Plans to close the main production site of group company Battenfeld Injection Moulding Technology (Meinerzhagen / Germany; www.battenfeld.com) in mid-2006 put the spotlight on plastics machinery at the annual results press conference of SMS Plastics Technology (Düsseldorf / Germany; www.sms-k.com) on 6 April 2006.

SMS chief executive Heinrich Weiss did not blame the planned shutdown – which he termed "somewhat of a disaster" – entirely on a poor business environment. Instead, he acknowledged "management errors," remarking in particular that the traditionally technology-driven structure of operations at Meinerzhagen was out of tune with the changing needs of the market. Cross-subsidation of companies within the group also was part of the problem, said Weiss, adding that the deficitary site should have been closed sooner.

In future, all SMS group companies will bear individual responsibility for operating in the black. Reflecting this, for the present at least, there will be no chief executive overseeing the entire plastics machinery business. Group companies Cincinnati Extrusion, Battenfeld Extrusion, Battenfeld Gloucester and the injection moulding units will report directly to group controlling. As management capability has been added in the SMS steel division, Weiss said he will have more time to become personally involved in management of the plastics side.

To a major extent, the shutdown of Meinerzhagen was dealt with in the balance sheet for 2005, with the social plan for redundant employees putting earnings under pressure. On the other hand, an outstanding performance on the steel side kept financial burdens on the group as a whole to a minimum. A positive note for the future is that subsidies for the Battenfeld site will no longer be needed.

In 2005, the value of new orders for injection moulding machinery in the SMS group declined 9% against 2004 to EUR 150m, as sales fell 6% to EUR 160m. Meinerzhagen continued its "tradition" of performing in the red; however, group figures do not indicate to what extent the poor 2005 performance was due to the temporary production stoppage for large machinery.

Weiss left unanswered the question of whether Battenfeld will ever resume production in this segment, saying a decision will be made in due course. Current plans call for investment in production facilties for medium-range machines at the Kottingbrunn / Austria site, which will absorb this part of the Meinerzhagen range.

Extrusion technology was the business that prevented further disaster from hitting the SMS group last year. Altogether, sales in this segment rose slightly to EUR 462m from EUR 460m in 2004, while order intake rose to EUR 457m from EUR 446m. Cincinnati slipped back by 13% to EUR 68m, due especially to a weakening Chinese market, but Battenfeld Extrusion increased its sales 6% to EUR 102m, as new orders rose 12% to EUR 108m. Management also was very satisfied with US-based Battenfeld Gloucester, where turnover picked up by 21% to EUR 238m. More than 44% of the increase is attributed to energy technology (turbines). The company´s film technology unit added 12% to its sales, which came to EUR 92m.

SMS annual report 2005 (German) as PDF-Dokument (3,665 KB)