SMS group strengthens service business and improves earnings

• Further improvement in earnings expected through service business expansion
• Major projects at H2 Green Steel and thyssenkrupp Steel enter a crucial phase and underscore the #turningmetalsgreen mission
• SMS investing in competitiveness
• New company headquarters in Mönchengladbach opened: Innovation Campus facilitates a contemporary way of working together

SMS group made significant progress in the 2023 fiscal year. Order intake was again increased to more than five billion euros (4.6 billion euros in the previous year). Sales also rose to 3.4 billion euros (previous year: 3.1 billion euros). In addition to important decarbonization projects, SMS has further expanded its service business in particular, which made a substantial contribution to boosting earnings. “The service business for our customers’ plants and equipment continues to gain importance for us. The close and consistent interlinking of the plant engineering and service business is the main driver for our profitable growth,” says Jochen Burg, CEO and Chair of the SMS Managing Board since October 2023. “To reinforce this trend, we pooled our expertise in the fields of electrical and automation systems, technical service, and digitalization in one business unit. As a result, we are ideally positioned to offer our customers individual and integrated solutions for the very different global challenges they face.” SMS aims to increase its share of the service business to at least 50 percent by 2030.

As regards adjusted earnings before taxes, the company’s result was 42 million euros above the previous year’s figure (19 million euros). SMS achieved a significant improvement in the operating result from 22 million euros to 134 million euros. At 906 million euros, net liquidity was a good 80 percent higher than the previous year.

“Profitability remains our company’s top goal,” says Fabíola Fernandez, new CFO of SMS group since January this year. “2023 was a successful year that moved in the right direction. We also expect a further improvement in our earnings for the current year.”

Decarbonization projects entering a crucial phase

With two major reference projects, SMS is continuing to drive the decarbonization of the steel industry. For H2 Green Steel in Sweden, SMS is building the world’s first steel plant to be operated using 100 percent green hydrogen. The planning and design phases for the facility have largely been completed. The plant components are currently being manufactured and delivered to the job site in Sweden. Starting in the fall, SMS will start to coordinate the plant erection work with its own designated teams on site.

At the same time, the preparations for thyssenkrupp Steel are underway for the construction of the first direct reduction plant in Duisburg, which will enable more than 3.5 million tons of CO₂ per year to be avoided in future. SMS will take over the construction site in the fall and start construction work, which will be a challenge given the confined space.

“We are fully on track with our #turningmetalsgreen mission,” says Jochen Burg. “We are not only relying on major reference projects, but also offering sustainable solutions that are suitable for all steel production routes. This secures us a key role in the green transformation of the industry.”

Spotlight on competitiveness

Last year, SMS increased its investments in competitiveness to 151 million euros (previous year: 129 million euros). One key investment is the construction of a new production facility on the west coast of India to further strengthen the company’s presence in this strategically important market. The workshop will commence operation next year.

Another focus is on further decarbonization solutions. For example, SMS is developing a process called EASyMelt that allows CO₂ emissions to be radically reduced, and that goes for the conventional blast furnace process too. “Our aim is to differentiate ourselves from the competition through innovative technologies. That being said, new technologies must also always contribute to the profitability of the company,” says CEO Jochen Burg.

In May this year, the opening ceremony was held for the new SMS Campus in Mönchengladbach, which offers attractive workplaces for more than 2,000 employees.

SMS looking ahead with optimism 

For the current fiscal year, SMS expects sales to increase further to 3.8 billion euros. At the same time, the aim is to achieve a significant rise in the operating result and an EBTA margin of at least seven percent by 2027.