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ThyssenKrupp Reports Stable Order Intake, Sales in First Quarter

02/15/2012 - In its fiscal first quarter, ThyssenKrupp Group was able to hold orders (€10.1 billion, up 1%) and sales (€9.9 billion, down 1%) from continuing operations (without Inoxum) steady year-on-year.

In an economically slow first quarter for its fiscal year 2011/2012 (October 1 – December 31, 2011), the ThyssenKrupp Group was able to hold orders (€10.1 billion, up 1%) and sales (€9.9 billion, down 1%) from continuing operations (without Inoxum) steady year-on-year. The Group said that demand in the Technologies division was largely favorable, with strong increases in orders and sales in the elevator and automotive component businesses. By contrast, the Group recorded declining volumes in most areas of the Materials business, where customers were cautious due to the uncertainty caused by the sovereign debt crisis.
 
The economic downturn and declining volumes at Steel Europe and Materials Services were more visible on the earnings side, with adjusted EBIT from continuing operations coming in at €83 million, compared with €261 million in the prior-year quarter. All continuing business areas reported positive adjusted first-quarter EBIT with the exception of Steel Americas, where the ramp-up was further impacted by technical problems and a weak market environment in the quarter. The Technologies businesses (Elevator Technology, Plant Technology, Components Technology, and Marine Systems) achieved solid adjusted EBIT of €409 million, while for Materials, the €288 million loss recorded by Steel Americas could not be offset by the Steel Europe and Materials Services business areas.
 
Earnings before interest and taxes (EBIT) from continuing operations fell to €(33) million from €261 million in the year-ago quarter. Results include net negative special items of €116 million, including goodwill impairment at Marine Systems in connection with the disposal of the civil shipbuilding operations. After-tax earnings from continuing operations were €(172) million, compared with €90 million a year earlier.
 
The Group also reported order intake from continuing operations of €10.1 billion, a 1% increase; sales from continuing operations of €9.9 billion, a 1% decrease; and adjusted EBIT from continuing operations of €83 million vs. €261 million in the prior year. EBIT from continuing operations was €(33) million, down from €261 million a year earlier, while EBIT margin slipped from 2.6% to (0.3)%. Earnings per share from continuing operations decreased from €0.29 to €(0.30).
 
Net financial debt (including Inoxum) was €5,937 million at December 31, 2011, which compares to net debt of at €5,814 million on December 31, 2010. The Group said the rise is due both to the increase in net working capital and the ramp-up of the new carbon and stainless steel mills in Brazil and the US.
 
In the first quarter 2011/2012 ThyssenKrupp successfully continued the strategic development program the Group adopted in May 2011. Nine months after adoption of the program ThyssenKrupp has signed sale agreements or already closed transactions for around 80% of the sales volume up for disposal. Sale of the civil shipbuilding activities to UK-based Star Capital Partners is now also completed following the closing on January 31, 2012.
 
 “In the first quarter of the current fiscal year, our Technologies businesses once again delivered stable earnings contributions, noted Dr. Heinrich Hiesinger, Chairman of ThyssenKrupp AG’s Executive Board. “This shows that our strategy of focusing more strongly on these businesses in the future is the right one. We have already made good progress on implementing the measures to develop the company into a diversified industrial group.”
 
The Group noted the continuing uncertainty of the macroeconomic situation makes it impossible to provide a reliable full-year forecast at present. “As we always have negative seasonal effects in the first quarter of our fiscal year and we expect the losses at Steel Americas to be lower in the second half, the adjusted earnings of the first quarter 2011/2012 will not be representative of the year as a whole,” said Hiesinger.
 
Second Quarter 2011/2012 Outlook — For Materials, ThyssenKrupp expects shipments and volumes to increase vs. the first quarter, with softer prices in contract business being offset by rising prices in shorter-term transactions and on the spot market. While the losses at Steel Americas are expected to be lower, higher volumes and improved productivity will continue to be offset by technical startup costs.
 
At Technologies, adjusted EBIT is expected to be level with the prior quarter, with higher earnings contributions anticipated from Components Technology as a result of continuing strong demand from car makers. By contrast, earnings contributions from Plant Technology could decline temporarily; the projects due to be billed there will result in lower adjusted EBIT.
 
Second Half Outlook — For Materials, although ThyssenKrupp currently sees encouraging signs on the price and volume side, uncertain economic parameters make it impossible to provide a reliable forecast for the third and fourth quarters. The Group believes that losses at Steel Americas should continue to decline.
 
At Technologies, the structure of orders in hand for the Group’s Plant Technology business continues to provide high planning certainty; earnings contributions from this business should be higher in the second fiscal half than in the first. The Components Technology business is more cyclical, so ThyssenKrupp does not expect the strong current overall operating levels to continue. Earnings contributions from Marine Systems are expected to be at a normalized level in the 2nd half of the year.
 
“With the economic environment remaining uncertain, we will continue to work systematically on the operational and structural improvement of the Group and rigorously implement our integrated strategic development plan,” said Hiesinger.
 
'ThyssenKrupp, a diversified industrial group, has 180,000 employees (September 30, 2011) in over 80 countries. In fiscal year 2010/2011 ThyssenKrupp generated sales of €49 billion (including discontinued operations).