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ThyssenKrupp Reports Increased Sales, Earnings in First Nine Months

08/15/2011 - ThyssenKrupp reports a 25% increase in orders and a 17% increase in sales through the first nine months of fiscal 2010-2011.

ThyssenKrupp reported a significant increase in orders, sales and earnings before interest and taxes (EBIT) through the fiscal third quarter. Compared with the first nine months of the prior year, orders increased by 25% to €38.2 billion and sales by 17% to €36.5 billion.
 
The Group’s structural earning power improved further, with nine-month EBIT reaching €1,315 million representing a year-on-year increase of €184 million (16%), and 9-month adjusted EBIT reaching €1,366 million, representing an increase of €200 million (18%).
 
Startup losses for the new steel plants in Brazil and the US negatively impacted the EBIT of Steel Americas, which at €(887) million was much worse than EBIT of €(280) million in the comparable prior-year period. However, as the ramp-up of the plants progressed, Steel Americas’ negative EBIT improved considerably from quarter to quarter, from €(378) million in the first quarter to €(190) million in the third quarter.
 
With the exception of Steel Americas, all other business areas made positive earnings contributions in the first nine months. The EBIT of the other Materials business areas heavily outweighed the losses of Steel Americas, and Materials as a whole generated EBIT of €456 million. The EBIT of the Technologies business areas came to €1,420 million.
 
The Group’s third-quarter EBIT came to €545 million, a year-on-year improvement of €45 million (9%). Adjusted EBIT was €566 million, unchanged from the prior year.
 
Third Quarter and Nine-Month Results — Compared with the first nine months of the previous fiscal year, order intake increased by 25% or €7,597 million to €38,228 million. Third-quarter order intake also picked up appreciably year-on-year, showing a 29% improvement at €14,120 million.
 
Sales were €36,487 million for the first nine months, a €5.350 (17%) million increase compared to the comparable year-ago period. Third-quarter sales, at €12,851 million, were also up 10% from the prior year.
 
Nine-month EBITDA came to €2,560 million, compared with €2,150 million a year earlier. Third-quarter EBITDA was 16% higher than the year before at €983 million. EBIT margin, 3.6%, was unchanged from the previous year. In the third quarter EBIT margin was 4.2%, compared to 4.3% for the year-ago third quarter.
 
Adjusted EBIT for the first nine month came to €1,336 million, compared with €1,136 million a year earlier. In the third quarter the Group reported adjusted EBIT of €566 million, unchanged from the prior-year quarter.
 
Earnings per share for the first nine months amounted to €1.35, compared with €1.38 in the prior year. At €0.46, the figure for the third quarter was down from €0.58 the year before.
 
Net financial debt at June 30, 2011 was €6,249 million, an increase of €2,469 million compared with September 30, 2010. Compared with March 31, net financial debt was €243 million lower.
 
Strategic Development — On May 13, 2011 ThyssenKrupp AG initiated an integrated strategic development program to move the Group forward competitively and sustainably. “We are working hard to implement our strategic development measures,” said Dr. Heinrich Hiesinger, Chairman of the Executive Board of ThyssenKrupp AG. “This program encompasses portfolio optimization, change management, and performance enhancement. Our goals are to reduce debt, enable growth, increase income, and create value. We have already achieved initial results.”
 
The Group is planning to divest businesses for which there are stronger alternative strategic options, including the activities of the Stainless Global business area. The possibilities under consideration are a spin-off, an IPO or an outright sale. Three banks, Citigroup, Deutsche Bank and Rothschild, have already been appointed to support the separation. The new management of Stainless Global has begun work.
 
Additional divestment activities include the following:
 
·         The Group completed its sale of the Metal Forming group to Gestamp Automoción S.L. of Spain.
·         Internal preparations are underway for the sale of ThyssenKrupp Waupaca, and initial talks with potential buyers are expected to be held in September.
·         Further measures include combination of the chassis operations of the Bilstein group and Presta Steering, and disposal of the spring and stabilizer operations and the Automotive Systems business in Brazil.
·         ThyssenKrupp sold treasury shares equivalent to 9.6% of the capital stock at the beginning of July 2011. Sale of the shares resulted in a cash inflow of €1.6 billion.
 
Outlook — In fiscal 2010/2011 ThyssenKrupp expects an increase in sales by 10 to 15% (2009/2010: €42.6 billion), with earnings expected to grow faster than sales. This will follow from further operating improvements and the recovery of the sales markets, which will more than offset the considerable negative contribution from the Steel America business area in the higher three-digit million euro range. The upward trend in all the other business areas confirms expectations that adjusted earnings before interest and taxes (EBIT adjusted for special items) will be around €2 billion (2009/2010: €1.2 billion).
 
“With our strategic development program we have decided to focus our portfolio and grow on the basis of our strengths,” said Dr. Hiesinger. “Our outstanding engineering expertise in the areas ‘Material’, ‘Mechanical’ and ‘Plant’ provides the platform for this. As a diversified industrial group with products and services in the key areas of infrastructure, urbanization, environment and energy efficiency, we move technology forward and offer our customers advantages in the global markets. This is a path we will continue to pursue consistently.”
 
ThyssenKrupp is a diversified industrial group, with around 180,000 employees in over 80 countries. In fiscal year 2009/2010 ThyssenKrupp generated sales of more than €42 billion. The Group considers innovations and technical progress to be key factors in managing global growth and using finite resources in a sustainable way.