SMS group adjusts its corporate structure and future outlook

November 30, 2020

SMS group GmbH, headquartered in Düsseldorf, Germany, reports that it is lowering its outlook for the coming years due to the impact of the coronavirus (COVID-19) pandemic on the steel market, which is facing reduced forecasts and order volumes. The group expects this year’s order intake to be around one third below the level originally planned, but reaffirms its growth strategy and realignment towards areas of future growth.

The group explains that the area most severely affected by the current decline is plant construction, where a long-term reduction in order intake is expected. The service and digitalisation business is said to be proving much more stable and is expected to continue growth, due to a combination of big data technologies and new business models such as equipment as a service, which allows customers to turn their capital expenses into operating expenses.

According to the SMS group, besides strengthening the growth areas of service, digital and electrics/automation, the growth strategy of the group is based on establishing global leadership in the decarbonisation of industry. Key elements of this strategy include the use of hydrogen in CO$_2$-free steelmaking and priority projects in the recycling of batteries and electronic scrap. A profitable core business reportedly provides the basis for all the growth areas.

In addition to establishing new technologies in the metals industry, such as metal Additive Manufacturing and the recovery of precious metals from electronic scrap, SMS group states that it transfers its expertise to other industries which include generating environmentally friendly synthesis gases from sewage sludge, which have numerous uses including fuel and energy production.

Through this “New Horizon” strategy, the group explains that it is diversifying its product portfolio outside its core business. The most recent example is the commissioning of a highbay storage system for shipping containers in Dubai. This facility of the SMS group joint venture BOXBAY reportedly not only offers three times the capacity of a typical container storage facility on the same area but also boasts a far higher handling speed, improved worker safety and a carbon-neutral footprint.

To further strengthen its ability to act quickly and effectively in the market, the SMS group states that it will continue to supplement its organic growth with acquisitions of suitable startups or established specialists. To optimise the conditions for future market success, the SMS group will adjust its corporate structure which will include a cross-divisional and international focus on customer projects. In contrast to the present structure, six regions will assume project responsibility for sales and execution.

In place of the current business units, Centers of Excellence (CoEs) will be created that will deliver their services and technologies to the projects. The entire organisation will reportedly be served by Global Support Functions. Consultations about the new organisation, which will be implemented worldwide from spring 2021, are expected to be held with the relevant committees in the coming weeks.

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