Major U-turn as Sulzer divests pumps business

ISSUE 58 OCTOBER 2000 ISSN 1359-6128

’ MAJOR U-TURN AS SULZER DIVESTS PUMPS BUSINESS Less than four months after completing the acquisition of Ahlstrom Pumps, Sulzer Corporation has announced a wide-ranging change in strategic direction, which includes the sale of its entire pump operations. In a dramatlc restructure. Sulzer plans to dispose of twothirds of its operations and refocus on medical devices and surface and materials technology. As a result, subject to shareholder approval, Sulzer Medica Ltd will merge with Sulzel- Ltd. This transformation from a broadly diversified technology company to a sharply focused high technology business means that five Sulzer Industries Business Units will be divested. Sulzer Pumps. Sulzer Infra, Sulzer Textil. Sulzer Turbo and Sulzer Burckhardt. Sulzer hopes to raise more than SFrl billion from selling these businesses. which generate annual revenues of SFr3.6 billion and employ more than I4 600 people. Sulzer Pumps has annUdl sales of SFr930 million and 5000 employees and mainlq serves powsr generation. oil and gas, hydrocarbon processing, water and sewage applications. as well as the pulp and paper industry. The acquisl-

tion of Finland’s Ahlstrom Pumps in May this year added SFr220 million in pump sales and 1000 employees, giving Sulzer a leading position in pumps for the pulp and paper industry. At the time, senior Sulzer management were very enthusiastic about the deal. predicting further strategic growth for Sulzer Pumps (see P~mzp Industry Analyst. April 2000). In March, while announcing annual results, Sulzer CEO Fred Kindle said they planned to turn Sulzer Pumps into a global leader, predicting pump sales of more than SFrI billion w-ithin two to three years (see Pump Industr;\~.4naIvst, April 2000). A spokesman for Sulzer Corporation told Pump IndusIQ’ AnaLixst that while pumps would no longer be a core activity, it was a strong business and that Sulzer would work hard to find the right buyer. Sulzer says it will give preference to those buyers for whom these units represent a good strategic fit for further development and who respect their obligations to the workforce. The company has stressed that throughout this transition it will honour its social obligations to its employees.

SMITHS INDUSTRIES AND TI GROUP TO MERGE

While a restructuring at Sulzer Corporation was expected following the UK aerospace and engineerappointment of Ueii Roost ing group Smiths industries as chairman in April, this has agreed to buy TI Group radical change in direction for $1.77 billion in shares. has surprised many. Just The merger creates a confive months ago, Sulzerwas bined group with sales of predicting great things for around f3 billion focused on its pump business, as it four businesses: Aerospace, announced plans to acquire Medical. Sealing Solutions Finland’s Ahlstrom Pumps. and lndustrial Equipment. The deal, which closed Smith Industries and Tl Group in May, broadened the prodshareholders will hold approxuct range and appeared to imately 57.6% and 42.4’s give Sulzer Pumps the critical mass that the busirespectively of the new group, nessneeded.Now after only which brings together two ot four months in the Sulzer the UK’s largest specialist engineering groups. stable, Ahbtrom Pumps finds itself back on the marTI Group is the parent company of John Crane, Flexiket, as Sulzer Pumps is box, Busak+Shamban and Fordivested. So who will buy sheda. Pump interests include Sulzer Pumps and will they want all or part of the pack- 1 Plenty and Hick Hargreaves. age on offer? With Flowserve and Ebara unlikely contenders, Weir is an STOP PRESS obvious candidate. Sulzer Pumps would make a parUNITED ticularly good fit for Weir, DOMINION giving a much-neededboost EXPLORES SALE to the UK Croup’s European activities. Parts of United Dominion IndusSulzer’s pumps business tries says it is in talks with may also interest Cardo, several parties about a posITT Fluid Technology or sible sale of the company. KSB. Sulzer is looking No definitive agreement for buyers who can offer regarding a sale has been strategic fit, suggesting entered into by the compaprice will not be the ny at this stage. JP Morgan only factor in closing this & Co is advising United divestment. m Dommion.

Pump Industry Analyst

October 2000

k%%y Abal Pump A3s AhIstrom Pumps

1.12 1 16 13 10

ElbW Saksr Hughes Barnes Pumps Ba(Jamann 1: 3ran+Leubbe 9 Burks Pumps Card0 Pump 7, *i Gatalano Associates 6 CH%E 7 5 Chempump Cornell Pump Crane 5,10,12, :t Davsy Products 13 Qavii Brcwn Union Pumps 12 ~~~~~ QMW Dover Ebara EnviroTech Nowdata Ftowasrve _ FybfOC Galighar Gardner Qsnvsr Girdlestons Glyrlwed Gorman-Rupp Goufds Pumps Grace HaMburton Hansen T~hnofngies Hi Hargreaves Hydraulic tftstkuIe Jdex IciP ITT Fktid Tschnofogy ITT nygt n-r lndur;tries Klmr Brothers KS3 towars

7.1: 10 1 IO,12 1,lcl 13 8 I,%, 10 12 1: 16 11 10 II,14 10 IO, 13 16 1 fl 10,12 8 1 12 to, 11,13.14 12 1, IO,13 9.14,

ZZiTp

National Oilwell PCC Flow Tschnoiogies PCM Motnesu Psntair Ffeiffet Vacuum Plenty Predsfon Castparts Process Systems Prcaser Pumps Putzmsiater RobMns & Myers Roper lfldustrles Ropar Pump Schlumbsrgar Sierllog Fluid Systems Sutzer Sulzer Pumps Fit222 TextrOn TI Group Torishima Tsurumi Mfg Unttsd Dominion UnksdTtinofogiss Usha lntsrnatkxral WI Warman ~s;xnan Pumps

:s 10 13

ii: 10 6 1 9. IO, 13 5 5 14 8,10, :: 12 10 12 1,lO 1 14 IO, :i 1‘12 10 10 l,%, 10, 16 16,ll 13 t4 13

1,10,12.1: Weir Enginesring Sarvicss Weir Process Group Weir Pumps Weir Slurry Group Wesco Abu Dhabi Willy Vogel Wisconsin Energy IO, 12,

:i 16 13 14 is”

REFINERY EXPANSION GETS THE GO-AHEAD China has approved a project proposal to develop a multi-billion dollar refinery expansion and petrochemical complex at the Fujian Petrochemical Company Limited (FPCL) Refinery in Fujian Province. FPCL is a joint venture between China Petrochemical Corporation (Sinopec) and the Fujian Provincial Government in Southeastern China. The Fujian venture will be a partnership between FPCL (50%), ExxonMobil (25%) and Saudi Aramco (25%). It will involve the construction of a new 600 000 tons-per-year ethylene steam cracker, a 450 000 tonsper-year polyethylene unit and 300 000 tons-per-year polypropylene unit, together with chemical derivatives manufacturing units and related distribution and marketing facilities. The petrochemical complex will be integrated with the refinery, which will expand its existing 80 000 barrels-perday capacity to 240 000 barrels per day.

$30 MILLION INVESTMENT PLANNED FOR TEESIDE Huntsman Petrochemicals and BOC have entered into a long-term contract for the supply of hydrogen and steam to Huntsman’s manufacturing operations on Teesside, UK. As a result, BOC will invest around &30 million to construct a new 32 000 tonne a year hydrogen plant at Huntsman’s North Tees site near Seal Sands. The new plant, which will be the largest out-sourced hydro-

gen plant in the UK, will supply high purity hydrogen by pipeline to Huntsman production facilities on Teesside at both Wilton and North Tees, as well as steam to North Tees under a 15year supply contract. Design and construction of the plant will be carried out and managed by Foster Wheeler Limited, which has formed an alliance with BOC.

SHAW TO BUILD ETHYLENE PLANT IN CHINA The Shaw Group Inc has signed a letter of intent with BASF AG, China Petroleum & Chemical Corporation (SINOPEC), and its subsidiary SINOPEC Group Yangzi Petroleum Corporation (YPC), to provide engineering, procurement and construction services under a negotiated, lump-sum turnkey contract, for a 600 000 metric ton-per-year ethylene plant, and related facilities, in Nanjing, China. Shaw’s subsidiary, Stone & Webster (S&W), will undertake engineering and procurement, while construction services will be subcontracted to a Chinese construction company. The plant equipment and materials included in Shaw’s July 2000 purchase of S&W assets will be used for this project. This plant is the first unit awarded for the US$2.7 billion Integrated Petrochemical site to be developed by BASF and YPC in Nanjing which is expected to go on-stream in 2004/2005.

KRUPP UHDE WINS GERMAN CONTRACT In Germany, Vintron GmbH has commissioned Krupp Uhde to build a turnkey

330 000 tonnes per year viny1 chloride plant and expand the alkali chloride plant at Vintron’s chemicals complex at Knapsack, near Cologne to 250 000 t/a. The contract for the two plants is valued at DM200 million. Mechanical completion of both plants is scheduled for October 2001.

KERR-MCGEE UPS PIGMENT OUTPUT Kerr-McGee Chemical LLC has announced plans for a 10% increase in production capacity at its Kwinana titanium dioxide pigment plant, located near Perth, Western Australia. The US$lO million project, scheduled for completion in mid-2001, will raise production capacity of chloride process pigment from 86 000 to 95 000 metric tonnes per year. The Kwinana pigment facility, which primarily serves the Asia-Pacific market, is part of the Tiwest joint venture between KerrMcGee Chemical and Ticor Ltd, a publicly-traded Australian company.

REPEAT ORDER FOR FW Foster Wheeler Iberia, in partnership with two other Spanish engineering companies, has been awarded the engineering, procurement and construction management (EPCm) contract by GE Plastics for a new 130 000 metric ton-per-year polycarbonate plant to be built in Cartagena, Spain. The total project investment is valued at US$480 million. The project is a duplicate of the existing GE polycarbonate plant also in Cartagena that was built in 1999 by the same group of contractors. The plant will be installed adjacent to the present facility

October 2000

and is expected to be completed in 2002.

Pump Industry Analyst

3-4 MW surface power plant, in the fourth quarter of 2002 which was installed when the ,I including necessary buildings. and the second vessel in the pulp mill was built in 1972. It ( NCC’s share of the project 1 first quarter of 2003. 1 is planned to be ready in less 1 amounts to approximately The vessels have been ) than two years. I US$35 million. In addition, a specified to allow a high i water supply project will be degree of flexibility and utilise KVAERNER 1 carned out in Brujuela-Casui. the extensive LNG experience , Sl JPPT .lRS --- ---This project involves drilling of BP’s shipping business in ALSTOM SECURES PROJECTS ON 3 and constructing groundwater their design. construction and INDIAN wells, piping deliveries and operation. They will form part CONTINENTS CONTRACT pipe laying, two concrete water of a growing portfolio of shipKvaerner, the Anglo-Norwetanks, pumping stations and ping capacity available to BP’s Alstom has won an g85 milgian engineering and conother facilities. NCC is respongas business. lion order to build a comstruction group, has secured bined cycle power plant at sible for the entire US$54 milpulp and paper contracts in lion project. Hazira, in Gujarat State, KVAERNER IN Belgium, Sweden, Brazil and India for Gujarat State CRUISE SHIP South Africa, worth more Energy Generation Ltd. INDIA’S BHEL than US$lO5 million. DEAL The 160 MW power plant WINS ZAMBIAN Roland Martin-Liif, cxecuis scheduled to enter commerKvaerner has signed conPROJECT tive \,ice president of Kvaerncial operation in early 2002. tracts for the delivery of two cr. said that while the market BHEL has secured a Rs680 Alstom Power will deliver cruise ships in 2003. for pulp machinery equipment two 58 MW type GTSC2 gas million, World Bank-funded An 86 000 gross registerhad been slow to recover, there 330 kv substation turnkey turbines. a steam turbine, two ed ton cruise ship will be was no14 a clearly positive contract from Zambia Elecheat recovery steam generabuilt for Italy’s Costa Crociere trend. as customers in the pulp tors, electrical equipment, the tricity Supply Corporation SpA. The 2 loo-passenger vesindustry increase their activity instrumentation and control (ZESCO). sel will cost approximately levels. backed by good profsystem. and the balance nt‘ The contract involves set- US$350 million, and will be itability in the sector. plant equipment as well as the ting up a new 330 kv substabuilt by Kvaerner Masa-Yards The largest of the contion at Lusaka West and rehaHV switchyard. at its Helsinki shipyard in Fintracts. worth US$55 million. is bilitating I I existing 330 kv & land for delivery in spring for Burgo Ardennes SA. I32 kv class substations 2003. NCC EXPANDS Kvaerner will supply a recovthroughout Zambia. BHEl:s Kvaerner IS also building IN CENTRAL scope of work covers design, an 86 000 gross registered ton ery boiler and other associated equipment for the company’s AMERICA manufacture, erection, testing vessel for Carnival Cornoraand commissioning of spe- tion. at an estimated cost of pulp and paper mill at Virton, Sweden’s NCC has received Belgium. The customer is cialised equipment for the new SKrl.3 billion in orders for US$375 million. This is the replacing its old recovery boiltwo hydropower plants in substation, as well as carrying fourth such vessel to be built in er, and at the same time, out civil works. Both projects Costa Rica, as well as a dam Carnival’s Spirit class. This Increasing the mill’s capacity. are set for completion in just facility and water suppI> cruise ship will be capable of The start-up of the new equip26 months. Norconsult of Norproject in the Dominican carrying 2 I24 passengers. The ment is scheduled for the end way are the project consultants Republic. new vessel will also be built at of 200 I In Costa Rica. the Brasil II 1 to ZESCO. the Helsinki shipyard, and is project comprises a concrete scheduled for delivery at the SCA UPGRADES dam, a transmission tunnel, concrete culverts, pressure AUSTRIAN PAPER ~ pipes and a 31 MW surface I MILL BP ORDERS I power plant. El Encanto, a XC- , Swedish paper group SCA is i ond 9 MW power plant, inTWO LNG shutting down a 40 year old ’ SiiDRA INVESTS cludes a concrete dam, a long VESSELS transmission tunnel in con90 000 tonnes paper machine IN V;iRij PULP BP has placed an order crete, pressure pipes and a surat its Laakirchen paper mill MILL worth more than US%300 face power plant. in Austria, and replacing it million for two new LNG Forest industry group Siidra In the Dominican Repubwith a new machine with an is spending SKr650 million lic, a dam will also be built on ships with Samsung Heavy annual capacity of 240 000 the Camu River. The project Industries in Koje, South on a new recovery boiler tonnes. at the Viirii pulp mill in involves a 70-meter-high balKorea. The investment will cost last-filled dam with an asphalt The order also incorpoSweden. about e.225 million. The i core, intake and overflow rates options to purchase a furThe recovery boiler will be increased capacity will be i ther three vessels. Construcstructures in concrete. a presdelivered by the Finnish comavailable between 2003 and I sure tunnel and a flushing tion will start in April 2001, pany Andritz-Ahlstriim and 2005. The new machme will tunnel in bedrock. as well as a with delivery of the first vessel will replace the present one be pre-equipped for expansion

October 2000

Pump Industry Analyst

at a later date to a capacity of 400 000 tonnes.

US WATER WINS NEW ENGLAND CONTRACT In what is the largest ever water privatisation deal in New England, US Water has signed a 20-year contract worth US%263 million to the Springfield, manage Massachusetts Water & Sewer Commission’s 67 mgd wastewater treatment plant, 29 sewage pumping stations, combined sewer overflow operations and system residuals disposal. The plant serves a population of 275 000 and is the third largest activated sludge plant in New England. US Water’s parent companies Bechtel Enterprises and United Utilities guaranteed the price and performance. The guarantees are joint and several and capped at US$lOO million. The Springfield contract includes about US$10.4 million in capital projects. US Water will be responsible for delivering the improvements within the first two years of the contract.

YORKSHIRE WATER INVESTS IN WATER TREATMENT In the UK,Yorkshire Water is about to start work on a El.7 million scheme to build a brand new water treatment works in North Yorkshire’s Upper Swaledale, improving water quality to 15 rural villages. The new plant at West Stonesdale, which will take nine months to construct, will be built next to the existing works.

FUNDING TO REPAIR EAST TIMOR’S WATER SYSTEMS The Asian Development Bank (ADB) has approved a project to repair East Timor’s badly-damaged water supply infrastructure and to re-establish institutions and systems to operate the sector. The Water Supply and Sanitation Rehabilitation Project will be financed by a US$4.5 million grant from the Trust Fund for East Timor and managed by ADB. The project will establish a water sector management and investment programme, including setting up a project management unit under the United Nations Transitional Administration’s Water and Sanitation Authority. Following the recent conflict, East Timor needs almost US$40 million to rehabilitate the sector for the fiscal year 2001-2003.

EIB SUPPORTS DUTCH WATER SUPPLY PROJECT The European Investment Bank has lent a0, million to the Dutch water company Waterleidingmaatschappij Drenthe NV (WMD), in order to upgrade its production and distribution systems. A key objective of the scheme is to reduce the extraction of ground water to sustainable levels. Partial relocation of production from ecologically sensitive areas to environmentally more robust zones will help cut the seasonal lowering of ground water tables. A large part of the EIB financed WMD investment scheme has been accorded green status, a Dutch seal of quality for projects with a considerable positive impact on the environment.

equipment procurement and actual construction of the upgrader facilities.

FW BUILDS DRUGS FACILITY IN SINGAPORE Schering-Plough has selected Foster Wheeler (FW) to construct design, engineer, and validate a multi-purpose bulk pharmaceutical chemical facility under construction in Singapore. FW will provide engineering, procurement, construction and validation, including all supporting utilities and infrastructure in a US$200 million contract. The plant, located on a site adjacent to an existing Schering-Plough pharmaceutical facility, will be built to Current Good Manufacturing Practices requirements and will be validated to US Food and Drug Administration standards. Preliminary work has already started on the project, which is scheduled for completion in mid-2002.

FLUOR TO DEVELOP VENEZUELAN OIL PROJECT Petrolera Ameriven has selected Fluor Corp to lead a consortium to develop a USSl billion crude oil upgrading project, known as the Hamaca Crude Upgrader Project, in eastern Venezuela. Fluor Daniel, the engiprocurement and neering, construction unit of Fluor, will lead the development of the crude upgrading facilities. which Texaco, holds a 30% interest in the project, and its partners, Petroleos de Venezuela SA, and Phillips Petroleum Company, have approved approximately US$l billion for engineering design,

CHEVRON AGREES TO RECORD SETTLEMENT Chevron USA is to pay a record US%7 million to settle claims that it violated the Clean Air Act at its offshore loading terminal near El Segundo, California. The settlement includes a US$6 million penalty, the highest ever paid under the Clean Air Act for a single facility, as well as environmental improvement projects valued at US$l million. San Francisco-based Chevron has also agreed to spend LJS$SOO 000 to install leakless valves and double-sealed pumps at its El Segundo refinery.

EBRD BOOSTS OIL OUTPUT IN AZERBAIJAN Two onshore oilfield blocks in Azerbaijan will be developed with financing of up to a5 million from the European Bank for Reconstruction and Development (EBRD). The funding consists of a loan of e44.4 million to Karasu Development Company and an equity investment of up to El 1.1 million in Kura Valley Holdings. The project involves the rehabilitation of the Mishovdag and Kemaleddin fields and the development of the larger Padar Block located approximately SO km south of Baku in desert and scrubland. Under a four-year programme, well repairs will be undertaken, existing wells will be completed and infill drilling will be carried out. Two additional wells will be drilled on an extension area alongside the existing wells and using existing facilities.

Pump Industry Analyst

October 2000

Crane Co, USA ‘refile Crane Co businesses manufacture and sell a diverse range of products including vending machines, aeroplane braking devices. lumps. valves and other industrial goods. The company has five segments: Engineered Materials, Merchandising Systems. Aeropace. Fluid Handling and Controls. Fluid Handling includes valve, pump and water treatment businesses. Crane Pumps and Systems CP&S) serves OEMs and end-users in a wide range of industries and markets, primarily domestic. These include the municipal. ndustrial and commercial water and wastewater markets, specialty industrial applications, power and construction industries, commercial HVAC, power generation, hydrocarbon, chemical and pharmaceutical processing, and government applications. Pump brand ames include Barnes Pumps. Burks Pumps, Chempump, Deming Pumps. Process Systems, Prosser Pumps and Weinman Pumps. Lnalysis Zrane’s Fhud Handling business reported 1999 operating lrofit of US$23 million on sales of US$502 million, both well lown on 1998’s figures. Results were badly hit by weak Lemand from the oil and gas industry and by depressed Asian narkets. Engineered and commercial valve shipments fell .9% and 20% respectively. The pump/water treatment busiless operating margin declined to 8.5% of sales compared vith I I .3”/;, in 1998, reflecting exceptional workers’ compenation. medical and product warranty expenses. The good lews came from the Valve Services business and Crane Supsly, where operating profits were up 45% and 13% on higher evenues. In order to reduce the fixed cost structure of the :luid Handling businesses, Crane closed a number of manuacturing facilities, cut staff numbers and rationalised product ines during the third and fourth quarters of 1999. 3ey Figures Zrane Co

(US$ million) Year ended

Uet Sales 3f Which: -bid Handling 3perating Profit 3f Which: Fluid Handling Income from Continuing

Operations

Contact Details Chairman and Chief Executive Officer: President and Chief Operating Officer: Address:

31 .12

1999

1998

1997

1996

1995

1553.7

1561.1

1411.3

1252.5

1211.5

502.2

557.8

499.8

169.6

212.0

176.8

144.0

124.1

22.9

35.0

36.9

100.9

124.8

103.7

79.8

-64.5

RS Evans Eric Fast 100 First Stamford Place Stamford CT 06902 USA

___-__

Tel: +1 203 363 7300 Web: www.craneco.com, Web: www.cranepumps.com

Recent Events * In December 1999, Crane spun-off Huttig Building Products to Crane shareholders. During 1999, Cochrane completed the integration of its 1998 acquisition of Enviroinmental Products, a global supplier of reverse osmosis systems and strengthened its focus on energy-related water purification applications. l

Pump Industry Analyst

October 2000

Pfeiffer Vacuum, Germany Profile ‘feiffer Vacuum designs, manufactures, sells and services a broad range of turbomolecular vacuum pumps, rotary vane pumps, ,oots pumps and customised vacuum systems. The company’s main markets are Europe, Asia and the USA, where the products are rsed in the operation of analytical instruments such as electron microscopes and mass spectrometers, and in the manufacturing of elevision and computer monitor tubes, semiconductors and flat-screen displays. The company is listed on the Neuer Markt of the Trankfurt Stock Exchange. American Depository Shares are listed on the New York Stock Exchange. Pfeiffer Vacuum has nine ;ales companies in Europe, an American subsidiary with nine branch offices, joint ventures in India and Korea and more than 20 agencies worldwide. inalysis @ith sales exceeding DM300 million for the first time, 1999 vas a year of steady growth and solid achievement for Pfeiffer Vacuum. Exports accounted for 68.8% of company sales, lown from 72% in 1998, mainly the result of lower than :xpected sales in North America and Europe. Sales rose strongly in Germany, while the company describes sales develjpment in Asia as “encouraging”. Pfeiffer Vacuum maintains ts policy of refusing non-profitable orders and has eliminated noducts from its portfolio that were not profitable enough. Key Figures (DM million)

Year ended 31 .12

Pfeiffer Vacuum 1999

1998

1997

1996

Net Sales Of Which: Turbopumps Rotary Vane Pumps Roots Pumps Dry Backing Pumps

300.2

279.2

117.0 17.8 11.3 5.3

120.1 22.3 10.5 1.4

121.5 22.1 11.1

109.8 20.0 15.0

Income before Tax

46.6

45.8

41.0

24.3

Net Income

26.1

24.7

21.7

11.9

Capital Expenditure

8.6

6.4

5.7

10.6

Number

792

765

764

736

of Employees

Contact Details Chief Executive Officer: Address:

Wolfgang Dondorf Emmeliusstrasse 33 D-35614 Asslar Germany

276.2

249.5

Web: www.pfeiffer-vacuum.de

Recent Events On 10 March 2000, Pfeiffer Vacuum held the groundbreaking ceremony for the new Factory 2000 at the Asslar site. The new facility will mainly accommodate the R&D department as well as production facilities for the turbo pumps and dry backing pumps for the semiconductor industry. Over the next two years, around DM20 million will be invested in the development of the site. The new factory is just the first phase of the project. The second phase involves converting the existing factory and in the third phase, the remaining facilities at the Asslar site will be adapted. In May 1999, Pfeiffer Vacuum acquired Catalan0 Associates for US$2 million. Catalan0 distributes and repairs vacuum pumps in the USA.

l

l

October

Pump

2000

Cardo AB, Sweden Sales

Analyst

Derlan Industries Limited, Canada

Key Figures (SKr million) January-June Invoiced

industry

~ ~

Key Figures (C$ million) Three months ended 30.6

2000

1999

4586

4477

2000

1999

Sales

43.4

31.7

11.6

11.6

32.1

22.3

6.1

5.7

6.7

5.5

Cardo Pump

1211

1165

Of Which: Pumps

Costs of Goods Sold

3118

3112

Manufacturing

Gross Earnings

1468

1365

Selling, General Expenses

Of Which:

Operating Earnings Of Which: Cardo Pump

359

242

98

105

Net Earnings

216

130

Expenses and Admin

EBITDA Of Which: Pumps

0.9

Net Income

(13.4) Six months

the acquisition of CH&E, deliveries to the construction industry decreased. CH&E, acquired in the USA at the beginning of the year, has a turnover of approximately SKr60 million and has provided diesel-driven dewatering pumps that complement Card0 Pump’s electrically driven pumps. In an effort to adapt to a consolidating pulp and paper sector, Cardo Pump has formed a special marketing and servicecompanythat targets this customer group exclusively. With headquarters in Miiltldal, Sweden the company has marketing and service activities in most cmmtries that have a develaped pulp and paper industry, In he, Card0 Pump received one of the biggest orders in the company’s history. Cardo Pump will supply dry-pit pumps worth more than SK&O milEon for a water cleat project in durhg 2001 (see

develop stronglly. Excluding

Orders, page 12).

m

1.1 0.9

30.6 2000

1999

Sales

78.1

61.8

Of Which: Pumps

22.8

22.9

57.5

45.1

11.6

10.0

Manufacturing

Thomas Widstrand, the new head of Cardo Pump, has inherited a respectableset of interim figures. Card0 Pump’s invoiced salesfor the first six months of this year reached SKrl2 11 million, up from SIG1165 million at the same stage last year. Adjusted for the effects of exchange rate movements and company acquisitions, this is a 3% increase. Lower margins on pulp and paper industry products however have hit profits, with operating earnings down SKr7 million to SKr98 million. In order to reduce costs in the pulp and paper area, Cardo Pump is looking to transfer the Njurmxia QperatlQtlin Swedento its plant. Del-ivery volume to the pulp and paper industry was more or bss level with last year, whib shipments to S

ended

--

Selling, General Expenses

Expenses and Admin

EBITDA Of Which: Pumps Net Income

12.2

9.7

2.4

2.8

(12.8)

1.6

L

There are still no developments from Derlan’s divestment discussionsas management continues to focus on reatising shareholder vahre (see Pump Industry dnalysi, April 2000). Meanwhile, Derlan’srevenue from can&zing operations for the three months ended 30 June 2900 rose 37% to C%43.4 m&on from C$3 1.7 miIIion in the second quarter of 1999. Most af the increasewas the reauktoftbe acquisition of lb& sion Gear in Wla Ptnnp sector revr~ue was C$ 11.6 million, unchanged

from a year ago, revenue in the Aerospacesector increased 59% to C%3I .8 million. D&an’s second quarter net earnings from continuing operations before special charges were C$1.6 million compared with GO.8 million last year. Backlog at 30 June Moo was C$l88 million versus C$123 million in 1999’s second quarter and G$l92 mihion at 3 1 March 2060. For the quarter, Derlan recorded a net loss of C$I3.4 million, as a result of mihion in special .II:

Pump Industry Analyst

October 2000

Roper Industries Inc, USA

Flowserve Corporation, USA

Key Figures (US$ million) Three months ended 31.7

Key Figures (US$ million) Second quarter ended 30.6

2000

1999

Net Sales Of Which: Fluid Handling

124.6

104.1

34.2

26.0

Gross Profit Of Which: Fluid Handling

64.0

54.3

16.5

12.9

Operating Profit Of Which: Fluid Handling

21.8

23.2

7.7

7.5

138.7

92.9

36.3

23.1

Bookings Of Which: Fluid Handling

2000

1999

Sales Of Which: Rotating Equipment Flow Control Flow Solutions

299.2

275.2

82.3 67.4 159.6

98.2 76.1 109.2

Operating Income Of Which: Rotating Equipment Flow Control Flow Solutions

26.4

16.9

6.2 8.4 18.7

5.0 7.2 13.1

Net Earnings

12.6

8.5

Six months ended 30.6 Nine months ended 31.7 2000

2000

1999

Net Sales Of Which: Fluid Handlina

356.8

293.6

86.8

72.6

Gross Profit Of Which: Fluid Handling

186.2

150.8

42.2

34.7

66.1

59.9

Operating Profit Of Which: Fluid Handling Bookings Of Which: Fluid Handling

21.3

19.6

379.9

300.4

94.0

76.4

1999

Sales Of Which: Rotating Equipment Flow Control Flow Solutions

584.5

544.6

155.8 135.2 308.4

189.7 151.7 217.9

Operating Income Of Which: Rotating Equipment Flow Control Flow Solutions

47.8

36.3

10.1 16.2 35.4

11.5 15.1 27.9

Net Earnings

24.5

18.9

October 2000

Pump Industry Analyst

Precision Castparts Corp, USA

1 United Dominion ~ Industries Ltd, USA

Key Figures (US$ million) Three months ended 2.7.2000

Sales Of Which: Fluid Management Cost of Goods

Sold

Operating Income Of Which: Fluid Management Net Income

Products

Products

~

Key Figures (US$ million) Second quarter ended 30.6 27.6.1999

549.5

359.0

75.3

73.3

427.6

279.1

67.8

42.5

2.6

4.9

28.3

22.3

2000

1999

Sales Of Which: Flow Technology

626.9

549.3

258.4

229.4

Cost of Sales

434.3

384.3

68.7

58.7

Operating

Income

Segment Profit Of Which: Flow Technology

70.2

61.4

21 .l

22.0

Net Income

30.8

27.5

Six months

ended

30.6 2000

1999

1185.4

1027.7

513.3

457.4

Cost of Sales

826.4

721 .l

Operating

106.4 109.5

94.4 -__. 99.7

35.2

41.4

42.8

40.9

Sales Of Which: Flow Technology Income

Segment Profit Of Which: Flow Technology Net Income For the first quarter of its fwxl year 2001, overall Saks reached UHiS49.5 million, a 53% iwrease over the US$359.0 million reported

mil-

The second quarter marked the end of United Dominion’s reStructurin@activitiesin&i&ed to wpport the UDXc&h5 ~~~~ Tllese actions included plant consotidations, processivies, and assetwrite-dawns. UDI’S second-quarternet income be6.x~~~~~~~ item8 ufUS$30.& raillisa, 03x sales of USS626.9 mi8iin,

year, Weil-k&Lain and Flair divisions shwed good yearover-year improvement, and Br&-tLuebh, acquired in the th.id quartet af 1999, had good results. Sk& petroleum mar&s continue to negatively affect MMey Cooling T-r and I&&y Pump.

pmly

-#need

joint

Pump Industry Analyst

October 2000

STOCKWATCH Splits and speculation

lie behind biggest gains.

Country

Exchange Symbol Company

Closing Price Closing Price % 23-Jun-00 Change 05-Sep-00

High

Low us14

52 Week

AMEX

GRC

Gorman-Rupp

USA

Us$l% ‘/a

Us$l6 93

A&+17.?

US!tN

Frankfurt

KSB

KSB

Germany

DM92

DM103

v-10.7

-

London

WEIR

Weir Group

UK

f2.19

fl.88

A+l6.5

-

NYSE

BHI

Baker Hughes

USA

US$37 %6

US%33 ‘%2

A+10.7

US$39 %6

US$15

NYSE

CR

Crane

USA

US$25 ‘1,~

US$23

A,+5.7

US$29

‘I2

US$16

‘I16

NYSE

DOV

Dover

USA

US$48 “/15

US$43 ‘I8

A+1 1 .o

US$54 %

US$36

‘/1s

NYSE

FLS

Flowserve

USA

US$18 %6

US$14

A+24.5

US$18 %

US$lO

9/16

NYSE

GDI

Gardner

USA

US$14

‘%6

US$i 8 Va

v-1 8.7

US$20 %

US$ll

%6

US$32 ‘A6

A+8.5

Denver

“I,6 13/ls

NYSE

GGG

Grace

USA

US$35

NYSE

HAL

Halliburton

USA

US$53%

-

NYSE

IEX

ldex

USA

US$30 %6

US$31 %6

NYSE

ITT

ITT Industries

USA

US$34

‘I16

-

NYSE

MPR

Met-Pro

USA

US$lO

‘I4

NYSE

PNR

Pentair

USA

NYSE

PCP

Precision

NYSE

Castparts

US$36 %

US$2% ‘lx

US$54 %

US$32

%

v-3.6

US$34 %

US$22

%

US$9 ‘I4

A+1 0.8

US$ll

US$8 3/8

US$32 %s

US$36 ‘18

y-12.0

US$46 %e

US$27

USA

US%73 ‘I2

US$44

A+67.0

US$77 %e

US$23 %A

78

‘/4

RBN

Robbins

USA

US$24

‘14

US$20

‘I4

A+1 9.8

US$24 ?s

US$15

NYSE

ROP

Roper Industries

USA’

US$32

‘14

US$33

‘A

v-2.5

US$38 ‘Se

US$24

NYSE

SLB

Schlumberger

USA

US$85

‘Is

-

US$88

78

US$52

NYSE

TXT

Textron

USA

US$56

‘/16

US$55 “I4

A+O.6

US%82 ‘1~

US$51

NYSE

UDI

United Dominion

USA

US$l6

‘la

US$17 %6

V-6.9

US$24 %

US$15

‘la

NYSE

UTX

United Technologies

USA

US$61

‘14

US$57 ‘h

A+7.3

US$66

‘%

US$46

‘IP

NYSE

WIG

Wisconsin

USA

US$21

%

US$20 “18

A+6.7

US824

“14

US$16

‘she

Swiss

SUN

Sulzer

SW2

SFr1275

SFr1092

A+16.8

-

Tokyo

6365

DMW

Japan

Y4770

Y4870

v-2.1

-

Tokyo

6361

Ebara

Japan

VI565

Y1506

A+3.9

-

Tokyo

6363

Torishima

Pump Mfg Japan

Y520

Y535

v-2.8

-

Tokyo

6351

Tsurumi

Japan

Y510

Y514

v-O.8

-

Toronto

DRL

Derlan Industries

Canada

C$1.85

-

The spectacular 67% gain in Precision Castparts’ stock price &canJune to September was accompanied by a 16 August announcement that PCC’s board of directors had approved a two-for-one

& Myers

‘I4

Energy

Mfg

split of its common stock in the form of a stock dividend. The split is the first in six years. The strong gains at Weir over the same time frame reflect market speculation

that a bid approach was in the air Despite no announcements, the stock has stayed steady, closing at E2.19 on 5 September. The markets obviously liked Flowserve’s integration

C$2.%4

“/16

C$i .70

plans for IDP - the FLS stock has increased 24.5% since June, the main gains achieved since Flawserve announced that it was to cut 10% of its workforce (seePump hdushy An&j&, September2t.MQ. I

Pump Industry Analyst

October 2000

E-BUSINESS IS? UES . ITT

l

lndustries is moving its non-production materials purchasing to an Internetbased system. The company has retained Deloitte Consulting to assist with the strategic design and integration of the application. ITT Industries will begin implementing the first phase of its web-enabled materials purchasing programme in the US in the third quarter of 2000. and expects to expand the programme outside the US in 2001. Once the nonproduction programme is fully in place worldwide, the company anticipates savings of more than US$50 million dollars annually. “The e-enablement of our purchasing function is a critical step in moving more of our business processes to the web environment. It will have a major positive impact on our key financial yardstick, Economic Value Added,” said Lou Giuliano, CEO of ITT Industries. Plimsoll Publishing’s UK acquisition service at www. whichcompany.net finds and names companies that would be the best acquisition prospects in a chosen market. including fluid handling equipment. Users locate a required industry through the website. Overnight an acquisition pack is compiled and delivered next day to the user. It then provides projections on how much hidden profit these prospects could achieve. The analysis IS completely confidential as these prospects are not necessarily for sale. A new water portal launched in India claims to be the world’s first comprehensive online platform for water. EverytbingAboutWater. corn (www.eawater.com) has a wide range of B2B and B2C products and services, with separate sections for the

business and home segments. The site provides a range of services for the water business community. These include news and events, tenders, buyer’s guide, Yellow Pages, information on developmental activities, online catalogue, StoreFronts, auctions and bids. Formally known as etreat. net. Waterwares.com (www. waterwares.com) serves the water treatment market. The new portal features thousands of water treatment products and related accessories from over 150 manufacturers. Through strategic Wateragreements with wares.com, manufacturers offer merchandise which is cross referenced in 20 major categories and/or by part number, product description and manufacturer name. e-Fiber (www.e-fiber.com) has reached the 500 member milestone, making it the largest web site focused exclusively on pulp and paper mill procurement. The company has registered over I50 mill sites, 200 direct suppliers, 100 brokersiagents and exporters and 50 industry service providers to its service in its first frill year of Internet operations. e-Fiber is expanding its service offerings to include chemicals, transportation, equipment, MRO supplies, consumable items and other goods and services that mills buy and is currently seeking closer alliances with suppliers of all goods and services that mills consume. In the UK, a survey of 450 corporate websites by Director magazine has rated www.glynwed.com as a Perfect 10. The survey looked at Glynwed’s site design, usability, access to further information and content. ITT Industries, the International Water Academy and

l

the Water Environment Federation are planning a global website to address the world’s water sector. This site is intended to bring more than 100 000 global water specialists together to exchange information on both existing recommended practices as well as innovative emerging technologies. A worldwide launch is planned for spring 200 I The site will establish a link between public water authorities, industry and water organisations. The aim is to improve water distribution efficiency and use of water; provide information on innovative technology and solutions that promote more efficient use of water and to catalyze water-related investments and partnerships. particularly in developing countries and raise public awareness of water issues. Interested parties are encouraged to retrieve and post information to the site and the Water Academy will oversee site content. United Technologies (UT) is using Pathlore Learning Management System (PLMS) to track and report employee progress at The Learning Portal. a new Web-based source of learning opportunities for UT’s 148 000 employees. ww~.utclcarningportal.com went live in March and consolidates training opportunities across all UTC business units. In the future. UTC will add virtual classroom learning, knowledge management. periodicals. realtime performance support. full competency-based learning management and other components. To date. seven of the UK’s top 20 steel stockholders have signed up to www.sellbuysteekcom, the independent, interactive information database of steel producers, stock&s. traders and users.

l

The main fuel pumping phase from the Erika tanker. wrecked off the west coast of France at the end of last year. has finished (see Pll1l?p

~ i ~ ~

/rrdll.s/r:l~

hcr~1:ct.

May 2000). This phase begin at the start oi July. About IO 000 tonnes ot heavy fuel were extracted from the tanks of the wreck. The final pumping phase, aimed at removing the fuel trapped in the holds, is expected to be completed by the end of September. Goulds Pumps has recently been named the “preferred pump supplier” in a Harris Interactive telephone survey. Approximately 600 engineering and maintenance decision makers in the pulp and paper. chemical processing and hydrocarbon processing industries aerc sur\:eyed, using unaided recall. Goulds Pumps came in first in the product reliability. accurate and on-time delivery, local service support. product offering and company reputation categories. Textron has been selected by IndustryWeek Magazine as one of the World’s 100 Best-Managed Companies 111 the manulacturing industry. The selection was based on operating goals. financial performance, practices in philanthropy and safety and innovative managemcnt strategies. C‘andidates \+ere chosen hy IndustryWeek editors and an international panel of over 90 key business leaders. Wall Street analysts and academicians. Visitors to the Hydraulic Institute‘s (HI) new web site. www.pumps.org. can register to win the entire 2000 Edition Standards, simply by signing the HI Guest Book. One winner per week will be announced for the US$SSO prire.

October 2000

Pump Industry Analyst

ORDERS l

l

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Dabhol Power Company is implementing the second phase of its Combined Cycle Power Project, near Dabhol, India. Kirloskar Brothers Ltd has been awarded the contract to supply five circulating water pump-sets through Bechtel International, the main EPC contractor for the project. The total order value is US$3.2 million. Cardo Pump has received one of the biggest orders in the company’s history. The company will supply dry-pit pumps for a water treatment project in Istanbul, Turkey in a contract worth more than SKr20 million. The pumps will be delivered during 2001. Met-Pro’s International Division, in cooperation with Met-Pro’s Fybroc Europe operation in Heerenveen, the Netherlands, has received the largest ever single order for Fybroc corrosion resistant fiberglass pumps. The order, valued at more than US$850 000, consists of 207 sets of pumps to be installed at the new Parque Oceanografico de Valencia aquarium under construction in Valencia, Spain. The pump sets, which range in size from 20 gpm to 3400 gpm, will be manufactured at the Fybroc Division plant in Telford, Pennsylvania. They are scheduled to be delivered in the third quarter of this fiscal year. This will be Fybroc’s first major aquarium installation in Europe. Fybroc pumps are also installed in aquariums in Australia, the Bahamas, China, Hong Kong, Japan, Korea, Kuwait, Malaysia, Mexico, New Zealand and Taiwan, as well as more than 25 installations in the USA. Weir Group’s push to win more contracts from the water and wastewater industry

l

l

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has received another boost with a contract from Sevem Trent Water, the UK utility. Two of the group’s main subsidiaries, Weir Engineering Services (WES) and Weir Pumps, have jointly signed an agreement to provide specialist engineering services, including repair and asset monitoring, for the utility’s centrifugal pumps located above ground and to also all similar new supply pumps. Weir fought off strong competition to land the initial 12-month deal, worth an estimated &2.5 million, and there are options to extend for a further six years. ABB is supplying drives to Ionics Inc for use at a seawater desalination plant in Trinidad. This contract is worth more than US$4 million to ABB. The US$l20 million facility will have the capacity to produce 28.8 million gallons of potable water per day. As part of the agreement, ABB will supply 12 ACS 1000 medium-voltage drives and 27 low-voltage drives from the ACS 600 series, to optimise control of the variable-speed water pump motors to be used throughout the plant. Motors for the project are being supplied by Siemens and pumps by David Brown Union Pump. Flygt’s N-Pumps are now installed in more than 100 pumping stations and sewage treatment works in the UK. In addition to supplying new N-Pumps, Andrew Barry, Flygt’s N-Pump product manager says they are also seeing an increase in the numbers of retrofit kits being used to modify existing equipment. Greater Nile Petroleum Operating Company, which operates the Heglig and Unity oilfields in southern Sudan, has selected PCM Moineau Oilfield to equip its wells.

l

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Sterling Fluid Systems has supplied US$l.95 million worth of engineered fire pump packages for fire protection duties at a number of locations along the route of the Caspian Oil Pipeline system. The pipeline runs from Tengiz in Kazakhstan to Novorossiysk in Russia. Pumps supplied include 14 diesel-engined horizontal split-case pumpsets, 10 electric end-suction units and 12 vertical multistage jockeysets. The engineering consultant on the Caspian Pipeline Consortium is Fluor Daniel. Energy-saving pumps from Lowara have been installed in Sydney’s Olympic Village. During the Games, the solar-powered Olympic Village will accommodate more than 15 000 athletes and officials in 1150 permanent dwellings and specially designed modular houses. Demand driven Hydrovarequipped Lowara pumps have been installed to provide water service to the Village, which will form a new residential community after the Olympics. ABS has been involved in a number of water supply and water treatment projects in Sydney, as the city upgraded its infrastructure in preparation for hosting the 2000 Olympics. Thirty three ABS pumps were installed in one of the world’s largest single water filtration plants, which provides potable water to 85% of the greater Sydney area. ABS has also supplied pumps and mixers for the upgrade of the Cronulla treatment plant, where a new secondary and tertiary plant have been constructed along with an upgrade of the existing primary plant. The installation includes several types of wastewater pumps, recirculation pumps and lifting pumps.

l

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Co’s regular Crane US$O.lO dividend on the company’s common stock for the third quarter of 2000 was payable on 12 September 2000 to shareholders of record as of the close of business on 1 September 2000. Weir has declared an interim dividend of 3.Op, up from 2.9~ last year. TI Group’s interim dividend of 6.1~ per ordinary share, up 5%, will be paid on 11 October 2000 to shareholders on the register at the close of business on 18 August 2000. Roper’s board of directors has approved a quarterly dividend of US$O.O7 per share payable on 31 October 2000 to stockholders of record on 17 October 2000. Effective 1 December 2000, Wisconsin Energy plans to reduce the quarterly dividend payable on shares stock of its common to US$O.20 per share (US$O.80 annualised rate) from its current level of uSSo. share per (US$l.56 annualised rate), a reduction of approximately 50%. By cutting the dividend the company hopes to be able to reinvest in core business areas, reduce debt and lower borrowing costs. Dover Corporation has increased its quarterly cash dividend to US$O.l25 per share, from US$O.l15, an increase of 8.7%. The new dividend was paid on 15 September 2000 to shareholders of record as of 3 1 August 2000. Idex’s board of directors has declared a regular quarterly dividend of US$O.14 per common share. The cash dividend will be paid on 3 1 October 2000, to shareholders of record on 16 October 2000.

October 2000

stock of Svedala earlier this advantage of shared marketsummer, creating a world leading and technical synergies er in rock and mineral processand to serve their customer ing technology (see Pump hdbase more effectively. of 1 trsr~~An&~t. August 2000). Barber Industries i Edmonton, Canada, PCC Ball Usha International, a SidValves Inc of Milan, Italy and NATIONAL dharth Shriram Group comPCC Sterom of Campina, OILWELL BUYS pany and one of the leading Romania manufacture a wide consumer durable marketing PUMP LINES variety of products for the oil companies in India, has enand gas industry. These include National-Oilwell Inc has tered into a tie-up with Dave] trunnion-mounted ball valves acquired the Wheatley Gaso Products Pty Ltd of Melup to 72 inches, wellhead proand Omega pump products bourne Australia, to exclusduction and safety equipment, from Halliburton Company ively market the full range of sucker rods, drilling tools, for approximately US!%13 Davey pumps in India under downhole pumps and gate million in cash. the brand name Usha Davey. valves. The Energy Group will Wheatley Gaso manufacThe Usha Davey tie-up enable the businesses to comtures and markets a complete adds a premium line of pumps bine complementary product line of piston and plunger to Usha’s existing range. Inifeatures and to sell the compumps and has a manufacturtially, Usha will start with plete product line to current ing facility located in Tulsa. Davey’s range of pressure and potential customers. Oklahoma. The Wheatley Gaso pumps for homes and small William McCormick, PCC pump product line enjoys a commercial establishments. A CEO, said the Energy Group large installed base and signifisurvey conducted by Usha has will realise the efficiencies of a cant distributor network for its ~ shown a rising demand for ade- single sales force and the equipment and OEM spares, quate water pressure in taps advantages of taking the best and appears to be a good fit and showers throughout India. technical features of one prodwith National Oilwell’s line of uct and incorporating them positive displacement plunger KSB EXPANDS into another product. He cited pumps. Omega manufactures, Barber safety systems which markets and services pumps SERVICE will now use PCC Ball Valves primarily used on well service CAPABILITY IN product, as opposed to valves trucks. In 1999. the acquired THE UK from an outside supplier. “We business had revenues of are fully confident that the synalmost US$?O million. KSB Limited of Loughborergies will multiply as the UK has acquired ough, Energy Group begins to funcPriiftechnik Services Limited ITT INDUSTRIES and Pumpserve Limited in a tion more fully as a team and ADOPTS NEW listens further to our combined deal that will increase KSB’s TICKER SYMBOL customers’ requirements.” sard service capability. McCormick. The two service companies ITT Industries has changed 1 will be merged into a new busiits New York Stock Exchange ness. Rotary Equipment SerEU REVIEWS (NYSE) ticker symbol to I’fT vices Limited will have service from IIN. METS03 OFFER centres in Chester, Calidcot. The company has been FOR SVEDALA Isle of Sheppey and Teeside. traded under the symbol IIN The company will be run indrMetso Corporation’s applisince becoming independently pendently of KSB Limited and cation for clearance of its listed in December 1995. ITT the range of services offered offer for Svedala Industri Industries’ predecessor compa1 will be extended. ny, ITT Corporation, had used AB, which was filed with the EU Commission on 7 August the ITT symbol prior to being 2000, has been extended into acquired in 1998. ~ PCC COMPANIES Travis Engen, chairman and a six week first stage, while FORM ENERGY chief executive of ITT Induscertain undertakings in relaGROUP tries, said that aside from the tion to the merger are being ~ historical relevance, adopting Three operating units of considered. Metso expects to be able to the ITT ticker symbol simply PCC Flow Technologies, recognised that the company address any competition conthe fluid management busiis known around the world as cerns. The company made ness of Precision Castparts ITT. The company’s legal name an 61.1 billion recommended Corp (PCC), have formed remams ITT Industries Inc. cash offer to acquire the entire the Energy Group to take

USHA, DAVEY FORM PRESSURE PUMP PARTNERSHIP

Pump Industry Analyst

As part of the change, the company’s corporate web site be located at can now www.itt.com. In addition to the NYSE, ITT Industries’ common stock is also traded on the Midwest. Pacific, London. Frankfurt and Paris exchanges.

WEIR RATIONALISES IN NORTH AMERICA Weir Slurry Group’s facilities in Madison, Wisconsin, previously Warman International, have undergone major change as part of a project to integrate the Galigher, ASH Pump and Warman products into one location to service the North/Central America and Caribbean Basin markets. Planning and preparation began in January, with work scheduled to finish in September. Key tasks included adding additional office space, building a 42 000 sq ft product distribution ccntre. transferring machining centreb from EnviroTech’s Salt Lake City facility, and expanding the indoor pump test facility to accommodate long shaft vertical pumps. The Warman and EnviroTech sales departments have been rationalised into one, along with the network of independent sales representatives. white Weir Slurry CrOilp regiUd sales manager ~ responsibilities have also been re-asslgncd. According to Mick Von Bergen, president and general manager of Weir Slurry Group. the entire manufacturing process had to be reinvented to accommodate the flow of three product tints. “Much is still to be done as we work toward the enlarged group’s future success. There will be many more exciting challenges ahead but we are confident we have a holid platform upon which to grow the business and reinforce our position as the leader m slurry pumping technology,” said Von Bergen.

October 2000

Pump Industry Analyst

PEC)IPLE l

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Chuck Norris has been named president of Marley Pump following the resignation of Robert Moore. Norris begins his new posiand tion immediately reports to Jamie Gibbs, president of Marley Cooling Tower. A former president of UDI’s Resolite division, Norris has been working as a consultant for UDI since last year. Bill Taylor has resigned as president of Sundyne Corporation to pursue a new business opportunity leading an independent representative distributor organisation. A 23 year company veteran, Taylor had been considering this opportunity for some time. He will continue to interact with Sundyne through his new venture. George Mangion, vice president of operations and business development at Suyndyne, steps into the additional role of manager, acting general until a successor to Taylor is found. In Germany, Heinz Gaub (36) has been appointed to the managing board of Willy Vogel AG. On 1 September, Gaub assumed responsibility for the engineering sector, following the retirement of Hans Gaca, who has been with the company for 37 years. Gaub joined Willy Vogel in January 1999 from the machine tool industry. A graduate engineer and Master of Science, Gaub studied at the Technical University of Berlin and at the Massachusetts Institute of Technology. Willy Vogel, a joint stock company, employs 628 people in Germany, while the Vogel Group employs 1160 people worldwide. Julio Ferreira has been appointed director - USA direct sales, responsible for

l

l

sales of all Goulds products sold to reserved accounts in the USA. Ferreira was most recently regional sales manager at Goulds for the Midwest and Western Territory. Meanwhile Stan Knecht has returned to the USA from his European assignment, taking on the role of global marketing manager for chemical and HP1 markets. Knecht spent three years at ITT Industries’ Vogel Pumpen in Austria, overseeing the introduction of the new IC Series process pumps. Both positions will be based at ITT Industrial Pump Group headquarters in Seneca Falls, New York. Gordon Adam has been appointed a director of Wesco Abu Dhabi. Adam will combine his new role with his existing duties as operations director of Weir Engineering Services, where he is responsible for WES’s overseas service bases, business development, Eden Engineering and the company’s Scottish and Irish service centres. Concrete pump manufacturer Putzmeister America has restructured its marketing department. In the reorganisation, Tom Teubel, vice president-sales, assumed the additional responsibility of overseeing the company’s marketing department. In his newly combined role, Teubel will direct both sales and marketing, building on his 10 years of sales and management experience at Putzmeister. His new title is vice president-sales and marketing. With the restructure, Jonathan Omer was appointed marketing manager, reporting directly to Teubel. In his new job, Omer will implement all marketing and communications programmes.

ECONOMIC REVIEW In the US, new orders for manufactured goods in July decreased US%30.5 billion or 7.5% to USS377.6 billion, according to figures issued by the US Department of Commerce, Bureau of the Census. This follows a 5.2% June increase and is the largest decrease on record. Shipments fell US$4.7 billion or 1.2% to US$379.5 billion, following a 0.8% June increase. Year to date shipments are 7.9% ahead of the same period a year ago. Unfilled orders decreased US$2.0 billion or 0.3% to USS580.2 billion, following a 4.3% June increase. Inventories increased US$3.2 billion or 0.7% to US$485.2 billion, following a 0.6% June increase. This is the tenth increase in the last 11 months. New orders for manufactured durable goods in July fell US$30.0 billion or 12.4% to US$211.8 billion, unrevised from the previously published 12.4% decrease. New orders for nondurable goods were down US$O.5 billion or 0.3% to US$l65.8 billion. Shipments of durable goods in July decreased US$4.1 billion or 1.9% to US$2 13.5 billion, unrevised from the previously published 1.9% decrease. Shipments of nondurable goods fell US$O.6 billion or 0.3% to US$l66.0 billion. Petroleum and coal products had the largest decrease, US$O.7 billion or 3.4% to US$l9.7 billion. Unfilled orders for durable goods in July were down US$1.8 billion or 0.3% to US$554.5 billion, unrevised from the previously published 0.3% decrease. Electronic and other electrical equipment had the largest decrease, US$2.1 billion or 2.0% to US$102.2 billion, due mainly to electronic components. Inventories of durable goods in July rose US$2.2 bil-

lion or 0.7% to US$303.3 billion. This is the 10th increase in the last 11 months, with all major industry groups reporting rises. Inventories of nondurable goods, up 13 consecutive months, increased US$l .O billion or 0.6% to US$l81.9 billion.

EXCHANGE RATES AGAINST THE US DOLLAR Date: 8 September

2000

COUNTRY

RATE

Australia

A$1.80

Austria

Sch15.88

Belgium

BFr46.56

Canada

C$1.48

China

Rmb8.28

Denmark

DKr8.6 1

Finland

FM686

France

FFr7.57

Germany

DM2.26

India

Rs45.64

Italy

L2234.85

Japan

r106.11

Malaysia

Rt3.80

Netherlands

F12.54

Norway

NKr9.26

Philippines

Peso45.55

Singapore

S$1.74

South Africa

R7.10

South Korea

Won1 109.00

Spain

Pta192.04

Sweden

X1.9.64

Switzerland

SFrl.79

Taiwan

T$31.06

Thailand

Bt41.60

UK

go.70

USA

US$l.OO

Euro

El.15

Pump Industry Analyst

October 2000

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Pump Industry Analyst

DOJ BLOCKS PETROLEUM PUMP JV The United States Federal District Court in Wisconsin has blocked the proposed joint venture between United Dominion Industries (UDI) and Franklin Electric Company (see Pump Industry Analyst, July 2000). The joint venture would have manufactured submersible gasoline pumping systems and leak detectors, combining the petroleum related assets of UDI’s Marley Pump business and Franklin’s FE Petro unit. “Naturally, we are extremely disappointed with the court’s decision,” said William Holland UDI chairman and CEO. Marley Pump’s submersible water pump business is currently up for sale.

INDUSTRI KAPITAL CLOSES ALFA LAVAL DEAL The Industri Kapital 2000 Fund has completed the acquisition of Alfa Lava1 from Tetra Lava1 in what is the largest ever Scandinavian leveraged buy-out transaction (see Pump Industry Analyst,August 2000). Tetra Lava1 continues to participate with a continuing minority interest in the business. Industri Kapital’s aim is to further develop Alfa Lava1 into one of the leading global process technology companies. The plan is to list the company within five years.

CRANE CUTS EARNINGS ESTIMATE Crane expects net income for the third quarter to be in the mid-US%030 range per diluted share outstanding, a reduction from previous consensus estimates of us$0.50-0.51.

October 2000

This compares with income from continuing operations of US$O.27 for the third quarter of 1999 (after a special charge of US$O. 18 per diluted share outstanding). Net income for the year is now expected to be US$2.01-2.06 per diluted share outstanding. Operating profit in the third quarter is now estimated to be lower than expected in each of Crane’s segments, including Fluid Handling. Crane CEO RS Evans continues to be optimistic about the outlook for 2001 and says strong backlogs in Aerospace, improved demand in energy markets for Fluid Handling and the completion of the Ferguson plant integration should improve results.

WISCONSIN ENERGY OUTLINES GROWTH PLANS Wisconsin Energy Corp has launched a IO-year, US$6 billion growth strategy to improve the supply, reliability and quality of electricity in Wisconsin. WEC’s strategy also involves increasing retained earnings in order to make investments in the company’s core competencies of electricity generation, utility distribution and pump manufacturing. By reducing the dividend, the company will be able to reinvest in core business areas, reduce debt and lower borrowing costs, which will increase its overall financial strength (see Dividends, page 12). Elements of the programme include construction of new power generation units, refurbishment or retirement of older generation units, substantial improvements and additions to the company’s electric distribution system, and a reduction in its quarterly common stock dividend to strengthen the company’s financial position and fimd growth.

ROPER BUYS HANSEN TECHNOLOGIES Roper Industries has completed the acquisition of Hansen Technologies Corporation. Hansen, headquartered in Burr Ridge, Illinois, with additional facilities in Orlando, Florida, is an industry leader in the supply of shutoff and control valves, autopurgers and hermetic pumps to the commercial refrigeration industry. Hansen’s products complement Cornell Pump’s refrigeration pumps, and Amot Control’s refrigeration valves. Hansen, with approximately US$29 million in trailing 12 month revenues, was acquired for approximately US$36 million in net cash, six times its expected first-year EBITDA. Hansen will be reported in the Industrial Controls segment. Derlvatlve

WEIR TARGETS PROCESS MARKET Weir has set up a new organisation to increase its share of the US$4.3 billion hydrocarbon and chemical process pump market. The Weir Process Group brings together the product and marketing expertise of Weir Pumps, Begemann and Girdlestone. The team is led by Steve Buckley, formerly sales director with Girdlestone, supported by Andrew Nash as project sales manager and Jan Schutte as European sales manager. Weir Process to Group was established make Weir a leading player in the HPI/CPI markets. “We have already started quoting a number of important customers pump packages combining Weir, Begemann and Girdlestone products. Despite this market being very competitive, we are convinced that the group has a bright future,” said Buckley.

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