Dear ladies and gentlemen, welcome to the conference call of Andritz AG regarding the full year results 2017. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Dr. Leitner, who will lead you through this conference. Please go ahead, sir.
Thank you very much. Good morning, everybody. Thank you for joining us. Let's start on page two. Summary to 2017. From our standpoint, a very stable development compared to 2016. Good profitability, reasonably good sales also. The one thing that we would have wished could have been somewhat better is the order intake, which is unchanged compared to 2016 also. But, as we remember, 2016 has not seen a very high order intake. So it has stabilized at this level, but obviously our goal is to increase it again. So I think that's the only, let's say, small negative on 2017 results. Otherwise, we are very satisfied. Briefing in numbers. Group sales, EUR 5.9 billion, practically unchanged. Group order intake, EUR 5.6 billion, unchanged, but below expectations. EBITA, EUR 444 million, unchanged. Margin 7.5%. Excellent margin in Pulp & Paper. We will get to that later on.
Also in Metal Forming, in the old Metals Processing part of Andritz Group were disappointing earnings. Overall, we have a one-time effect of about EUR 25 million from the technical defense in Schuler in China. I will also talk a little bit more about that, how we should see that. Based on 2017 results and the outlook for 2018 that we currently have, we will propose to the annual shareholder meeting to decide for a dividend of EUR 1.55, which corresponds to nearly 60% of payout ratio. So it is in the upper end of our communicated range of payout ratio between 50% and 60%. So it would give a dividend yield of about 3%. On slide three, details to the sales. A very small decline by 2.5% from EUR 6 billion to EUR 5.9 billion, driven by 10% decrease in Hydro from EUR 1.75 billion to EUR 1.58 billion.
Obviously, consequence of declining order intake over the last three years, I guess, by now. Pulp & Paper, minus 2%, practically stable. Metals, plus 3%, stable. And Separation with a +2%, also stable. Also regionally, geographically, no real change. Europe, 37%. North America, 21%. China, 15%, slightly up. Asia without China, 13%. And South America down to 10% from 15%. Consequence that the large pulp projects that have been under execution were started up by middle of last year. Therefore, the revenue conversion already declined somewhat. On slide four, service business up from 32% to 34% on the basis of practically stable sales. So it's a good development. Hydro substantially up, unfortunately, as a consequence of declining sales. Therefore, the weight of service obviously increases by sales. Metals, good progress, two points up. Pulp & Paper, slightly up. And Separation, also up.
We are continuing to develop our service business, which obviously provides a lot of stability to our business. Slide five. Order intake, as already said, practically unchanged, EUR 5.6 billion. Another decline in order intake in Hydro from EUR 1.5 billion to EUR 1.3 billion, -12%. We think that is the bottom. We do not think it will go down further. We will see how this year develops, and obviously, we have to adjust to this development. Pulp & Paper, good increase by 6% to slightly above EUR 2 billion. Metals, +4%. And separation, +4%. Also, continuing good improvements. By region, weight of Europe has gone up compared to the sales. North America, stable. China, stable. Asia, stable. South America is below sales level, so it is only 7%. We will come to that when we talk about Pulp & Paper. Emerging markets overall 39%. Good ratio, I would say.
On slide six, order backlog down 6%. Obviously, with sales being above our order intake to EUR 6.4 billion. Still more than one year order backlog. Full workload in all our business areas. Obviously Hydro is seeing the largest decline and the rest basically even out. Slide seven. EBITA, unchanged from EUR 442 million- EUR 444 million. Includes one-off effect of about EUR 25 million. Majority of that is the profit on the sale of the tech center of Schuler, which was a tech center, but the reason why we sold it was that we had started to produce parts for the automotive industry and with that demand, very sophisticated parts on this press we had installed there. There was such a strong demand for these parts that we had two options.
Either we invest another two to four forming presses, and with that, would have started to become a competitor to our customers, producing parts to a higher level. Or we could sell it to one of the parts producers, and we decided for the second. It is not, how should I say, an emergency. It is not at all an emergency. It has been a very successful and profitable project over the last few years. We have demonstrated what our forming presses can do in China, and have demonstrated how these parts can be manufactured, and this was the right time to sell it and consume the profit from this. Very good timing, I would say. Most of these parts went into or are going into automatic gears for the automotive industry. EBITA margin increased from 7.3%- 7.5%.
We can always take out one-time effects, so without that, it would have been 7.1%. But I would say if we look at what has been really achieved in the business, these 7.5% are the right number to look at. If you look at the business areas, Pulp & Paper, I would say sensational profitability. Hydro, continuing satisfactory, good profitability. In Separation, we continue to improve our margin. Metals, Schuler, good. Metals processing, not so good, and therefore overall, slightly lower profitability. Slide eight, key figures. We see it, I think we touched most of them. Financial results, substantially lower as a result of substantially lower interest rates, 4 basis points in Brazil. Reduced net cash, obviously also. And cost of this Schuldschein bond we issued last year, which also added about EUR 6 million to our interest expense.
Cash flow from operating activities is down because this sale of the tech center is under investment activities. That would have improved the cash flow. Net working capital unfortunately continues to become less negative or is increasing, partially due to lower payables. It is not so much influenced by Hydro as some of you may suspect. It is more caused by a reduction in payables. Then we have on slide nine, the history for dividends. I think we have covered it. Proposal for this year is EUR 1.55 up from EUR 1.50 from last year, and a payout ratio of 60%, after 56% in 2016, 52% in 2015, and 49% in 2014. If you go to the business areas, starting with Hydro on slide 10. Unchanged market. The market, I would say, has shrunk slightly more. We estimate about EUR 4.5 billion, probably in this range.
It is challenged by continuing big capacity additions from solar and onshore wind, each at the rate of about 30 GW per year. It is suffering from a completely artificial environment in Europe, with Germany continuing to subsidize solar and wind with EUR 25 billion per year, which has driven down the electricity price to extremely low levels, which is not a good basis for investors to decide to start an investment in, for example, hydropower. It also affects the rebuild market, and as far as we see, we do not think that we are losing market share. We think it is more or less stable with one or the other percentage point maybe going up or down. But overall, we think it is more or less stable. We do not expect a substantial change short-term.
As I said in the beginning, we think it has bottomed out now, but in our internal planning, we are and will continue to adjust to these levels, our capacities. We have been adjusting over the last two, three years quite substantially. We have spent more than EUR 30 million on these restructurings or downsizing. We expect that to continue for the next one to two years. As we see today, the cost for that will be less than what we have spent so far. We do not plan to show it as any extraordinary expenses, but think we can absorb it in our regular operating results. So much about Hydro. On slide 11, numbers for last year. Order intake, as I said, down from 1.5 to 1.3 billion. Backlog declined correspondingly by 10%, 11%. Sales are also down by 10% and EBITDA under proportionately.
EBITDA margin has come up 10.7% and EBITA margin 7.8%. Still good profitability. As I have said, you will see in the next two years a declining number of employees. Probably this result here is that the stable number is caused by certain construction sites that are still manned with a substantial number of people. But as these sites finish, we will see a decline in employee numbers. If we move on to Pulp & Paper on slide 12, continuous solid market. For those of you who are following the pulp prices, you know that prices are fantastically high and driven, I would say, by the fact that no big pulp mill currently is under construction.
We are convinced, and I think we get also the impression from our large customers, especially in South America, that the next pulp mill project that will start the construction can expect to start up two years later in a very favorable market environment because consumption of pulp continues to grow, especially in Asia, obviously, and that requires pulp. We are optimistic that this investment activity will continue and that we will also see one or the other greenfield projects. Excuse me. It could only be delayed if the rumors that are currently published in the press about consolidation discussions in Brazil between Fibria and Suzano and other interested parties having published that they would also be interested to participate in such activity. That could result in a delay of one or the other projects, but that remains to be seen.
Paper, good activity in tissue, in packaging, and stable competitive environment. On slide 13, the numbers you see is more than EUR 2 billion order intake, EUR 2 billion sales. EBITDA up by 6% and EBITA margin of 9.5% is really excellent and also substantially above what we see from our main competitors. I think that is what I can say about Pulp & Paper. Metals. Good order intake in metals processing, but relatively low order intake in the forming part in Schuler. Reason is that the top line is unchanged, but this is supported by first-time consolidation, full year of consolidation of the acquisition Schuler has made in 2016. It is caused by a very low investment level of the German car manufacturers, which are the core customers in the automotive segment for Schuler. Therefore, order intake there is low.
We have analyzed the situation at beginning of middle of last year and have come to certain decisions middle of last year. We made several changes in Schuler with a goal to become much more active in entering the domestic automotive segment in Asia. I am very confident that I can report first successes very soon in selling press lines into Asia to domestic customers. I think that today looks much more promising. Obviously, we need to adjust the cost of the lines to the much lower price level. We certainly need to enter the market offering some advantages to the first customers. But I am really convinced that in the new setup and with the new management, we will be successful and create substantial additional volume in Asia in the automotive part. Slide 15, the numbers. Order intake slightly up and sales slightly up or more or less stable.
EBITDA lower. EBITDA margin 6%, as I said, as a consequence of very low profitability in the metals processing part. Reason for that, a combination of low prices in the standard steel products. In addition, some cost overruns in some of the projects, which led to a clearly unsatisfactory profitability in the metals processing part in 2017. Slide 16, separation. Continuing recovery. Good market activities in municipal and mining and minerals. Mining is waking up. Minerals, we are quite active on the lithium side. For example, in Chile, where we supply several products and on feed and biomass, rather moderate project activities. If you look at the numbers on slide 17, order intake is up from EUR 600 million to EUR 620 million, up 4%. Sales still stable at about EUR 600 million.
EBITDA very substantially up. EBITDA margin up 50%- 6%. EBITDA margin also up from 2.1%- 4.6%. I think after many years of asking for your patience with the separation area, I think we are on a good track. We have a new divisional manager since fall of last year. We are developing a new strategy, and we are confident that we can continue on the growth path as well as the profit improvement path for separation also in 2018. If we look on slide 18, outlook for 2018. I think we assume or base our planning on stable environment compared to 2017, sorry. Pulp & Paper, we continue to be optimistic. For all aspects, be it pulp, be it tissue paper, be it biomass boilers, which is part of this business area. We have sold last year, the second biomass boiler into Japan.
Who knows, let's say, the pride of the Japanese boiler industry to succeed in selling a boiler into Japan shows that we have really superior technology, and we expect continuing orders in the future in this field, for example. On the pulp side, I think I talked about the situation in South America, that remains to be seen. With continued growth in pulp consumption, we are completely convinced that we will see the start of one or two greenfield or brownfield projects in 2018. Hydro. We concentrate on our internals, continue with our adjustments of our capacities to this reduced market levels. It does not mean that we are convinced it will not grow again in the future, but we think this is the right time to adjust and make sure that profitability can be maintained also on the lower level.
If we achieve that, I think we are excellently positioned to benefit from any revival of the Hydro market and in the future with even increased profitability. On the downside, I think we have certain growth areas. Pump accounts for about 20-25% of sales of Hydro. Here we see some good growth opportunities. Metals. Metal forming, I already said, we are optimistic that we can create some growth there. Acquisitions that have been made are developing favorably. On the separation side, we see good market activity, maybe with the exception of food, and expect continuing growth and continuing profit improvement for 2018. Overall, it is early in the year, but we definitely are optimistic, and we do our best to avoid another year of stable order intake.
We clearly have the goal to increase this, and this is not a guidance and not a forecast, but our hope certainly is that our order intake in this year will start with a six and not with a five. That is my presentation, and we will follow to your questions.
Thank you. We will now begin our question and answer session. If you have a question for our speaker, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero two to cancel your question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question comes from Sven Weier of UBS. Please go ahead, your line is now open.
Yeah, good morning. Thank you. Couple of questions, maybe we can take them one by one. I think the first question you kind of answered already just now, because I was wondering if you want to achieve stable sales, whether that is coming through higher order intake or further decline in the backlog. I guess you are expecting orders of EUR 6 billion or more. I was just wondering what divisions, if I understood you correctly, it is probably including Pulp & Paper with the greenfield, and then especially on metals, while Hydro should be more or less stable. Is that fair? That would be the first question.
We take the order intake from each division wherever it comes. I think in all the areas, in all business areas, there is some potential for upside. But again, I think it is, we are middle of February or end of February. No, actually it is March already. But still two months into the year, so it is too early to really have a specific expectation. All I can say is that markets are active. You never can say whether decisions are delayed or not. As it looks now, it seems to be as quite active, and therefore, I think we still have optimistic that we can add some additional order intake compared to last year in any of the business areas.
What makes you more confident than 12 months ago? Because I think 12 months ago, there was a similar optimism about an active pipeline, and then it did not materialize. Do you feel it is a firmer pipeline this time around, or how do you see it?
Well, hopefully, we will not see a repetition of what happened 12 months ago because, if you remember, we had an excellent order intake in the first quarter of 2017 with EUR 1.56 billion. That times four, this would have been a record order intake for the year. What I am saying is not that I expect the first quarter of this year to be on the same level as last year. But it is just the aggregate of the impressions we get from many, many meetings with customers, from projects being around. Obviously, the fact that last year we had only this EUR 5.6 billion order intake is also a consequence that some of the projects that we had thought would be decided or would come into force in 2017 already, they have not disappeared. We have not lost them.
So that also obviously supports our, let us say, judgment that currently, there is reason to be cautiously optimistic for the order intake. But as you said, it can change in three months, in six months, and can also stay on the same level as last year.
Mm-hmm. That is fair. The second question is regarding your guidance for profitability. I was just wondering how you define solid. Should we adjust last year's profit for the one-off, and that would be the basis, or how should we look at your EBIT margin this year?
I leave it up to you how you want to account for it. But the truth is probably somewhere in between, yeah.
Okay. You are not expecting any kind of one-off this year, anything planned or any disposals?
No.
Okay. The last question, please, is just maybe looking more on the M&A pipeline and going forward, especially on Hydro. You mentioned the headwinds you see from solar, from onshore wind, which is unlikely to go away, I guess, and probably starts working without subsidies at some point. Probably we see something similar potentially happening on the pumped storage challenge with regard to new storage technologies. Do not you feel that structurally long-term, you have to position yourself more towards those newer technologies, or do you want to stay with what you have?
We don't want to stay with what we have, but we want to focus on areas where we have some leverage for future developments, some leverage from what we are already doing. Only because something is a growing market, if you are a new entrant, maybe at a late stage, without having any leverage, without having any sustainable advantages, is a difficult thing to do, and we certainly don't want to do that. We are certainly very active in looking into what do we have, which we can expand. For example, we have an ongoing project on what can we do on the battery side, on the battery business. We have products that we are currently selling and have been selling into the lithium mining industry in Chile.
We have our products that Schuler is selling to produce the battery cells, also to the leading Asian producers of battery cells, and we have ideas how to expand that. In our metal processing parts, we have projects to produce sophisticated or higher, let's say, call it high nickel, cobalt, manganese oxides, oxide mixtures, which are the cathodes in these lithium batteries, or at least the material for the cathodes in the lithium batteries. So there we want to expand. Now to jump into wind, we have checked the wind several years ago, because obviously the wind turbines have a generator. But this generator is so far away from the generators we are producing, and we've decided that our potential competitive advantage, if you will, to enter that is negligible, and therefore we have decided not to do it. Most likely we will continue in this segment.
Thank you, Dr. Leitner.
Thank you.
Thank you. The next question is from Jack O'Brien of Goldman Sachs. Please go ahead. Your line is now open.
Hi, good morning. Thanks for taking the questions. First question is just on the Metals division. You pointed to significant order increases in the processing side, and slightly less in the metal forming. I just want to understand the dynamics between those two. Also, I didn't quite catch why the profitability had been down year-on-year. So that's the first question.
May I answer the first one? In metals processing is supplying processing lines to the general steel industry, both the stainless steel industry, but also the carbon steel industry. Stainless steel industry continues to be nearly zero with regard to new investments. What we live on there is the carbon steel industry, and that's predominantly continuous galvanizing lines, hot-dip galvanizing lines that are being built or are being rebuilt for some electro-galvanizing lines to hot-dip galvanizing lines. That's a market that serves the traditional steel industry at this high level for top-end galvanizing lines that produces material that typically goes into the automotive industry. There it will be processed by stamping lines, by forming lines, et cetera. It will be converted into parts for the automotive industry. The first part accounts for EUR 400 million-EUR 450 million sales, roughly.
About 25% of the volume of the business area. 75% are comprised by Schuler, that is producing and selling forming presses. Any type of forming press, from a press line with five presses and order value of EUR 60 million-EUR 70 million to very small, fast, high frequency producing small presses to produce coins, to produce small electric motors, et cetera. They are adjacent to each other. Schuler is processing the material that the machines that are being sold by the processing part of metals are producing.
Okay, understood. Thank you. Have you seen on the Schuler side, and particularly into the auto industry, that payment terms have been worsening and customer appetite to spend CapEx, particularly amongst the German OEMs, has been deteriorating in the last quarters?
Yes. Obviously, the internal problem with Schuler is that it has been concentrating on the German car industry. In the top year, the order intake from the German car industry has been about EUR 500 million, and that has come down to less than EUR 100 million last year, for example. Obviously, Schuler has been able to compensate that nearly completely. We see in the, especially German car industry, but also European car industry, that our customers have to invest a lot into e-mobility, electric cars, e-mobility, and therefore they try to avoid investments into standard press lines. Because they think that this e-mobility, the number of vehicles will not come on top of what they're producing today, but that there will be a switch from standard cars to electric cars, and therefore they don't need additional capacity on the forming presses.
That is a question of capital allocation, obviously, CapEx allocation. All that, I think, has led to a substantial decline or reduction of investments of the German car industry. As I said, I am very optimistic that we will make very good progress this year in entering the Asian car industry. The Asian electric car industry is a very agile environment. I think in China, there are several hundred of potential electric car manufacturers. Obviously, only a small number will survive. We see substantial investments going on there, and we have to be part of that, and we will be part of that.
That is very clear. Thank you. Perhaps just a quick question on Hydro, where obviously life is a bit tougher. We have seen signs of one or two orders in some quite niche markets like Ethiopia, Pakistan, I think China as well. Are you saying that actually some of these deals are being financed by your competitors or by the Chinese, and is that impacting the competitive backdrop?
Well, our Hydro power orders in China obviously are placed in an environment which is very close to state-owned enterprises, to government, to the state grid. Therefore, it is a combination of technical aspects, of price aspects, but also of, how would I say, allocation aspects, especially with regard to the domestic producers. The government clearly analyzes technologies and decides which special and specific technologies do they not have within China, and these are the opportunities for the foreign companies, like Andritz, like Voith, like Alstom, RGE, to make some business. We got an important order last year for pumped storage turbine. We have improved our position there from the history. We have been very weak. Today, I think we are catching up.
We are not yet on the same level, I would say, as the other foreign companies, but quickly catching up and I am confident we also can be participant in the future in these businesses. Pakistan and what you call niche markets, you can add Bhutan and you can add Rwanda and Sudan, and we have built Hydro power plants everywhere. So these are not special environments for us. Your question with regard to financing of Chinese companies outside China, yes, in certain instances that plays a role. Is that the reason for the lower volume we see for us? In reality, no.
Again, perhaps just a final couple of modeling ones. Can you just highlight your guidance for restructuring costs and tax this year?
Restructuring costs, nothing very special. It will be in the low, low double-digit numbers, which I think we have seen also in the past. That should not have any special impact seen from today. The tax question, obviously we are also affected by the change in the U.S. tax law that has added about 2-3 basis points to our tax rate. We have also some loss carry-forwards that we cannot convert into our tax advantages. That was also about 2%-3%. We expect for 2018, we expect probably in the old range of 30% or 31%.
Great. Thanks for everything.
Thank you.
Thanks. The next question is from Jörg-André Finke. Please go ahead, your line is open.
Yes, good morning. Thanks for taking my questions. Some of them have been answered already, so maybe some sort of follow-ups. Maybe also we can take them one by one. The first one would be again on metals. Schuler versus legacy metals. I think at the third quarter, you mentioned that legacy metals orders were significantly up while Schuler was substantially down. I assume that has turned around in Q4. So maybe you could give a sort of a feeling how Schuler orders have developed sequentially and to which extent this momentum has continued into 2018 so far. That would be my first question.
I know that the order intake of Schuler in the last quarter was very good. The other quarters, give me a second to look it up. So in the second quarter of last year, Schuler has had EUR 240 million, and in the third quarter it has had EUR 220 million. I remember roughly the numbers now. EUR 220 million, and in the fourth quarter, EUR 370 million. The first quarter was good, was EUR 306 million. 2017 all these numbers, yeah. So EUR 306 million , EUR 240 million , EUR 220 million, and EUR 370 million was the quarterly for the intake.
Thank you. That has continued into this positive trend sequentially. Has it continued so far and into 2018?
Well, we are not covering the first quarter of this year, but I have given you my general assessment, which is basically not too pessimistic, but I could not say more now.
Okay. Thank you. My second question would be a follow-up on Hydro. You stated in the outlook slide that there are a couple of individual large-scale projects likely. Is this again like in the previous one, two years, only visible in China? Are there other countries where you could imagine bigger projects happening?
No, there are other countries, and I think we have published one in Africa, I think.
Customers published it.
Customers published it, yes. Our customers published it in Morocco.
Yes.
It is not concentrated on China, no.
Okay, thank you. My last question, again, a follow-up on your comments on one to two potential tenders on the pulp side in 2018. Is this still on, or have you started to work on a tender already?
Pardon, I did not understand. The tenders for 2018 on the pulp side, but the rest part I did not understand.
I just was curious to know whether you are working already on a tender, or you expect the project to be tendered only in the course of the year.
Well, I can only talk about what has been published by customers, or one Chilean producer has published that he wants to go ahead with a new line in Chile in the second half or in the fourth quarter of this year. That remains to be seen, and others are also under development. We are always working on these type of projects together with the customer because they need us to develop this project. But it is always, actually it is impossible to say when then these final decisions will be made. But there are projects around. The forest base is around. The demand is there. No new pulp mill will start up in the next two years because none is under construction. Therefore, I think the pulp price is very high. The environment for making investment decisions, I would say can't be better.
We expect one or two of these to go ahead, whether it is in the second half of this year or beginning of next year, that remains to be seen.
Great, Wolfgang. Thanks.
Thank you. The next question is from Daniel Lion of Erste Group. Please go ahead, your line is now open.
Yeah, good morning. Thanks for taking the question. I would like to refer on the Hydro as well. As you mentioned, we've seen the increase in the service levels. Where does this specifically come from? Is this also from Europe? Would this potentially indicate increasing investments going forward? This would be my first one.
I'm afraid I must disappoint you. The increase in the percentage for service sales comes from a decline in capital sales or decline of overall sales.
Okay. Just stable sales since. Oh, okay.
It doesn't mean that we have project and we have received just an order for operations and maintenance of a large hydropower plant for the next five years. We are doing a lot and we are making progress, but top down, if the sales decline by 10% and let's say by itself increases the share of stable service sales by 1 or 2 points.
Okay. Now I'd like to stay with Hydro. Again, focusing on China, I've seen that your competitors have just recently won orders for supplying or Hydro orders. How difficult is it for you to really get a stronger foothold after winning the first contract last year? Do you see an improvement going forward? Are you confident you can replicate this success? Maybe just your view on this topic.
As I've said, I mean, historically, Andritz or VA Tech or Sulzer have been very strong in Europe, especially in the service and the small Hydro market. Obviously, that is suffering. China has always been the weak spot. I think we have caught up a lot, but we are not yet there. I think both Voith and GE/Alstom are certainly somewhat ahead of us. Have got important order, and we are confident we will continue on this path. We also get the signals that we are considered to be a leader in certain technologies and by the Chinese, and that they want to continue to expand their cooperation with us.
Okay. Then a follow-up on the Metals Processing business. You've said a lot already, but would you regard the situation as cleared now? Would you expect profitability and the cost overruns being finished going now into 2018, or would you see further improvements?
I would like to, if you agree, to postpone your question to the next quarter. We are approaching the end of these two or three projects where we had some troubles. But experience says you are only there when you are there, so I would like to see them started up and then I could answer your question.
Last one on M&A. How is the market developing? Is there any new targets will be popping up or yeah, just-
With some project in the double-digit millions sales that we are pursuing. I think the market continues to be, valuations continue to be very high. Actually, there are not that many companies that are of interest to us in the market. Typically, the owners are happy with the development because they are profitable, they are benefiting from the overall state of the economy, and therefore it's currently, I would say, not an overly attractive market. But as I said, we have a few and a handful of projects in the double-digit sales level that we're pursuing.
We are very active on the startup or small company side in areas of Industrial Internet of Things and artificial intelligence, where we have seen several activities on our side, and we continue to do that, to leverage our plans, the plans that are running already to make them more optimized, to make them more autonomous. That is currently, I think our focus and I think we have good opportunities and also a very good position compared to our main competitors.
Okay. Thank you very much.
Thank you. The next question is from Graham Furlonge of Jefferies. Please go ahead, your line is now open.
Yes, good morning. Thanks for taking my questions. A couple from my side. First of all, just on Hydro, you talk about ongoing capacity adjustments. Can you talk about how many manufacturing sites you have in Hydro, what the sort of level of employees change between 2017 and 2016 was, and where would you like to see the level of employee numbers in Hydro?
The number of manufacturing sites we can get back to you later on. It is obviously a sizable number. We are looking into a very low number of sites where we say, okay, is this necessary or not? But this is very low, I would say. It is more an incremental or gradual capacity adjustments on the main locations that we have. We have reduced the number of employees quite substantially over the last two years. That will continue. But again, as a gradual or a step-by-step process. In our business, when a large construction site or a large project is started up, obviously a certain number of people end their work there. Then it has to be decided whether we continue to employ them or not. So that is, I would say, nothing very special on our side. But the direction of our employee number certainly is downwards.
In Europe and in North America, also South America, probably it is heading upwards in India and in China. Overall, the net effect is certainly lower than the gross effect, the plus in Asia and the minus in, for example, Europe.
Okay, thank you. Sticking to Hydro, what proportion of sales are storage pumps and what was the growth in storage pumps last year? Is there any relative profitability difference between the storage pumps and the rest of the business?
No difference in profitability. Obviously within capital business, there is no difference in profitability. The weight of storage pumps is, I would say, definitely less than 10%, so between 5% and 10%, I would say.
What was the growth in orders or sales?
Yeah, we got this order in Portugal, it was EUR 80 million, I think. EUR 100 million. China was EUR 70 million. It comes in big chunks. You cannot see any consistent growth rates from year- to- year.
Right. Have you any update on tidal and specifically the big project that is in the U.K. that is often talked about?
If it would be wine, it would become more and more valuable, but unfortunately, it is not wine. No developments. Obviously, the more or the longer it takes, the lower expectations are. There are some times in our developments where somebody says we need to do something there, and then obviously not a lot is happening. If it would be realized, it would be completely on top of everything we have been discussing today.
Okay, thank you. On separation, you talk about mining. Just remind us what proportion of mining is separation exposed to, and what sort of products or mines are you seeing the best growth in the supply in that area?
Mining overall in separation is about 10% of sales. Obviously, activity has gone up because copper price has gone up because of lithium demand. There we want to expand or grow with the market and make sure that we fully participate in this growth. The hope certainly is that we can increase the weight of mining to, for example, 15%.
What sort of specific products are you supplying?
Special types of centrifuges, special types of filter presses, and of filtration equipment and of sedimentation equipment, of pressure filters. Basically liquid-solid separation to the mining industry.
Right. Okay, thank you. Just finally, just back on metals and your comment about forming. You enunciated quite well about how you do not think the Germans are not investing enough around. Well, they are thinking more about electric vehicles and not about traditional vehicles, so they are not investing in forming presses. Then you said, of course, that China is, and so there is growth there. But when the German car manufacturers do go down the route of electric vehicles in a bigger way, why would not you participate in that?
No, we would. What I was saying is that I think everybody expects that e-mobility will replace whatever percentage of current sales numbers of vehicles. It will not come on top of the number of vehicles that is currently being sold. That means that the current capacity for forming presses to produce body parts or whatever could grow slightly with the overall growth, but the car manufacturers would not have to invest in new press lines if 20% of the cars they are currently selling would be electric cars. They would only need additional capacity if the electric cars would come on top of the current sales numbers, but this is not what is generally expected.
No. Okay. Right. That is clear. Thank you very much
Thank you.
Thank you. As there are no further questions, I would hand back to you, Dr. Leitner.
Thank you very much. Thanks everybody for joining us, and talk to you when we publish the first quarter. Thank you.
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