core sector communique

ThyssenKrupp continues upward trend in first nine months 2010/2011

EBIT up significantly year-on-year despite higher startup losses in Brazil and the USA / Orders and sales also noticeably improved / Ambitious full-year targets confirmed with a clear rise in adjusted EBIT to around €2 billion in 2010/2011 / Strategic development measures being systematically implemented

ThyssenKrupp continued its upward trend in the first nine months of fiscal year 2010/2011 (October 01, 2010 - June 30, 2011). Orders, sales and earnings before interest and taxes (EBIT) improved significantly from quarter to quarter. Compared with the first nine months of the prior year, orders increased by 25 percent to €38.2 billion and sales by 17 percent to €36.5 billion. Almost all areas of the Group contributed to this pleasing growth.

The structural earning power of the Group improved further. Nine-month EBIT reached €1,315 million and 9-month adjusted EBIT €1,366 million - a year-on-year increase of €184 million or 16 percent and €200 million or 18 percent, respectively. In this context it should be borne in mind that due to startup losses of the new steel plants in Brazil and the USA the EBIT of Steel Americas at €(887) million was much worse than in the comparative prior-year period, when this business area had EBIT of €(280) million. However, as the ramp-up of the plants progressed, the negative EBIT of Steel Americas improved considerably from quarter to quarter in the current fiscal year - from €(378) million in the first quarter to €(190) million in the third quarter.

With the exception of Steel Americas all 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 or nine percent. Adjusted EBIT was €566 million, unchanged from the prior year.

On May 13, 2011 ThyssenKrupp AG decided on an integrated strategic development program to move the Group forward competitively and sustainably. Dr. Heinrich Hiesinger, Chairman of the Executive Board of ThyssenKrupp AG: "We are working hard to implement our strategic development measures. 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 will be divesting businesses for which there are stronger alternative strategic options. The decision to part with the activities of the Stainless Global business area is a key element in this. all options for continuing the business outside the Group are being examined with an open mind. 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.

• The sale of the Metal Forming group to Gestamp Automoción S.L. of Spain has been completed following the approval of the EU competition authority.
• Internal preparations are underway for the sale of ThyssenKrupp Waupaca as part of a best-owner solution. Initial talks with potential buyers are expected to be held in September. Bank of America Merrill Lynch is supporting this disposal process as financial adviser.
• Further measures include the combination of the chassis operations of the Bilstein group and Presta Steering, and the disposals of the spring and stabilizer operations and the Automotive Systems business in Brazil as part of a best-owner solution. The management structure for the new unit emerging from the combination of Bilstein and Presta Steering has already been decided and the disposal processes have begun.
• ThyssenKrupp sold treasury shares equivalent to 9.6 percent of the capital stock at the beginning of July 2011. The sale of the shares resulted in a cash inflow of €1.6 billion, thereby strengthening equity and reducing net financial debt.

The highlights for the first nine months 2010/2011 (October 01, 2010 - June 30, 2011) and the third quarter 2010/2011 (April 01, 2011 - June 30, 2011) compared with the prior year:

• Compared with the first nine months of the previous fiscal year, order intake increased by 25 percent or €7,597 million to €38,228 million. Third-quarter order intake also picked up appreciably year-on-year, showing a 29 percent improvement at €14,120 million.
• Sales in the first nine months rose by 17 percent or €5.350 million to €36,487 million. Third-quarter sales were also up ten percent from the prior year at €12,851 million.
• EBITDA came to €2,560 million, compared with €2,150 million a year earlier. Third-quarter EBITDA was 16 percent higher than the year before at €983 million.
• EBIT climbed from €1,131 million to €1,315 million. Third-quarter EBIT increased year-on-year by nine percent from €500 million to €545 million.
• EBIT margin was unchanged from the previous year at 3.6 percent. In the third quarter EBIT margin was 4.2 percent (prior-year quarter: 4.3 percent).
• Adjusted EBIT 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 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.

In fiscal 2010/2011 ThyssenKrupp expects an increase in sales by ten to 15 percent (2009/2010: €42.6 billion). Earnings are 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).

Dr. Heinrich Hiesinger: "With our strategic development program we have decided to focus our portfolio and grow on the basis of our strengths. 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. It has around 180,000 employees in over 80 countries developing ideas and innovations into solutions for sustainable progress. In fiscal year 2009/2010 ThyssenKrupp generated sales of more than €42 billion.

For us innovations and technical progress are key factors in managing global growth and using finite resources in a sustainable way. With our engineering expertise in the areas of "Material", "Mechanical" and "Plant", we enable our customers to gain an edge in the global market and manufacture innovative products in a cost and resource efficient way.