l
1st quarter 2019/2020 sales at prior-year level
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Operating earnings down year-on-year particularly due to market
situation at Steel Europe
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Restructuring measures proceeding to plan
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Full-year forecast for current fiscal year unchanged
In a difficult economic environment, thyssenkrupp’s sales were
virtually stable at €9.7 billion in the first three months of the
current fiscal year 2019/2020. While the capital goods businesses
achieved in some cases double-digit growth rates, the materials
businesses were clearly impacted by price and volume losses. This is
also reflected in order
intake , which was 4 percent lower overall at €9.7
billion. Adjusted EBIT amounted to €50
million and as expected was down from the prior year (€217 million)
particularly due to the situation at Steel Europe and a general
weakening of the automotive market.
“The latest figures are not great. But we are convinced that we are
on the right track. A decision on the Elevator transaction is
imminent, the negotiations with codetermination representatives on
the Steel strategy are making progress, and we are improving our
performance. The bottom line: We are moving in the right direction,”
says Martina Merz, Chief Executive Officer of thyssenkrupp AG.
Performance of the businesses in the 1st quarter 2019/2020
In a difficult overall market environment in the automotive sector –
dominated by continuing weak sales on the world’s biggest market
China – the Automotive
Technology [1] business
area’s order intake improved by 5 percent and sales by 11 percent
year-on-year. The increases mainly reflected the start of production
at new plants and projects, particularly for steering systems but
also for damper systems and camshaft modules. This pleasing growth
was partly offset by negative earnings contributions from the two
businesses under review – System Engineering and Springs and
Stabilizers. At System Engineering capacity adjustment and cost
measures have already been initiated. Overall adjusted EBIT at €21
million was up from the prior year (€13 million).
At Industrial
Components bearings in particular profited from the
good order situation for wind energy. However in the forgings
business, where cost-reduction measures have already been
introduced, earnings were impacted by lower volumes for truck and
construction machinery components. Overall order intake was down by
13 percent and sales by 5 percent. Adjusted EBIT was level with the
prior year at €44 million.
Elevator Technology booked
orders worth €2.2 billion in the past quarter – a new record high –
mainly resulting from new installations and modernization business
in the USA. Sales were 6 percent higher year-on-year, with growth
above all in North and South America and Asia/Pacific (particularly
in China). Adjusted EBIT showed a positive trend in all regions and
improved by 12 percent to €228 million. Margin was 0.5 percentage
points up at 11.1 percent, not least due to implementation of the
performance program.
Plant Technology achieved
a 23 percent increase in sales, mainly in chemical plant
engineering. Order intake was 15 percent lower year-on-year,
reflecting a major mining order in the prior-year period. The
chemical and cement plant businesses showed a stable to positive
performance. Adjusted EBIT remained negative but at €(18) million
was significantly better than in the prior year (€(30) million) due
to a slight recovery in chemical and cement plant engineering,
proceeds from the sale of a building, and positive effects from the
implementation of the transformation program.
Marine Systems maintained
its order intake at the prior-year level. Sales were 28 percent
higher at €381 million, particularly as a result of sales from the
major order for four frigates from North Africa. Operating earnings
remained stable at around break-even.
The Materials
Services business area felt the effects of the weak
market environment and further declining prices. Order intake and
sales were down clearly by 9 and 10 percent, respectively. Falling
market prices and very weak demand, particularly in warehousing and
distribution and in the auto-related service centers in Europe and
America, impacted business and led to substantial negative effects.
Accordingly adjusted EBIT at €11 million was as expected down
sharply from the prior year (€22 million).
The performance of Steel
Europe was also characterized by the structurally
extremely challenging situation in the steel sector. The overall
slowdown in market momentum was clearly noticeable, in particular
due to the significant drop in demand from the auto industry. Order
intake and sales were down 10 and 13 percent respectively from the
prior year. As a result of declining shipments and continuing cost
pressure – driven again in part by higher raw material costs
(especially iron ore) – adjusted EBIT slipped into negative
territory at €(164) million (prior year: €38 million).
thyssenkrupp is progressing as planned with the reduction of
administrative costs at Corporate
Headquarters and in the regional organization.
Adjusted EBIT remained almost stable at €(66) million.
Key figures 1st quarter 2019/2020
thyssenkrupp reports a net
loss of €(364) million for the 1st quarter 2019/2020
(prior year €68 million). Alongside operating performance, this was
due to restructuring expenses in connection with the implementation
of “newtk”, increased interest expense for financial debt, and
one-time expenses in connection with the Elevator transaction. After
deducting minority interest, the net loss in the 1st quarter
2019/2020 was €(372) million (prior year €60 million); earnings per
share came to €(0.60) (prior year €0.10).
Despite operating improvements in some businesses, free cash flow before M&A at
€(2.5) billion remained as expected clearly negative and at the
prior-year level. The main reasons for this were the payment of the
fine in the heavy plate cartel case in the amount of the recognized
provisions of €370 million and the increase in net working capital
in the materials businesses. As a result of the negative free cash
flow before M&A and the remeasurement of lease liabilities in
accordance with IFRS 16 in the amount of €1 billion, the Group’s net financial debt increased to
€7.1 billion (September 30, 2019: €3.7 billion). Taking into account
available liquidity of €5.1 billion and the balanced maturity
structure, thyssenkrupp remains solidly financed.
As a result of the net loss for the period, total
equity decreased by €286 million compared with
September 30, 2019 to €1.9 billion.
2019/2020 forecast
Taking into account the continuing limited visibility and reduced
planning reliability, thyssenkrupp is maintaining its forecast for
the current
fiscal year 2019/2020. Against the background of
progress in the capital goods businesses, overall weaker earnings in
the materials businesses and intensified restructuring measures
already initiated, the Executive Board expects adjusted
EBIT to be level with the prior year (prior year
€802 million). Free
cash flow before M&A is expected to be lower
year-on-year (prior year € (1,140) million). Expenses for the
intensification ofrestructuring measures (special items in the mid
three-digit million euro range) are expected to result in a
significantly higher net
loss for the year than in the prior year (€(260)
million).
Source from Thyssenkrupp |