[Translate to Englisch:] Wirtschaft und Unternehmen

Economy and Business

Strategic Orientation

Messer acquired the majority of Linde AG’s gases business in North America and certain Linde and Praxair business activities in South America with effect from 1 March 2019 in a joint venture – called Messer Industries – with CVC Capital Partners Fund VII (“CVC”). Messer Industries invested a total of around 3.6 billion US dollars (3.2 billion euros). Messer contributed the majority of its Western European companies to the joint venture.
With some 5,400 employees, the Linde activities acquired in the USA, Canada, Brazil and Columbia along with Praxair’s Chilean operation generated sales of 1.8 billion US dollars (1.6 billion euros) with EBITDA of approximately 408 million US dollars (359 million euros) in 2018.

Messer plans, to fully integrate the joint venture into the family-run Messer Group within a few years. In the medium term, we want to use the merger of the two companies to become a global player again with a presence in the relevant industrial gases markets. Financial strength, business strength and organisational strength are the three aspects that Messer wants to work towards. The aim is that the business which Messer – together with financial investor CVC – took over from Linde and Praxair will be fully integrated into the Messer Group in 2022, followed by a buy-out of CVC. New projects, increased margins in existing markets, automation and process improvements are intended to ensure that Messer continues to enjoy strong economic growth. Applications that are successful in Europe will be promoted and implemented in the Asian market and new customer segments identified. In June 2018, Messer Ibérica in Spain was visited by a 15-member delegation from China. The group consisted of executives from different Chinese Messer companies and representatives of major customers. Messer Ibérica gave them an insight into the company’s development and activities in Spain and Portugal, its pipeline business in the Tarragona Chemical Park and the sale of cylinder and liquid gases. The visitors also visited the air separation unit in El Morell. Here they were shown the plant’s standard, energy efficiency projects and how pipeline customers are supplied.

The emerging ASEAN region will be run from Thailand in future. Messer will initially focus on the markets in Thailand, Vietnam and Malaysia. In the course of the academic exchange between Frankfurt School of Finance & Management and Messer Group, a high-level delegation of bankers from Myanmar visited us on 23 May 2018. In addition to a brief presentation about our company and a visit to the Messer Museum, the participants also had a face-to-face meeting with Stefan Messer. This highlighted several promising potential opportunities for our company to get involved in Myanmar, which is located in our ASEAN growth region.

Messer opened a new international competence centre in Krefeld, Germany, on 6 June 2018. It will serve as a hub for testing gas application technologies in the areas of Food, Industrial Cryogenic Applications, Cutting & Welding, and Chemistry & Environment. The centre offers space for future expansion.

The technical centres for the various segments were previously spread across different sites in a number of countries. They have now been brought together in Krefeld, the control centre for important central functions, including Application Technology. This allows experts from the different segments to share experience based on practical tests and pool their efforts to find new solutions for customers.

The new technical centre’s equipment includes a cold grinding facility with complete classification and analysis technology, equipment for cryogenic chilling and freezing of food products, test equipment for transport refrigeration, a unit for high-pressure extraction with supercritical fluids, and welding equipment for all commonly used welding methods. Rooms and facilities are also available for employee and customer training.

A specialised competence centre’s function covers the stage between research and development under laboratory conditions on the one hand and industrial application on the other. It serves the purpose of carrying out detailed analysis of technical processes, practical testing of newly developed application technology and working out specific solutions for individual industrial applications, all of which is performed in close cooperation with universities and project partners.

In the Cutting and Welding segment, the rapid development of laser technology is one of the reasons why cutting and welding gases are having to meet many new requirements. Specific gas mixtures can significantly improve the efficiency and quality of welding processes. This segment also includes additive manufacturing and 3D printing with metal material – processes in which shielding gases are indispensable.

The same applies to the Chemistry and Environment segment, where gases ensure process safety and help preserve product quality. As a rule, this involves preventing oxidation reactions and thereby also containing the risk of fire and explosion. On the other hand, however, oxygen is also used for targeted process optimisation, including in the treatment of drinking water, wastewater and process water.

The Food Industry uses gases on account of their chemical and physical properties. They help extend the shelf life of products by creating a modified atmosphere in the food packaging process (MAP; Modified Atmosphere Packaging); they are also increasingly used as refrigerants both in processing and transportation. In food production, for example, cryogenic gases are used for rapid freezing, surface hardening or as a cold source during various mixing processes. When transporting food products, these gases allow complete truck load compartments or individual insulated containers to be kept at the desired temperature.

Cold Grinding usually involves the use of liquid nitrogen at a temperature of minus 196 degrees Celsius. The cold gas ensures that the material to be ground becomes brittle, thereby facilitating the production of extremely fine powders. The low temperature also counteracts the evaporation of volatile constituents, which is particularly important when grinding spices, in order to keep the flavourings in the product. Another example of an efficient, environmentally friendly application involving the use of liquid nitrogen is the cleaning of waste gas flows by means of condensing and freezing out vaporous substances from process waste gases in the chemical industry, where the condensed vapours can often be reused.

The physicist and Nobel laureate Dr Georg Bednorz, one of the discoverers of high-temperature superconductivity, was a guest of honour at the opening of the technical centre, where he gave a talk on superconductivity as a key technology of the 21st century. Modern high-temperature superconductors lose their electrical resistance when cooled with liquid nitrogen. They have been marketable for energy-related applications for several years now. High-temperature superconducting cables transmit large amounts of electricity without loss, thus enabling the construction of highly efficient power distribution systems in cities and at industrial sites.

The foundation for growth is created above all through investment projects.
 


The following are examples of the projects that were initiated or completed in 2018.

Investments in Europe

Romania: Messer acquires BUSE Gaz
Messer bought BUSE Gaz S.R.L. in Romania with effect from 4 May 2018. As part of this investment, Messer took on all 39 employees as well as taking over all fixed assets. In about two years’ time, after expansion and modernisation, BUSE’s current headquarters in Bucharest will become the new head office of Messer in Romania. The two companies complement each other in terms of their activities and their operational and production structures. With two cylinder gas filling plants – one in Deva and one in Valcea – as well as another filling plant in Bucharest, we are strengthening our geographic configuration and enhancing our product portfolio with liquid CO2 and dry ice.

Germany: Air separation unit at St. Gobain
Saint-Gobain has decided to heat the new glass tank that is due to be built at its Speyer site in 2019 with natural gas and pure gaseous oxygen. Messer will put up a new air separation unit – its third one in Germany – to provide the customer with a long-term supply at the Speyer site. The unit – a joint investment with an industry partner – will also produce liquid oxygen, nitrogen and argon to supply customers in the surrounding area, including in neighbouring France and Switzerland. Synergies resulting from the combination of required quantities of gaseous and liquid products will ensure greater economic efficiency for everyone concerned, which was the decisive factor in the bidding contest.

Germany: First hydrogen production facility in Germany
In 2018, Messer signed a 15-year hydrogen supply contract with RÜTGERS Germany, a subsidiary of Rain Carbon Inc. Messer is investing a total of nine million euros in a hydrogen production facility at the site of Rain Carbon Inc. in Castrop-Rauxel. The company will use the hydrogen in the hydrogenation of industrial resins. Messer will also use the facility to supply other hydrogen customers in the region. The facility will produce hydrogen by means of the steam reforming process, using natural gas as the feedstock. It will have a capacity of 2,700 normal cubic metres per hour. That is the equivalent of approximately 15 tankers per day. Start-up of the hydrogen plant – Messer’s first in Germany – is planned for the third quarter of 2019.

Slovenia: Messer’s first air separator
On 25 May 2018, Messer Slovenija put its first air separation unit into operation at its new Škofja Loka production site. Instead of being supplied by 100 truckloads per week, the biggest customer can now get the necessary industrial gases directly from the facility. Twenty local jobs have been created.


Opening of the air separation unit in Škofja Loka, Slovenia:
Ernst Bode, Johann Ringhofer, Valentin Ilievski, Stefan Messer, Adolf Walth, Bojan Andrejašič and Zoran Wltavsky (left to right)

Hungary: Natural CO2 to meet growing demand
Messer has successfully completed the construction of its third CO2 production facility in Ölbő. High-purity carbon dioxide is extracted from a local natural source. The source itself lies at a depth of around 2,000 metres. The gas is supplied primarily to the beverage industry in Hungary and in neighbouring countries. To satisfy their rapidly growing demand, original output at the site has now been tripled. Besides extraction from natural sources, CO2 is often obtained as a by-product of processes in the chemical industry, after which it is purified. Natural CO2 has a high level of purity in comparison and can be obtained independently of other industrial processes. The facility in Ölbő is therefore one of the most reliable sources of CO2 in Europe.

Czech Republic: Investment in Vratimov
In October 2018, MG Odra Gas succeeded in extending its oxygen, nitrogen and argon supply contract with steel manufacturer ArcelorMittal Ostrava for a further ten years until 2030. In order to secure production at the Ostrava steel plant in the long term while at the same time making it more efficient and profitable, we are modernising our air separation unit and liquefaction capacity at the Vratimov site. In addition, this will secure the long-term supply for our existing on-site customers Biocel and OKD.

Investment in Asia

In Dung Quat, Vietnam, Messer is building two air separation units to provide Hoa Phat Steel’s new steel plant with a pipeline supply of oxygen, nitrogen and argon. The facilities will go into operation in 2019.

 

Strong demand in China led to almost all our Chinese production facilities operating at full capacity in 2018. Expansion projects were initiated at numerous sites to ensure a continued supply for customers in future. Product expansion is also planned in the specialty gases segment. To this end, a new specialty gases plant is being built in Anhui.

Expansion of the electronics industry in China is leading to a high level of demand for on-site facilities to supply high-purity nitrogen. In addition to expanding the nitrogen supply for BOE Optoelectronics Technology in Chengdu, Sichuan Messer also concluded a new contract with Truly and is currently building two gaseous argon generators for Truly’s new plant in Sichuan.

Further information on investments can be found in the 2018 Group Management Report of Messer Group GmbH.

Data Protection

On 25 May 2018, two new laws came into force: the EU General Data Protection Regulation (GDPR) and the new version of the German Federal Data Protection Act (BDSG-Neu). A Messer GDPR project team took timely measures to prepare Messer for the new legislation and the date on which it would come into force: since May 2017, the business processes needed to comply with the new legislation had been defined and specified while critical areas and functions had been examined with specific reference to the new provisions.
The new laws give a more important status to data protection in Europe: deadlines have been reduced, penalties increased, documentation requirements significantly extended, with the basic data protection principles remaining unchanged. Data protection essentially concerns personal data. Examples include a person’s name, email address, postal address and date of birth, but also their computer’s IP address, income, health data and other information that can be used to identify a person. This protection was already a requirement in Germany as well as in many other European Union (EU) countries, but there was no standardised approach. The introduction of the GDPR has now created a binding framework for all EU and EEA countries.
Messer must now be able to prove that we always use our employees’, customers’ and business partners’ data in accordance with the law. Whereas previously it was the responsibility of the authorities to prove that a company committed a possible error, now, in cases of dispute, the company has to prove that effective personal data protection measures were implemented.

Data protection issues concern every workplace, in particular HR, Marketing and Sales. Whenever processes or systems used to process personal data are created or modified, it is necessary to check the data protection settings. This involves recording all the necessary information, defining protection measures and documenting the details in the record of processing activities.

Messer’s European national subsidiaries and Messer Group GmbH communicate their data protection notices in the respective national language via their websites. The employees have made the appropriate changes to their email signature in Outlook by adding a link to their national subsidiary’s data protection notice (mandatory) and to that of Messer Group GmbH (optional). Companies outside Germany, Austria and Switzerland should provide a link to an English version of their data protection notices. In addition, it was recommended that the data protection notice links of Messer Group and the respective national entity be included in business documents such as contracts, order confirmations, invoices, delivery notes etc.

Digitalisation

Today, information technology permeates virtually every part of a modern company. Digitalisation disciplines such as artificial intelligence, Big Data or the Internet of Things increase the efficiency of production processes, thereby contributing to sustainability and resource conservation, or expand the spectrum of services that we can offer our customers.

The production of air gases is an energy-intensive process. Each additional optimisation of the energy efficiency of the plants involved is accompanied by a considerable savings potential in terms of resources required. In line with the relevance of the topic, we are simultaneously investigating two different approaches to optimising control via intelligent IT systems. One of these projects emerged from the current Junior Circle, with a sub-group of this training scheme also playing a key part in moving it forward.
The two other subgroups of the Junior Circle are analysing the potential for optimising the use of our gas cylinders and developing solutions for improving case-related customer communication. We are seeking to optimise our cylinder stock by, among other things, implementing Big Data analyses based on the data set generated by our BABEL cylinder tracking system. We are making a chatbot available on our websites – initially with limited coverage in terms of regions and content – to provide interactive answers to questions regarding our products. Since the beginning of 2019, we have made it possible for the service engineers at our national subsidiaries to provide our customers with quick and efficient support remotely via the Internet.

To facilitate automated communication of software systems, including between companies, we are making easily integrated interfaces available to our customers, and in future to our suppliers as well, for the electronic transfer of, for example, orders or invoices.

Many of our tank installations have been part of the Internet of Things for 20 years. Now we are taking the next step by equipping the first mobile tanks with technology to transmit the current filling level. Our aim in doing this is to be able to offer these customers an enhanced and optimised supply service too.

IT Security

Nowadays, information technology is found in almost all areas of modern companies. Functions such as Internet, e-mail and ERP are a daily part of our work, supporting communication and operational processes and thereby making a substantial contribution to value creation and efficiency, and thus to sustainability and resource conservation.

We have created the position of Group IT Security Officer at Messer Group in order to centralise control of data security issues relating to IT functions and associated data. The protection objectives place particular emphasis on data confidentiality, availability and integrity.

Within the framework of the newly defined section, we are gradually examining IT-relevant areas and gathering fragmented information centrally with a view to creating a single data security concept in future. We are making an inventory of cloud services already used; this is being done through a newly created organising committee made up of participants from Europe for the time being.

A programme for assessing cloud services was one of the first measures to be initiated. The aim is to give an evaluation and risk assessment in terms of data security and the protection of personal data.

Service providers are contacted via the central contact for IT security with the aim of checking our IT security through penetration tests and thus making the operation of industrial control systems safer.

Sustainable, documented supply chain

A sustainable supply chain is one of the foundations of Messer’s economic success.
In this regard, a crucial role is played by Messer’s relationships with its key suppliers, which are maintained by the Logistics/Sourcing and Engineering/Production departments in their respective areas of expertise. These central departments take charge of or provide assistance with Europe-wide purchasing of logistics services, commodities, merchandise, facilities, machinery, transport equipment and vessels and containers. They are both ISO 9001 certified and have put in place robust and effective quality management systems as part of the certification process. Periodic audits of key suppliers are an essential part of supplier assessment.

The Corporate Production department supports the Messer national subsidiaries in the operation and maintenance of existing production facilities (troubleshooting, maintenance planning, know-how transfer/training, standardisations).
The Engineering department is responsible for all technical and procurement-related aspects in connection with execution of projects for the production of all manner of gases. These include the development as well as construction or conversion of units for the production of technical and medical gases. In addition to plant design, project management and construction management, these tasks also include procurement/purchasing of all necessary plant components and continue through to commissioning.

Logistics/Sourcing, together with Messer Gaspack, ensures the availability of products (all kinds of gases) for Messer and customers, as well as taking care of transportation of the products. This includes the development and purchase of tankers, stationary customer tanks and vaporisers, the purchase, rental and periodic inspection of gas cylinders, the purchase of electricity for the production facilities and the purchase of gases from external sources. Logistics/Sourcing also supports the national subsidiaries in managing transport contracts and organising the transportation of heavy loads. Dealing with these specialist areas centrally allows economic advantages to be achieved while also ensuring high quality standards across the board.

In 2018, the Logistics/Sourcing department performed a total of six key supplier audits. One of the areas of focus is auditing the manufacturing process and the quality of manufactured products. In this context, key suppliers are now also being questioned on their compliance with the principles of the UN Global Compact.

The supplier is assessed in four categories. In the event of an unsatisfactory assessment, measures designed to improve performance are worked out together with the supplier.
In addition to the quality management system (e.g. ISO 9001), other important considerations for a supplier evaluation include compliance with safety standards, the provision and quality of staff training and the inspection of machines used, as well as environmental aspects. In particular, this also involves checking how liquids are used and disposed of in production. For example, as a rule, when checking the pressure of all types of tanks and vessels (tanks, tank trailers, gas cylinders), drinking water is used as a compression medium for safety reasons. Questions regarding its sustainable use are also part of the supplier audit.
The results of the supplier audits in 2018 were very satisfactory. All the suppliers met Messer’s requirements, some of them after completing a catalogue of measures.