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ThyssenKrupp Reports Growth in First Half despite Startup Losses in U.S., Brazil

05/16/2011 - ThyssenKrupp continued its upward trend in the 1st half 2010/2011 ending March 31, 2011, reporting a 22% year-on-year increase in order intake to €24.1 billion and a 21% year-on-year increase in sales to €23.6 billion.

ThyssenKrupp continued its upward trend in the 1st half 2010/2011 (October 01 – March 31, 2011), reporting a 22% year-on-year increase in order intake (to €24.1 billion) and a 21% year-on-year increase in sales (to €23.6 billion). Nearly all areas of the Group contributed to this growth.

Highlights for the first half 2010/2011 (October 01, 2010 – March 31, 2011):
 
Order intake increased to €24,108 million, a 22% or €4,407 million increase compared with the first half of the prior year.
 
First-half sales rose by 21% or €4,178 million to €23,636 million.
 
EBITDA came to €1,577 million compared with €1,305 million a year earlier. First-half EBIT improved from €631 million to €770 million, while EBIT margin rose to 3.3% from 3.2% the year before. As there were no special items, adjusted EBIT likewise came to €770 million, compared with €570 million a year earlier.
 
EBT came to €497 million, compared with €504 million a year earlier. At €497 million, adjusted EBT was higher than the prior-year figure of €443 million and at €352 million in the 2nd quarter showed a considerable year-on-year increase of 71%.
 
Earnings per share amounted to €0.89, compared with €0.80 in the prior year.

 
The company notes that measures to improve the Group’s earnings structure are having a clear positive effect, as earnings before interest and taxes (EBIT) were €770 million, up 22% from EBIT of €631 million in the prior year. The increase was achieved despite stronger-than-anticipated losses (mainly related to ramp-up) of €697 million (prior year: €150 million) in the Steel Americas business area. ThyssenKrupp expects significant improvements at Steel Americas from the next quarter, as the second coke oven battery started operation at the end of April.
 
All business areas other than Steel Americas made strong positive earnings contributions. The negative EBIT of Steel Americas was more than offset by the €872 million earnings of the other Materials business areas. The Technologies business areas achieved EBIT of €935 million, which was partly offset by €340 million in corporate costs and consolidation items.
 
EBIT in the first six months of the prior year included a €61-million gain from special items, whereas there have been no special items in the current fiscal year to date. Adjusted EBIT increased by 35% from €570 million to €770 million.
 
Dr. Heinrich Hiesinger, Chairman of the ThyssenKrupp AG Executive Board, believes the Group is on track to achieve its ambitious targets for the 2010/2011 fiscal year.
 
 “Our structural improvement programs are taking effect and demand in our core markets and key customer sectors is generally encouraging,” said Hiesinger. “We are profiting from rising volumes and prices in the materials and components business. The elevator and plant engineering businesses have strong orders in hand and high earnings quality, allowing them to plan with confidence.”
 
Net financial debt at March 31, 2011 was €6,492 million, an increase of €2,712 million compared with September 30, 2010. The increase is primarily due to the high borrowing requirements in connection with the investments for the new carbon and stainless steel plants in Brazil and the USA, and to the increase in net working capital (NWC) for the ramp-up of these plants. In addition, the significant rise in demand required a corresponding increase in inventories. Not least, the substantial rises in raw material prices had the effect of increasing NWC. On March 31, 2010 net financial debt stood at €2,652 million.
 
“We are systematically continuing our structural improvement programs,” said Hiesinger. “Reducing our net financial debt remains our number-one priority. At the same time we want to achieve further growth in our highly profitable core businesses so as to continuously increase the value of our enterprise. We are presenting details of this forward strategy to the Supervisory Board today.”
 
Looking ahead, ThyssenKrupp expects sales to increase by 10 to 15% in fiscal 2010/2011 (vs. €42.6 billion in 2009/2010). Earnings are expected to grow faster than sales, following further operating improvements and the recovery of sales markets, which will more than offset the considerable negative contribution of the Steel Americas business area in the higher three-digit million euro range. The upward trend in all the other business areas reaffirms expectations that adjusted earnings before interest and taxes will be around €2 billion, as compared to €1.2 billion in 2009/2010.
 
ThyssenKrupp is an integrated materials and technology group with currently almost 177,000 employees in more than 80 countries. In the 2009/2010 fiscal year they generated sales of more than €42 billion. Eight business areas focus the Group’s activities and know-how in the strategic competency areas of Materials and Technologies. In addition to manufacturing materials and plants, the Group also provides complete system solutions and innovative services.