3)

Expenses

Operations

Net Income/(Loss) L

In terms of pumps, Halliburton’s third quarter was dominated by its decision to divest its interest in IDP. The Dresser Equipment Group business segment’s revenues were US$560 million and the operating income was US$33 million in the 1999 third quarter. These results were negatively impacted by lower than anticipated financial results at the Dresser-Rand and Ingersoll Dresser Pump joint ventures, which contributed just US$6 million to the segment’s operating income for the quarter. In selling its interests in both joint ventures to Ingersoll-Rand Company, Halliburton will receive cash consideration of approximately US$l. 1 billion. However simultaneous with the closings of these sales, Halliburton will repay the joint ventures approximately

US$220 million of outstanding advances made to the company. Net of taxes and all related costs, the sales will result in a net cash inflow of approximately US$630 million which will be used to repay short-term debt, strengthening Halliburton’s balance sheet, and for other genera1 corporate purposes. The transactions are scheduled to be completed on 30 December 1999 and will result in a 1999 fourth quarter after-tax gain of approximately US$380 million. Based on the company’s analysis, advice from its independent auditors and consultation with the SEC, Halliburton has concluded that the sale of the joint veninterests will not ture adversely affect the pooling of interests method of accounting used for the Dresser merger in 1998. n

Derlan Industries Limited’s transformation is almost complete. Since announcing its divestment programme late last year (see Pump Industry Analyst, December 1998), Derlan has realised proceeds of approximately C$150 million which have strengthened Derlan’s balance sheet, simplified the operations of the company and allowed management to focus more closely on its Aerospace and Pump operations. During the third quarter Derlan sold several operations for C$59.6 million. Net income from continuing operations of C$O.5 million for the third quarter ended 30

September 1999, compared with a loss of C$O.8 mihion for the third quarter of 1998. For the nine months of 1999, net earnings per share from continuing operations were C$O.O6 per share compared with break even in 1998. Sales from continuing operations were CS38.6 million for the quarter, an increase of 7.1% from sales of C$36.0 million in 1998. Sales for the nine months ended 30 September 1999 were up 13.1% to C$l23.1 million from C$108.8 million. Aerospace sales increased 5.8% and Pump sales increased 8.1% from comparable third quarter sales in 1998. n

Pump Industry Analyst

January 2000

I

Wicor Inc, USA

Idex Corporation, USA

Key Figures (US$ million) Three months ended 30.9

Key Figures (US$ million) Third quarter ended 30.9

Operating Revenues Of Which: Manufacturing Operations Operating

Income

Net Earnings/(Loss) Of Which: Manufacturing Operations Capital

Expenditures Nine months

1999

1998

197.0

172.7

127.8

109.4

6.0

0.8

0.6

(1.2)

7.2

5.5

16.6

13.4

ended

1998

726.5

696.0

382.9

355.3

71.2

Net Earnings/(Loss) Of Which: Manufacturing Operations Capital

Operating Revenues Of Which: Manufacturing Operations Operating

Income

Expenditures

1998

Net Sales Of Which: Pump Products

169.9

159.4

93.5

93.0

Cost of Sales

104.1

97.0

65.8

62.4

14.5

14.3

5.9

3.8

2.8

1.3

Gross

Profit

Net Income Capital Expenditures Of Which: Pump Products

30.9

1999

1999

Nine months

ended

30.9

1999

1998

487.9

488.0

57.7

Net Sales Of Which: Pump Products

282.7

286.8

35.5

29.8

Cost of Sales

296.0

293.8

22.3

18.8

37.1

33.9

Gross Profit

191.9

194.2

Net Income

40.5

50.4

Capital Expenditures Of Which: Pump Products

14.8

16.3

7.0

6.5

Having reported higher third quarter orders, sales and earnings, a confident ldex Corporation is moving into its fourth quarter expecting an even better performance. In the third quarter, sales of US$169.9 million improved by 7% from US$l59.4 million a year earlier. An increase in base business sales of 3% and a 5% contribution from newly acquired FAST SpA were partially offset by a 1% decline related to foreign currency translation. The increase in quarterly base business sales was the first since the opening quarter of 1998. Net income from continuing operations amounted to US$14.5 million, up 6% from last year’s comparable quarter.

New orders received in the quarter totaled US$164 million and, as anticipated, backlogs were reduced by almost US$6 million. ldex ended the third quarter with a typical unfilled orders backlog of about 1.25 months’ sales. Soon to retire president and CEO Frank Hansen, said they continued to see signs that the industrial economy was gradually strengthening, but admitted that weakness still lingered in some of the process industries served by Idex’s pump businesses. Operating margins improved to 16.2% of sales in the third quarter compared with 15.9% in the first half of the year, but were still below the 17.3% recorded in last year’s third quarter. n

I-

Sustained strength in its manufacturing business put Wicor’s third quarter eamings in the black for the first time in what historically has been a loss quarter. Quarterly earnings climbed to US$O.6 million from a US$1.2 million loss in 1998. Revenues increased 14% to US$197 million. Wicor’s results improved despite US$O.8 million in merger costs expenses related to the proposed merger with Wisconsin Energy Corporation, which were charged against earnings for the period. George Wardeberg, Wicor’s chairman and chief executive officer. said the positive results this quarter were no anomaly, but were the results of a focused effort to increase profitability, manage costs and strategically grow the company. Manufacturing earnings

jumped 31% to US$7.2 million for the quarter, topping 1998’s record third quarter performance, while manufacturing revenues increased 17% to USS127.8 million. Wardeberg attributed the earnings gain to higher sales and cost improvements. “Greater market penetration of our products, favourable weather and the strong American economy all contributed to the manufacturing group’s stellar performance,” Wardeberg said. Quarterly sales were up across the board, with the water systems and filtration markets turning in the most impressive increases. Hurricane-related flooding in the eastern United States generated heavy demand for drainer and utility pumps. Filtration revenues tripled, reflecting the second-quarter acquisition of Omni Corporation. n

Pump Industry Analyst

January 2000

PEOPLE l

l

l

l

According to the German Machinery and Plant Manufacturers Association (VDMA), the October 1999 orders received by their industry increased by 2% in real terms compared with October 1998, with domestic orders falling by 3% and foreign orders increasing by 7%. In the three-month-comparison August to October 1999, which is influenced to a lesser degree by accidental fluctuations, orders increased by 3%, with domestic orders decreasing by 3% and foreign orders rising by 8%. ABB, the global technology group, is acquiring Dance Talleres Metalurgicos SA (DANCO). the Argentinian oil and gas equipment manufacturer. DANCO manufactures low-pressure valves and wellheads for use in oil and gas wells. 20% of its production is exported to other South American countries. ABB said the acquisition, to be integrated into its ABB Vetco Gray unit, opens new market opportunities for other ABB products in the growing Argentina oil and gas market, the second largest in Latin America in terms of wells drilled. Grundfos Taiwan has won the Excellent Company award for the second time. The award is given by the Finance Ministry every three years. Grundfos was chosen along with six other winners from among more than 26 000 companies in the MiaoLi county. The prize aims to encourage companies to abide by the laws and be honest taxpayers. Sterling Fluid Systems has opened a sales office in Ireland. The new Shankill, Co Dublin office complements Sterling’s Belfast Service Centre. which opened at the start of 1999.

l

Scott Greer, president and chief operating officer of Flowserve Corporation, takes on the additional role of chief executive officer from I January 2000. Bernard Rethore, current chairman and chief executive officer, remains chairman of the Flowserve board. When Greer joined Flowserve in July 1999, Rethore said he would step down as CiTJ during 2000, but this move has come a lot earlier than expected. Just two months ago, Flowserve created an office of the chief executive to facilitate Greer’s transition into his future role of CEO (see

Pump

Industry

1

l

Amdyt,

November 1999). * Lennart Wiklund, managing director of Johnson Pump International AB, is retiring as planned after his 60th birthday. The new managing director will be Henrik Lange, who is currently responsible for SKF’s production company in Austria as well as for production units in Germany and the USA. Lange takes up his new duties as managing director in February 2000. Friedrich Arnold, member of the board of Leistritz AG, has been elected chairman of the German Pump Manufacturers’ Association. He succeeds Dr Erich Holzhiiter, who has served as the Frankfurt-based pump association’s chairman since I99 I Dr Holzhiiter has also retired from Sterling Sihi. KSB board member Peter Wurzbacher is the new German delegate on Europump’s Executive Council. A major restructuring at Weir Pumps sees its seven divisions replaced by four market-driven business units. The directors of the units will be Graham Bibby (power), Derek Hill. manag-

ing director of newlyacquired Girdlestone Pumps (industrial) and Ian Morrson, who has returned to the UK from Weir’s Hong Kong office (water and wastewater). The head of the oil, downhole and subsea business will be named shortly. Each unit will have protit and loss responsibility for its own sectors but will be supported by common manufacturing, finance/secretarial and technology/central services. The directors of these services will be Jim Montgomery, Robert Fair and David Woodley respectively. At a regularly scheduled meeting, the board of directors of Pentair Inc has elected recently-appointed president and chief operating officer Randall Hogan. to a seat on the company’s board (see

l

Pump

Indlqv

l

l

l

Ant&w,

December 1999). Hogan will serve on the Pentair board until the company’s annual shareholders meeting in April 2000, when he will stand for re-election to a three-year term. Hogan becomes the board’s 12th member. Wilden Pump & Engineering Co, the California-based manufacturer of air-operatdouble-diaphragm ed, pumps, has appointed four vice presidents. Danny Buskirk becomes executive vice president of operations: Gary Bowan is the new vice president of marketing: Ronald Brewer assumes the role of vice president of sales and Gary Lent is promoted to vice president 01 engineering. Bruce Bartells continues as Wilden’s chief executive officer, while John Allen remains as president and chief operating officer. Wilden operates as a standalone entity within Dover Resources Inc, one of Dover Corporation’s subsidiaries.

l

In the UK, Wilo Salmson managing director Howard Davis has praised his staff for their efforts in launching a series of building services pumps, shortly after they completed the move to their new &I.5 million purposebuilt headquarters at Burtonupon-Trent (see Pump Industry Annlyst, October 1999). The launch programme coincided with the move from Derby, and the pumps made a successful public debut shortly afterwards at an intemational water exhibition in Birmingham. Tom Haan has been appointed president of Burgmann Seals America Inc. Haan was formerly group vice president Flowserve Corporation and president of Flowserve’s Fluid Sealing Division. David Anderson has joined ITT Industries Inc as senior vice president and chief financial officer, replacing Heidi Kunz, who left the company to join clothing retailer Gap Inc (see Pump Industty Am&v, September 1999). Anderson was most recently senior vice president and CFO at Newport News Shipbuilding. Myson Pumps has received the UK’s Investors in People award. Investors in People is based on a company’s commitment to each employee’s training and development needs and its ability to demonstrate action being taken to train and develop employees. Myson employs 2000 people; 40 are studying for national vocational qualifications (NVQs) and a furthcr 40 are studying for higher level NVQs and degree courses. Myson is now part of Baxi Partnership Limited, following Baxi’s f480 million acquisition of Blue Circle’s Heating Division (see Pump Industry Analyst, November 1999).

Pump Industry Analyst

January 2000

ORDERS l

l

l

Torishima is to supply a dock drainage system to Imabari Shipbuilding Co Ltd for its large shipbuilding dock currently under construction at Imabari’s Saijo Works. The system includes main drainage pumps, leaked water pumps, relief pumps and ballast pumps. Weir Pumps is to supply vital pumping equipment to help rebuild war-torn Kosovo. The company has won a contract to manufacture pumpsets needed to restore normal drinking water supplies to Pristina. The city gets its water from three outlying pumping stations, one of them six kilometres away at Badvock. whose main station was destroyed during the recent conflict. British soldiers from the Royal Engineers are refurbishing a derelict %-year-old plant nearby. Two of the old station’s three pumpsets failed when re-started and Weir answered an emergency plea from the UK’s Crown Agents IO provide replacement units. The pumps - part of Weir’s new Swallowglide end suction range - are being manufactured in Glasgow. Weir Engineering Services will oversee final installation and commissioning in Kosovo. The pumps have been designed to cause minimum disruption to existing pipework on site and to be up-and-running as quickly as possible. According to Graham Bibby, Weir Pumps sales and marketing director. the ability to supply the pumpsets under a fasttrack programme was crucial in winning the order. USA Petrovalve Inc, a wholly-owned subsidiary of Flotek Industries Inc, has received a large valve order from Venezuelan Oil Company PDVSA. Oscar Rivas,

l

l

l

manager of USA Petrovalve, reports that the production data have demonstrated sigimprovement in nificant pump efficiencies resulting in production improvements. reducing the incidents and costs of pump repairs. Solar and water engineering company WorldWater Corp has signed an agreement with the Kuwaiti charity Al-Noori Charity group, Organization, to implement rural water and power projects in developing nations including the Philippines, Pakistan, Sri Lanka, Tanzania and Ethiopia. The first year’s joint activity could include drilling 500 water wells equipped with WorldWater’s proprietary AquaSafe pumping systems. This would require US$7.5 million in funding. ITT Flygt’s hire division has completed a large temporary pumping contract at one of Glasgow’s main sewage treatment works. MJ Gleeson was appointed by West of Scotland Water to carry out a number of civil refurbishment projects at Daldowie sewage treatment works and in order to undertake work on the main outlet channel, the entire flow through the works needed to be overpumped. USFilter Operating Services is to design. build and manage a new wastewater treatment plant in Plymouth. Massachusetts. llnder the US$47 million public-private partnership agreement, USFilter Operating Services will design, build, operate and maintain a 3 million gallon per day wastewater treatment plant for the town. Plymouth will own the wastewater plant, while USFilter Operating Services will assume full risk and responsibility.

l

l

l

l

The board of directors of Grace Inc has declared a regular quarterly dividend of 14 cents per common share, an increase of 27%, payable on 2 February 2000 to shareholders of record at the close of business on 17 January 2000. The company has approximately 20.4 million shares outstanding. Roper Inc’s board of directors has approved a quarterly dividend of US$O.O7 per share payable on 28 January 2000 to stockholders of record on 14 January 2000. The 2000 first quarter dividend represents an 8% increase from the prior-year dividend rate. Roper has increased dividends every year since its initial public offering in 1992. Rohhins & Myers Inc’s board of directors has approved a regular quarterly dividend payment of US$O.OSS per share for the first quarter of fiscal 2000. Shareholders of record as of 14 January 2000 will receive payment on 31 January 2000. The company’s common stock trades on the New York Stock Exchange under the symbol RBN. Crane Co’s board of directors has declared the dividend for the spin-off of Huttig Building Products. The dividend will consist of one share of Huttig common stock for every 4.5 shares of Crane common stock held of record at the close of business on 8 December

l

l

Pump

l

l

1999. l

Directors of The Oilgear Company have declared a regular quarterly dividend of USSO. per share on the company’s common stock. The dividend is payable on IO January 2000, to stockholders of record at the close of business on 3 I December 1999.

Warman International has invested in a slurry pump wear test rig in a back-tobasics research programme aimed at improving pump design and the wear-life performance of materials and spare parts. Kevin Burgess. Warman’s product design manager, says the Northparkes self-contained test cell is essentially a permanent controlled field test, which will give Warman a lot more accurate data, more quickly and without the need to interpret results. Flowserve Corporation has received clearance under federal antitrust law to proceed with its proposed acquisition of Innovative Valve Technologies Inc (see

l

Industp

Anulyst,

December 1999). According to Flowserve, the waiting period required under federal antitrust law has terminated, which allows the company to move ahead with its tender offer to acquire Invatec. Flowserve still expects to close the transaction in early January 2000. Cardo AB is to acquire the remaining 40% shareholding in Cardo BSI Rail AB from ThyssenKrupp. Under a 1997 option agreement, Cardo can acquire the shares as of January 2000. The preliminary agreement involves Cardo acquiring the shares as of 3 1 December 1999 for DM 100 million. AxFlow Group has set up Meller Pumps, a new company in Dublin to handle Mono, ITT Jabsco and Wernert ranges pump together with Roots Dresser blowers throughout Ireland. Brook Crompton, part of Brook Hansen, is to be managed separately from Hansen as a focused motors business within Invensys’ Drives Systems Division.

Pump Industry Analyst

January 2000

Mergers and Acquisitions Review 1999 was another year of strategic restructuring for the global pump sector. While the majority of the mergers and acquisitions listed below cover niche products or markets, the most significant developments actually involve divestments. The Summer of ‘99 was dominated by Ingersoll-Rand’s decision to quit the pump sector. North’s July sale of Warman International to Weir saw another established parent leave the pump arena. And it doesn’t end there. 2000 will see no let up in pump industry exits, as Tetra Lava1 is set to finalise the sale of Alfa Lava1 early this year.

Company

Activity

Comment Fourth

Ahlstrom

Corp

Textron

Announced plans pump activities.

Inc

Acquired

Ensival

Blue Circle

Industries

plc

to divest

KSB Annecy

its

quarter

1999

Ahlstrom says the pump business requires substantial resources develop further and could have greater opportunity for profitable growth under new ownership.

of France.

KSB had announced earlier from the non-core oil pumps

Merged with Moret, creating Ensival-Moret Group.

the

The new France-Belgian turnover ofE60 million, pulp and paper, power

Divested its Heating Division Baxi Partnership Limited for f480 million.

to

Baxi is one of the UK’s leading presence in Italy and Denmark. Myson pumps and valves.

in the year that business.

it planned

to withdraw

company will have a consolidated serving the chemical, petrochemical, generation, sugar and mining industries. heating businesses with a strong The Heating Division includes

Tuthill

Corporation

Acquired Atlantic Fluidics of South Norwalk, Connecticut.

The business will operate under the Tuthill Corporation/ Vacuum Systems Group and will market its product under both the Kinney and Atlantic Fluidics brand names. Atlantic Fluidics makes liquid ring vacuum pumps.

Wicor

Inc

Added two more pump companies to its growing manufacturing base.

Simer Pump, a division of the Rival Company of Kansas City, Missouri, and Western Dispensing Technologies Inc, of Santa Barbara, California had combined 1998 revenues of more than US$23 million. Third

Osmonics

Inc

ITT Industries Tetra

Inc

Lava1 Group

Bran+Luebbe

Ingersoll-Rand

Wicor

Textron

Inc

Inc

Co

quarter

1999

Sold its Mace products business to a subsidiary of Entegris Inc, a critical materials management company headquartered in Chaska, Minnesota.

The sale

Completed the acauisition Flojet Corporation.’

Flojet is a privately-held manufacturer beverage market and for light industrial

of

included

Mace

Teflon

pumps.

of pumps for the applications.

Announced that it was actively exploring the sale of Alfa Lava1 AB.

The purchase of Alfa Lava1 would automatically position its buyer as a significant player in the pump industry. A decision is expected in early 2000.

Became part of United Dominion Industries’ expanding flow technology portfolio.

With 85% acquisition operations.

Announced that it was to quit the pump sector by terminating its Ingersoll-Dresser Pump joint venture with Dresser Industries.

Dresser had first option to buy Ingersoll-Rand’s 51% stake in IDP Dresser declined to buy this stake and as a result had to sell its own interest in the joint venture to Ingersoll-Rand, who then put the acquired business up for sale.

Bought Cuma SA of Monterrey, Mexico, a privately held manufacturer of pumps for irrigation, industrial and residential applications.

Founded turnover

Strengthened its motion control business with the acquisition of Energy Mfg Co and Williams Machine &Tool Co.

Collectively the acquired companies manufacture hydraulic cylinders, valves, pumps and reservoirs construction, waste handling and truck equipment

of Bran+Leubbe’s adds a strong

in 1970, Cuma of US$2 million.

sales outside North America, the international base to UDl’s flow technology

employs

50 people

and has an annual

welded for the agriculture, industries.

to

Pump Industry

muary 2000

Company ITT industries

Weir

Inc

Group

Activity

Comment

Expanded its service capabilities by acquiring Energy Machine Service Inc, a Utah-based engineered product service shop for energyrelated markets.

Founded in 1980, Energy monitoring, field machining

Machine Service offers condition and service capabilities.

Acquired Warman International, pump business of Australian resources group North Limited, f 195 million.

As a result, Weir’s f500 million.

pump

the

Pumpen

GesmbH

Purchased the business Puraqua Umweltanlagen service department.

Wicor

Inc

Signed a definitive ment with Wisconsin

Grace

Inc

Bought

Pullen

Pumps

Pentair

Ltd

Bollhoff

sales

increased

by 40%

to around

for

Second ABS

annual

Analyst

activities GmbH’s

merger agreeEnergy Corp.

Verfahrenstechnik.

quarter of

The

1999 move

strengthens

The companies Spring 2000.

ABS’

expect

position

in the Austrian

the transaction

water

to be completed

market.

by

Bollhoff is a Bielefeld, Germany-based manufacturer of piston pumps, diaphragm pumps, two component proportioning equipment and applicators used in automotive and industrial markets.

The UK centrifugal pump manufacturer was sold to Howard Anderson Limited.

Over the past two years, Croydon, UK-based Pullen Pumps has extended its portfolio to supply pumps and drainage products to the water and waste industry, and has added pump products through the acquisition of Crane Pumps Limited’s design rights.

Inc

Announced plans to acquire Essef Corporation of Chardon, Ohio for US8312 million cash.

Essef manufactures composite water and spa equipment used in residential parks and commercial aquariums.

Sterling Group

Fluid Systems

Acquired the pump interests of QVF Engineering of Wiesbaden, Germany.

The product range sealless construction

Textron

Inc

Bought LCI Corporation International’s Fluid Systems Division (FSD), a manufacturer and assembler of gear pumps, filtration systems and accessory equipment for the polymer, extrusion and industrial pump industries.

FSD becomes part of Maag Pump Systems Textron’s Fluid Handling Products business.

Expanded its water jet pumping business by acquiring Houstonbased Butterworth Jetting Systems.

The

Won control of Sundstrand Corp in a 50% cash and 50% stock merger valued at US$4.3 billion.

Sundstrand was combined with UTC’s Hamilton forming Hamilton Sundstrand. Sundstrand Fluid then changed its name to Sundyne Corporation.

Gardner

Denver

Inc

United

Technologies

Corp

Firs! Weir

Group

Hayward

United Inc Grundfos Ebara

Rejected an unsolicited f600 takeover bid from Flowserve Corporation.

Tyler

Dominion AIS Corporation

Ltd

Industries

million

quarter Weir

deal was a cash

consists mainly for corrosive

for stock

tanks, pumps, filters and pool and commercial pools, water of PTFE pumps applications. Textron

in sealed

and

Inc, a division

of

transaction.

Standard Handling

division Corporation

1999 later went

on to acquire

Warman

International

for f 195 million.

Acquired the Industrial Pumps and Mixer Division of APV based in East Kilbride, Scotland.

The deal was backed by venture capital company 3i and the Bank of Scotland with additional investment by Hayward Tyler directors. APV manufactures canned pumps, magnetic drive pumps and a series of fluid mixers.

Sold Marley Pump’s motor product line assets to Franklin Electric.

Marley Pump will continue to manufacture petroleum and water pumps.

Acquired Deutsche of Baden-Wurttemberg,

Deutsche hot water

Vortex

GmbH Germany.

Acquired the ultra low-temperature pump operations of Cryostar Hydrocarbon Pump of Switzerland.

and sell its Red Jacket

Vortex is a specialist in small pumps in private homes and small apartment

Ebara expects the acquisition.

sales

of cyogenic

products

for the circulation buildings.

to increase

as a result

of of

~

Pump Industry Analyst

January 2000

MARKET REPORT: , Centrifugal and Turbine Pumas

ECONOMIC REVIEW Latin America’s economic recovery will be gradual in 2000, with the region’s gross domestic product expected to grow by 2.7% before increasing to 3.5% in 2001, according to a new report published by the World Bank. The Bank’s annual Cl&u1

I

A recently published market research study from Frost & Sullivan has found that US centrifugal and turbine pump manufacturers have experienced some tough times in recent years. Consolidations and downturns in pump end-user industries, as well as deregulation in the power generation industry, have combined to negatively impact this segment of the US pump market. However, it’s not all doom and gloom, as the US centrifugal and turbine pump market is now starting to experience a slow, steady expansion. Frost & Sullivan’s new market report, US CmtrifLlgul and

Turbine

Pump

Mcrrket,s,

puts an estimated value of US$I .96 billion on the 1998 US centrifugal and turbine pump market. This figure is forecast to increase to US$2.37 billion in 2005. The study outlines a number of challenges that the centrifugal and turbine pump industry is currently facing and suggests strategies to tackle these changing industry dynamics. According to Frost & Sullivan, new building projects, growth in end-user industries, a strong economy and stricter Environmental Protection Agency regulations arc continuing to drive growth rates within this segment of the industrial pump market. The report finds that the increasing complexity of pump materials as well as the widening range of applications for centrifugal and turbine pumps arc fuelling additional revenue growth for pump manufacturers within the sector. However the widespread merger and acquisition activity across a broad range of enduser industries in the late 1990s has moved the pump

industry into a difficult transitional phase. The study suggests that some centrifugal and turbine pump end-users are likely to defer capital investment decisions in the shortterm, as they attempt to gain market share by pursuing their own acquisition strategies. Because US centrifugal and turbine pump manufacturers are faced with a number of challenging issues, they are looking for and finding new ways to maintain profit margins and increase revenue streams. Frost & Sullivan industry analyst Pamela CulbertsonKrieger believes that the use of life-cycle costing in the maturing US centrifugal and turbine pump industry will become an indispensable strategy for those manufacturers who want to survive and thrive in this highly competitive pump market. As end-user demand for efficient and technologically advanced machinery increases, US Centr(fuguI hine Pump Markets

md

Tur-

forecasts stronger growth rates in application areas where pump monitoring technology. remot e diagnostics, variable speec drives and scalless technology such as magnetic drive ant canned motor pumps, are used US Cm tr(fugal Pump Markets,

Economic Developing

and Turbine

Report # 5449-12, was published by Frost & Sullivan in December 1999 and is priced at US$3450. For further information, contact Frost & Sullivan, 2525 East Charleston Road, Mountain View, CA 94043, USA. Tel: + I 650 237 4385 Fax: + I 650 903 09 I5 Web: www.frost.com

I

Prospects Countries

and

the 2000

suggests that following a twoyear slump, Latin America’s turnaround will be driven by growing world trade, stabilised and rising commodity prices. a gradual return of capital flows, as well as lower domestic interest rates and reduced debt servicing costs. Over the last two years, Latin American GDP growth fell from 5.4% in 1997 to 2. I % in 1998. By the fourth quarter of 1998, the World Bank says Argentina, Brazil, Chile, Colombia, Ecuador, Peru and Venezuela were all experiencing recessions. The Asia crisis, as well as the Russian economic difficulties in August 1998, contributed to this downturn. These events triggered reduced export prices and volumes, along with a drop in capital flows. These external forces, combined with deep-seated domestic problems in many countries, pushed growth rates down. GDP is expected to fall by an estimated 0.6% in 1999. The report says that shortterm risks remain. These explain why the recovery is expected to be moderate in 2000, when compared with the 1996 turnaround. Fiscal tightcning is still required in many countries, the study warns, and the savings rate remains low across the region. Resistance to needed economic reforms is surfacing in some countries, presenting political challenges to governments as they face elections, divided legislatures and difficult policy choices.

Long-term growth prospects for the region remain favourable, with 3.5% growth expected for 1999-2008, as efficiency gains from past reforms, including privatisation and liberalisation of trade, take effect.

EXCHANGE RATES AGAINST THE US DOLLAR Date: 10 December

1999

COUNTRY

RATE

Australia

A$l.57

Austria

Schl3.54

Belgium

BFr39.69

Canada

C$ I .4X

China

Rmb8.28

Denmark

DKr7.32

Finland

FM5.85

France

FFr6.45

Germany

DM I .92

India

Rs43.48

Italy

Ll905.12

Japan

YlO2.30

Malaysia

Rt3.80

Netherlands

Fl2.17

Norway

NKr7.98

Philippines

Peso40.75

Singapore

S$l.68

South Africa

R6. I2

South Korea

Won I 132.65

Spain

Pta163.70

Sweden

SKr8.46

Switzerland

SFrl.57

Taiwan

T$3 I .62

Thailand

Bt38.61

1 UK

&0.62

USA

US$I .oo

Euro

EO.98

Pump Industry Analyst

January 2000

DIARY 6-9 March

2000

8-11 March

Houston, Texas, USA 17th International Pump Users Symposium Contact: Turbomachinery Laboratory, Texas A&M University, College Station, Texas 77843-3254, USA Tel: +1409 845 7417 Fax: +1409 845 1835 E-mail: [email protected] Web: turbolab.tamu.edu

2000

Zaragoza, Spain SMAGUA, International Water Exhibition Contact: SMAGUA, International Water & Environment Federation, 50080 Zaragoza, Spain Tel: +34 976 ‘76 47 00 Fax:+34976330649 E-mail: [email protected]

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Bangkok, Thailand Pumps & Valves 2000 Contact: Miller Freeman (Thailand) Co Ltd, 41 Lertpanya Building, 8th Floor, Suite 801, Soi Lertpanya, Sri Aryuthaya Road, Kwaeng Thanon, Phyathai, Khet Rajathewee, Bangkok 10400, Thailand Tel: +662 642 69 118 Fax: +662 642 69 1920 Web: www.thai-exhibitioncorn

Frankfurt am Main, Germany Achema 2000 26” Exhibition Congress International

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Meeting on Chemical Engineering, Environmental Protection and Biotechnology Contact: Dechema eV, D-60061 Frankfurt am Main, Germany Tel: +49 69 75 64 261 Fax: +49 69 75 64 201 Web: www.achema.de

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January 2000

Pump Industry Analyst

KSB STREAMLINES PUMP PORTFOLIO KSB has withdrawn from the oil pumps business by selling its manufacturing plant in Annecy, France to Textron Inc, USA (see Pump Industry Analyst, December 1999). The French facility has annual sales revenues of approximately DM60 million and employs 280 people. As a result of the sale, KSB is withdrawing from the new and replacement upstream pump business, with the exception of the Indian and Brazilian markets, where KSB subsidiaries will continue to offer the complete KSB product range and will closely cooperate with Textron. KSB’s downstream pumps for petrochemical processes in refinieres as well as pumps for oil sand processing are unaffected by the sale, as are KSB’s valve activities. The German pump manufacturer rates the oil pumps business as a non-core activity and says that the disposal is an important step in the company’s new focus on core competencies.

ENSIVAL AND MORET JOIN FORCES Ensival and Moret have merged creating the EnsivalMoret Group. The new France-Belgian company will have a consolidated turnover of e60 million, serving the chemical, petrochemical, pulp and paper. power generation. sugar and mining industries. Ensival is one of the largest Belgian pump manufacturers with an annual turnover of around BFrl billion. The company employs over 280 people in Belgium and SO in France and has a network of agents worldwide. Ensival exports over 80% of its production. The majority of the company’s shares are still held by the founder’s family.

French pump company Moret includes three divisions: Moret Kestner, a specialist in the pumping of abrasive and corrosive liquids; Delplechin, which serves the chemical and industries; and agro-food Moret Pompes Industrie, which special&es in the chemical, petrochemical and water industries.

WEIR OUTLINES PROJECTIONS FOR 2000

PENTAIR TO MEET OR BEAT EARNINGS ESTIMATES Pentair chairman and chief executive officer Winslow Buxton expects the company to meet or exceed analysts’ consensus earnings estimates of US$2.86 per share in 1999. “Each of the three businesses are performing well, and with greater strength in our Enclosures businesses, we are achieving better balance of performance across all business segments,” Buxton said. “With the ongoing integration of the Essef and DeVilbiss acquisitions proceeding well, we expect to supplement our strong internal growth with good contributions from these new businesses in 2000.” Buxton also said that Pentair remains comfortable with analysts’ consensus earnings estimates of US$3.64 per share for 2000.

The Weir Group has completed a review of its projected financial results for 1999 and of the budget for 2000. While Weir is expecting strong growth in 2000, short lead time business in the second half of 1999 has not improved as predicted in August, when interim results Although were announced. enquiry levels and order prospects are slowly improving. the oil, power and minerals processing markets have MYSON NOW remained fairly sluggish. In PART OF BAXI addition some Weir customers have requested delays on Baxi Partnership Limited deliveries on current contracts has completed the acquisiuntil 2000. After including a tion of Blue Circle’s Heating first time f3 million contribuDivision (see Pump Industry tion from Warman, operating Analyst, November 1999). profits for 1999 before goodA new organisation has interest been put in place to run the will amortisation. new business which will have a payable and exceptional items, turnover of approximately are expected to be 8% lower than the comparable 1998 f700 million and will employ throughout 7000 people results. Europe. The boilers and radiaThe integration of Warman tors business will be run as a is progressing. Weir continues separate business. The manuto expect the acquisition to be facturing operations will also earnings enhancing pre goodoperate separately from the will in 2000, with the full bencommercial operations. efit of the savings to be seen in Baxi is the UK’s largest 2001. employee-owned manufacturLooking ahead, Weir is ing company. Headquartered moving into 2000 with a highin Preston, Lancashire, the er order book than a year ago. company’s businesses mainly as bookings have exceeded comprise boilers, radiators and invoiced sales. With the incluwater heaters. Bryan Gray, sion of a full year of Warman, Baxi chief executive, says Weir expects turnover from these were exciting times for existing operations to show Baxi, and that Baxi is commitgrowth of at least 25% from ted to being Europe’s leading 1 heatmg company. 1 IYYY. I

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