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2008-03-10 Power Service strategy

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2008-03-10 Power Service strategy

  1. 1. POWER SERVICE ANALYST DAYS IN DUBAI Power Service Strategy Walter Gränicher 10 March 2008
  2. 2. P2 POWER SERVICE Agenda Introduction Page 3 Page 8Power Service market Page 13Alstom Power Service today Page 21Strategy - The Way Forward
  3. 3. P3 POWER SERVICE Alstom Power Service Our Business Scope Power Service's market is the Power Generation element in the energy value chain, specifically: • operation • maintenance and repair • performance improvement and lifetime extension of existing power generating plants Fuel Electricity Power Generation Maintenance Operation AssetManagement
  4. 4. P4 POWER SERVICE Alstom Power Service Vision and Mission Statement VisionVision To be the undisputed leader in servicing and upgrading power plants around the globe. We provide the most responsive, reliable and innovative solutions to keep power plants competitive throughout their life cycle. Mission Statement Mission Statement
  5. 5. P5 POWER SERVICE Alstom Power Service KPIs vs. Sept. 06 (%) 6 months12 months March 07 (€M) vs. March 06 (%) Sept. 07 (€M) Orders backlog Orders received Sales Operating Income Operating Margin 5,219 4,058 3,198 510 15.9% +20% +16% +12% +15% 5,882 2,512 1,756 286 16.3% +14% +6% +18% +20% Fast growth and improving profitability
  6. 6. P6 POWER SERVICE The Power Service Opportunity • Global installed capacity continues to grow, especially in China, India, and Middle-East • Customers focusing on increasing existing plant efficiency to reduce costs and emissions • Increased environmental focus • Technology is key to differentiation in the marketplace, and to profitable growth
  7. 7. P7 POWER SERVICE Agenda Introduction Page 3 Page 8Power Service market Page 13Alstom Power Service today Page 21Strategy - The Way Forward
  8. 8. P8 POWER SERVICE World Installed Power Generation Capacity 0 20 40 60 80 100 120 140 160 others Hydro Nuclear ST - conventional GT / GTCC 1 6 11 16 21 26 31 36 41 46 ~4400GW Installed Capacity; 30% older than 30 years 2006 2000 1990 1980 1970 1960 Year of Commission Age of Power Plant GW 1312 GW >= 30 Years (at End 2007) Source – UDI 2007 / PS BD, Power Generation Market, all sizes 5% 60%5% 29% 1% • A growing and old fleet with predominance of coal fired plants • Lead time for new units and environmental regulation is driving the need for efficiency increase / lifetime extension
  9. 9. P9 POWER SERVICE Alstom installed fleet PS Workshop / Engineering location PS Field Service Hub Plant containing at least 1 major Alstom equipment • Alstom has leading positions in all key equipments in terms of installed fleet (GT; ST; GEN; BOI; ENV) -> A good basis to develop service business • Plants containing Alstom equipment are historically concentrated in Europe and North-America -> opportunity for OOEM strategy in other areas
  10. 10. P10 POWER SERVICE Total Market €26bn(*) • Power Service presence to be adapted to capture growth from most dynamic areas • Service strategy is not limited to own fleet: focused OOEM initiatives based on Alstom technology and local network are pursued to address the entire market potential (*) Scope excludes industrial, <20MW, retrofit, construction and uses average regional utilisation 2000-2004. Growth rate MACA 2006, *incl. BOP, basis -2006 Rest of Asia €3.0bn China €1.9bn Russia & CIS €1.0bn Europe €5.5bn North America €7.4bn South America €1.3bn Australasia €0.4bn India €0.9bn MEA €3.5bn 7.2 18 1.9 2.7 1.2 8.8 % 8.7 % 10.9 % Plants containing at least 1 Alstom major equipment No Alstom equipment installed -> Specific OOEM initiatives developed Outsourced revenue potential in €bn > 5 % CAGR (to 2015) The Power Service market: 26B€; growth above 5% p.a.
  11. 11. P11 POWER SERVICE The Service players: typology A specific environment with clear segmentation of players The major OEMs: Alstom; GE; Siemens… • Comprehensive range of equipment and proprietary fleet • Excellent technological level across the board • Focusing on their own fleet first but having developed service as a specific business with its own key success factors The emerging OEMs: Chinese; Indians… • Partial range of equipment and overall lower technological level • Mostly focusing on new builds and therefore offering lower quality of service to their customers The Independent Service Providers (ISPs): Wood Group; Sulzer; North American Energy Services… • Spin-offs from utilities in Field Service activities • From niche players with some technological know-how in their field to purely execution focused companies (selling manpower but no/very limited technology) • Very different sizes and financial performance
  12. 12. P12 POWER SERVICE Agenda Introduction Page 3 Page 8Power Service market Page 13Alstom Power Service today Page 21Strategy - The Way Forward
  13. 13. P13 POWER SERVICE Alstom Power Service Present in Key Markets Gas Coal Nuclear (conventional island)Industrial
  14. 14. P14 POWER SERVICE Alstom Power Service Present in all Key Components GeneratorsGas Turbines Steam Turbines Boilers/HRSG Environmental Instrumentation & Control
  15. 15. P15 POWER SERVICE Alstom Power Service Offering a comprehensive product portfolio Plant Components Products Parts Spare parts, re-conditioned parts, workshop repairs Field Service Outage management, field repairs, erection, commissioning, construction, supervision Consultancy & Support Technical services, condition assessment, consultancy, training, monitoring & diagnosis, performance analysis Performance Improvements Upgrades, modernization, optimization, life- time extension •Mechanical BoP •Environmental •I&C, Electrical BoP •Boiler •Generator •Steam Turbine •Gas Turbine = Total Plant Solutions
  16. 16. P16 POWER SERVICE Power Service Organization: Our Objectives • Meet our strategic goals (significantly grow revenues and profit) • Meet the business needs of today and tomorrow • Minimize inefficiencies and exploit our full potential • Continuity and continuous improvement of established processes Leverage centralized product know-how and execution capability with local Service Centers
  17. 17. P17 POWER SERVICE Power Service Set-up: Locations & Headcount ~2000 ~200 ~300 ~10,000 ~2500 Workshop / Engineering location Field Service Hub Headcount by geography (all functions) NAM SAM EUROPE MEA ASIA • 38 engineering locations; 26 field service hubs; ~ 15'000 people • Resources historically concentrated in Europe & (less so) in the U.S. • Recent acquisitions in Asia
  18. 18. P18 POWER SERVICE Sales by Product (%) Sales by Market (%) Power Service at a glance (2006/07 figures) 20 30 40 35 30 35 Europe Americas Asia Africa – Middle East Gas (GT+TG) Steam (ST+TG) Boiler island Key Facts • Balanced mix, with main pillars in Europe and U.S. • Still potential to increase market share in key areas • Challenge to develop business in fast growing areas with limited own fleet Key Facts • 3 well balanced pillars • >60% of revenues from higher-margin rotating equipments 10
  19. 19. P19 POWER SERVICE Alstom Power Service Competitive Strengths • Technology leadership and ownership • Global reach – service at customer’s doorstep • Comprehensive portfolio • Largest installed base • Leader in Environmental Control Systems Alstom Power Service has developed the right skills to benefit from a growing and changing market
  20. 20. P20 POWER SERVICE Agenda Introduction Page 3 Page 8Power Service market Page 13Alstom Power Service today Page 21Strategy - The Way Forward
  21. 21. P21 POWER SERVICE Power Service Maturity Model: Continued Development Leverage Existing Resources Leverage Technical Strength Leverage Technology & Size to differentiate “Meet our Vision" • Put marketing at the centre of the organization Stage 1 Informal Stage 3 Integrated Process Stage 2 Functional / Balanced Start-up Power Service 1999/2000 2002/2004 Stage 4 Customer Collaboration Integrated processes to act as One Business 2005/2010
  22. 22. P22 POWER SERVICE Our Strategic Pillars to Growth PLANT Full Plant Service Provider and expert in optimizing performance and extending the lifecycle Diversify geographically by building up infrastructure and capabilities in target areas PRESENCE Differentiate through products which provide extra value to customers PRODUCTS Global excellence in integrated and aligned processes PROCESSES PEOPLE
  23. 23. P23 POWER SERVICE Steam Plant Strategy: from customer demand to products CUSTOMER DEMAND Component Upgrade Maintenance Support Operation Support M&D MARKET DRIVERS Increasing Power Demand Increasing Power Demand Environmental Legislation Environmental Legislation Fuel Price Development Fuel Price Development Electricity Trading Electricity Trading Lack of Competent Personnel Lack of Competent Personnel Increase Power Output Increase Power Output Improve Availability Improve Availability Improve Flexibility Improve Flexibility Reduce Emissions Reduce Emissions Increase Efficiency Increase Efficiency Extension of Lifetime Extension of Lifetime XX XX XX XX XX XXXX XX XX XX XXXX XX XXXX XX Component 1 Component 2 Plant integration Targeting the overall plant, the integrating systems and the non-ALSTOM components to offer an integrated solution to the customer
  24. 24. P24 POWER SERVICE Product strategy: principles • Service “Products” are the basis for the Sector development model − Plans are defined and aligned centrally, then implemented locally • Strategies are adapted to individual equipment − Defend or gain market share on own fleet by leveraging technology as well as commercial levers on mature products − Develop organisation to support fast growing activities − Selectively address opportunities on OOEM fleets Technology is key to differentiation
  25. 25. P25 Product strategy: example of innovative solutions Market-driven R&D efforts to extend lifetime and improve availability and efficiency Gas Turbine Steam Turbine Full Rotor Scanner • Automated ultrasonic modular scanning system for all rotors • Detecting and sizing of cracking and forging defects • Market: all OEM and OOEM rotors and cylindrical parts Valve upgrade for ex ABB/BBC Fleet • HP valve groups (control valves) with reduced pressure losses to increase plant efficiency GT13 E2 XL • Development of GT13 E2XL with improved lifetime/availability extension package at minimal possible cost Robotics
  26. 26. P26 Product strategy: Acquisition of PSM in March 2007 • ALSTOM Power System Manufacturing − Headquartered in Jupiter, Florida − USD 70m sales in 2006 − 100 highly qualified people − High-tech company focusing on service for F-class gas turbines A strong platform to develop Power Service activities in OOEM Gas Turbines
  27. 27. P27 Presence Geographic Expansion in the Middle East • ALSTOM Power Service (Arabia) FZE, (APSA); Jebel Ali Free Zone • Focusing on CCPP: – supply of field service personnel – gas turbine blade reconditioning – generator rewind and repair – spin pit for generator rotor balancing • Local Resource: 140 employees; 3 200 sqm of offices and workshops Adapt industrial footprint to key markets
  28. 28. P28 Presence Geographic Expansion in China • ALSTOM Strongwish − Headquartered in Shenzhen, China − 4 M€ sales in 06/07, 100 employees − Remote Monitoring and Diagnostic services • Alstom Sizhou − Qingdao Sizhou acquired in May 2007 − 50 M€ sales in 2006, 1 100 employees − Ash handling systems and spare parts − Coal handling systems and spare parts − Wind Tower Manufacturing Build-up platforms to develop Service activities
  29. 29. P29 Processes One Business Platform – 3 Major Projects Standardizing Business Processes Lead Unit A Support Unit B Support Unit C Commercial Visibility of Internal Supply Chain Internal Offer and Order Management Managing Customer Information & Sales Opportunities Processes Platforms One Platform for Sales & Marketing (CRM) One Platform for Commercial Business Processes One Platform For Local Unit Execution Processes (ERP) One Global Business Platform
  30. 30. P30 • Recruitment of >2 000 employees − Covering attrition and new positions required to support sector growth − Mainly Europe, NAM, Asia • Training / knowledge sharing: increase current training for employees by more than 50% People by geography People HR: High attention given to people development Key HR action plans 12 15 55 12 Europe Other Asia China MEA 6 Americas Industry requirements: high skills; experience; service culture
  31. 31. P31 Support growth by driving a focused M&A strategy Two main categories for M&A in Service Product focused Execution focused • Add complementary Service products and innovative resources − Increase own fleet / product base − Acquire products complementary to our fleet • Add capabilities and resources − Establish stronger local presence − Add capabilities to our existing industrial footprint (focus on low cost sourcing and supply chain management)
  32. 32. P32 Past acquisitions have reinforced portfolio and execution capabilities Technology value added Geographic reach Global PSM Strongwish SizhouHolmes RMG Pointo ETH CSC MSc 160 M € sales/year 1 700 new colleagues 100 new products Execution Technology Intermediary Local Low High Past 18 months Turboteh (FR) (CN) (USA) (CN) (USA) (CH) (AU) (CR) (FI) Proven acquisition and integration capabilities
  33. 33. P33 Conclusion • Power Service on track, but significant potential growth remains to be captured • Straight forward strategy based on: PLANT PRESENCEPRODUCTS PROCESSES PEOPLE We are committed to sustainable economic development
  34. 34. www.alstom.com

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