BAUER REVIEW FOR EMPLOYEES AND FRIENDS OF THE BAUER GROUP COMPANIES 2010 40 Contents Status report 5 20 years since reunification 6 Thomas Bauer on reunification 20 20 years of environmental technology 23 Construction in southern Germany 24 Bauma 2010 26 Equipment for customer use 28 Projects all over the world 30 Bauer Resources 38 25 years of cutter technology 40 Central Services 41 News in brief 43 In-house news ctober 3rd, 1990 culminated in a massive fireworks display and Oringing of bells throughout the country. Less than 11 months after the fall of the Berlin Wall, East and West Germany – which as a result of the Sec- ond World War had endured 40 years of separation and confrontation – were now reunited. Even before the official reunification took place, Bauer, like many companies in West Germany, had been very keen to move into the former German Demo- cratic Republic (GDR) firstly in order to expand its markets and, secondly, to assist in the transition from a planned economy to a free market economy. Twenty years on, this Review looks at how Bauer went about this undertaking, returning once again to focus on the early days of the reunification process. The story is told not so much on the basis of documents and records, but rather through the voices of the man- agers responsible for running the busi- ness at the time. Most of them are still in senior management posts today, though some have retired. Witnesses on the Schrobenhausen side who were consulted in compiling the report in- cluded Chairman of the Management Board Thomas Bauer and Heinz Kalten - ecker, as well as Wolfgang Brunner, Alexander Hofer, Josef Goller and Ernst Stümpfle. Intensive interviews were also conducted with representatives from 'the other side': Peter Pfeifer, Hein- rich Markgraf, Jürgen Stäter and Norbert Mühlenberg. It was not easy documenting the dif - ferent (yet not opposing!) viewpoints in the most sensitive way possible. De- spite all attempts at objectivity – and at some kind of balanced judgement – the report is quite clearly written from a West German perspective. This issue of the Bauer Review also once again fulfils its role as a chronicle of the year's events. Alongside reports on numerous construction sites all around the world, it looks back to the Bauma trade fair in spring 2010, and to the establishment of environmental technology operations within the BAUER Group. Tottenham Court Road project for London Underground – see article on page 37 5 Status report s 2010 draws to a close, the Bauer Review as usual appraises therefore now stabilizing – though at quite a low level. Unfortunately, the progress made by our business during the year. As is now this rise does not indicate a general recovery in the construction ma- A also customary, it briefly summarizes the financial results of chinery market. Except for the plants in China, our facilities are currently the previous year, 2009. working only to partial capacity. After having cut temporary staff, and The years 2009 and 2010 will go down in the history of our company thanks to some limited deployment of short-time working policies, we as extraordinarily difficult ones. After we had enjoyed a record year in have succeeded in retaining our core workforce, and the inestimable 2008, the unprecedented global recession of 2009 saw our revenues wealth of know-how they embody. With the first finished and fully and earnings fall substantially (revenues of EUR 1,278.3 million down tested models of our new deep drilling rig range we have opened up a 16.3 percent against the previous year; earnings of EUR 42.0 million new market. Things are therefore looking up for us, and we can expect down 60.9 percent). In view of the turbulence on international markets, to see growth in the Equipment segment over the coming year. however, we were satisfied with the overall development of the Our Resources segment has very healthy levels of orders in hand, well BAUER Group. up on the previous year. In Jordan we were awarded a major contract The Construction segment saw a significant drop in the number of large-scale projects compared to the situation back in 2008, and also Geographical breakdown of total Group revenues had to absorb declining business volumes in Eastern Europe and Dubai. in EUR million Germany 364 (28 %) The still reasonably healthy markets – the rest of the Middle East, the Total Other 109 (9 %) Far East and America – delivered sufficient levels of business to keep 1,278 revenues satisfactory (though down 16.2 percent). America 138 (11 %) The Equipment segment suffered the most severely of all our business units from the effects of the crisis, with revenues down 22.5 percent. While customers remained reluctant to invest in smaller standard equip- ment, demand for larger specialist machinery was relatively stable. The long-term strategy of the BAUER Group in establishing the Re- sources segment as a key new driver of growth for the future also proved effective in overcoming the crisis year 2009. Achieving a growth Far East 140 (11 %) Development of total Group revenues by segment Middle East 207 (16 %) in EUR million (segments after deducting Other/Eliminations/Consolidations) Europe (other) 98 (8 %) Total EU excluding Germany 222 (17 %) 1,278 1,500 Resources for water supply to the city of Amman. It involves drilling 55 wells and 166 also includes large volumes of engineering material. Our BOT project in 1,000 Oman, involving the biological treatment of oil-contaminated water, is Equipment also making good progress. Our long-term strategy of turning this seg- 531 ment into a key pillar of the Group's business operations is well on the 500 way to being realized. Construction Looking at the improved order situation, it does appear that the crisis 581 has bottomed out. Revenues will be around the previous year's level. 0 Earnings, too, will be satisfactory, considering the impact of the crisis. 2000 01 02 03 04 0506 07 08 2009 In this light, we approach the end of 2010 – a year which also marks the end of an outstanding decade for the BAUER Group – filled with re- rate of 21.2 percent, the segment generated almost 13 percent of total newed confidence. Group revenues. After all the concerted efforts we have recently employed in steering the As the first full year of economic crisis came to an end, we were able to BAUER Group successfully through difficult times, it is appropriate that gain a more objective view of the changes taking place and – thanks to we should pause to take a brief look back at the past 10 years. It was the measures we instigated – were able to acclimatize to the now less a period in which we overcame the Far East crisis and a decade-long friendly market. As the first quarter of 2009 had still been relatively recession in the German construction industry. After having maintained healthy, the crash – precipitated also by the extreme bad weather in consistent performance over the first four years of the decade, we have Europe – was very heavily felt this year. The following quarters now need since almost tripled our revenues to date. Milestones along the way to recover the losses suffered. We are thus now undergoing the typical included the demerger of BAUER Maschinen GmbH from BAUER Spe - seasonal pattern as was quite normal for the construction industry prior zialtiefbau GmbH and the construction of new manufacturing plants, the to the boom years. further internationalization of our business, the stock market listing in It instils us with confidence that as the year progresses we saw not 2006, and the establishment of the Resources segment in 2007. only a thaw in the severe weather but also a significant economic We recognize that the dramatic impact of the crisis has severely dented recovery. Reflecting this trend, orders in hand rose steadily in all three our upward growth curve. Yet looking at the period as a whole, and segments throughout the year. considering the success of our efforts in combating the crisis, we have Our Construction segment acquired additional sections of the dam re- certainly shown just what we are capable of. I would like to thank all mediation project on Lake Okeechobee in Florida. BAUER Group com- the company's employees for their great efforts and commitment in panies are also currently working on the construction of the Guggen- difficult times. Provided we continue working to our strengths, the heim and Louvre museums in Abu Dhabi as well as on major projects in crisis will ultimately prove to have been no more than a temporary set- Qatar and Canada. The trend this year in all regions apart from Eastern back which we successfully overcame. However, we still have quite a Europe has been satisfactory. Even though we have not yet regained bit of work to do before this point is reached. the high levels of orders in hand seen in 2008, we do regard the Con- struction segment as a stabilizing factor. Orders in the Equipment segment have risen once again, driven par - ticularly by growth in Far Eastern markets. The segment's business is 20 years ago – undreamt-of changes Bauer's development after the fall of the Wall ometimes – very rarely – it seems greeted with widespread acclaim. They as if the world is for a moment mov- were recognized not only by the man- Sing a little faster than usual. That agement and workforce of Schachtbau was the impression held by many people Nordhausen; governmental authorities in Europe during the dramatic years of also acknowledged the great commit- change through 1989 and 1990.