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TWST: Can we start with a brief introduction to VA Technologie (Vienna:VATE.VI) including an historical sketch?

Mr. Schwaiger: VA Technologies was founded at the end of 1993 as part of the engineering machinery and plant building complex of the previously state-owned industry of Austria. We floated 51% at the initial public offering in the first half of 1994 and have since had quite an interesting story. As a group we enjoyed very strong growth from the market, especially driven by the [fantasy] in the Southeast Asian markets in the first four or five years. In fact, we had double digit growth in both the top and bottom line of our businesses. We also enjoyed a very sharp increase in the share price, which tripled from about 65 to 190-200 per share around mid 1997. However, we then had the global crisis beginning in Asia and then spilling over into Russia and Latin American. Of course, as with everybody else our share price came down significantly by 30%, 40%, 50%. However, this had the affect of opening up the window for very major acquisitions and divestments and we took action. We had what you might call a war chest of 750 million from the flotation and made some acquisitions in what we had defined as our core businesses. Since 1998, we have grown into a very focused global technology and services group, having evolved from what was an engineering conglomerate in the mid 90s. The acquisitions we have made have given us top global market positions in our core businesses and I emphasize that we have become a significantly global group. We had, for example, 9% of our employees outside of Austria in 1994. Now we only have 42% of our employees in Austria. Therefore, 58% is international -- majority being in Europe. We have spent around EUR 750 million on acquisitions and divestments: roughly 430 million on acquisitions and joint ventures and 320 million on restructuring and some divestments. During this period we have both acquired and laid off employees. Out of a current employee base of 18000 employees, roughly 50% are new people, mainly in France, UK, Germany and North America. We have laid off the other 50% mainly in Germany and Austria but also UK and France. So it’s a new ball game. It’s a new company and of course the task ahead and the big challenge is to transfer this into profits. We have the portfolio and the right focus on our businesses, but we are not there yet profit-wise.

TWST: Can you elaborate on some of the trends and developments you see driving growth in both the areas of metallurgy and power and infrastructure?

Mr. Schwaiger: Let’s put it this way, the world steel consumption between last year and this year will grow 3.6%; that’s the forecast. The driver in the metallurgy business is a privatization and concentration of steel producers. As they concentrate their production sites with competitive location advantages near to the customer they have to invest in modernizing these plants. Number two, there is a trend of course towards higher quality and productivity for the car industry, ever thinner car sheets for example; and for the white goods industry like household appliances, better galvanized steel for example. So that again involves modernization, automation and services. Then there is the growth in population, especially in the Third World. As the gross national product of these countries grows, there is an emergence of a new middle class in key countries like India and China. These people are now 15 or 16 years old and will get older and will want to have cars, houses, roads and infrastructure, etc., all of which will drive steel consumption. On the Power and Infrastructure section, it’s interesting that since the 90s and through to 2015-2020 there has been a very steady global power consumption growth of around 2.7% per annum. In growth countries, i.e. third world countries and newly industrialized countries, there is an average growth of 4.2% per annum. So it’s a steady growth, driven of course by the increasing population and by the increasing power consumption per capita, again linked with the material wealth and gross domestic product per capita. A second driver is the increasing urbanization. We have around 50% of the world’s population already living in cities. Especially in the cities, there is increasing needs for clean water, better infrastructure, more power production and transmission and distribution. Then a third driver is liberalization, deregulation of the power market, and renewable energies. The Kyoto Protocol implementation may take sometime, especially due to resistance from the US, but it is a trend that is not to be ignored. It’s a definitely a driver and it will happen, especially in the power and infrastructure sector.