- Corporate
- Steelmaking
- Industry
- Auto
- Processing
- ThyssenKrupp Nirosta
- ThyssenKrupp Acciai Speciali Terni
- ThyssenKrupp Mexinox
- Shanghai Krupp Stainless
- ThyssenKrupp Stainless International
- ThyssenKrupp VDM
- Plant Technology
- Marine Systems
- Mechanical Components
- Automotive Solutions
- Transrapid
- Central/Eastern/Northern Europe
- Southern Europe/Africa/Middle East
- Americas
- Asia/Pacific
- Escalators/Passenger Boarding Bridges
- Accessibility
- Materials Services International
- Materials Services North America
- Industrial Services
- Special Products
- Corporate at ThyssenKrupp AG
Segment review
Steel: Order volumes halved
| 9 months ended June 30, 2008 |
9 months ended June 30, 2009 |
3rd quarter ended June 30, 2008 |
3rd quarter ended June 30, 2009 |
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|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 10,939 | 6,008 | 3,765 | 2,321 | |||||
| Sales | million € | 10,755 | 7,602 | 3,902 | 2,272 | |||||
| Earnings before taxes (EBT) | million € | 1,138 | (41) | 389 | (348) | |||||
| Employees (June 30) | 40,733 | 39,321 | 40,733 | 39,321 |
The global recession left a deep mark on the steel market and on ThyssenKrupp Steel's business. Due to falling market prices for steel products the revenues of the Steel segment slipped during the first 9 months of the reporting year. In total, the value of new orders received decreased by 45% to €6.0 billion, with order volumes dropping by 53%. However, volume demand firmed slightly in the 3rd quarter and was pointing clearly upwards in June.
Operating adjustments were necessary in all stages of production throughout the reporting period. Blast furnace 9 with a hot metal capacity of 4,500 tons per day was shut down in March 2009. The three other blast furnaces were operated at minimum levels. Blast furnace A at investee company Hüttenwerke Krupp Mannesmann was also shut down temporarily in connection with a scheduled reline. The downstream processing lines responded with block shutdowns and adapted their daily output to the changed market situation. As a result of the adjustments, material inventories were significantly reduced.
Steel's sales decreased by 29% to €7.6 billion. This was mainly due to a 37% decline in shipments. Average net revenues dropped in the course of the year but thanks to a large proportion of long-term contracts were still significantly higher than in the comparable prior-year period.
The Steel segment made a loss of €41 million in the first 9 months of 2008/2009, following a profit of €1.1 billion in the comparable prior-year period. The main reason was a slump in shipments. Net revenues decreased in all business units. In addition there were inventory writedowns of €54 million and restructuring provisions of around €155 million, mainly relating to an adjustment program in the segment. The cost-reduction measures introduced at short notice – with a total potential of €400 million for fiscal year 2008/2009 – contributed to a significant improvement but were unable to offset the market-related earnings declines.
The number of employees in the Steel segment decreased significantly. At the end of June 2009 the segment had 1,412 employees fewer than a year earlier. The biggest personnel reduction was in the Metal Forming unit. From the beginning of 2009 short-time working was operated on a large scale throughout the segment – including the administrative areas; in total, almost 20,000 employees were affected.
Corporate
The Corporate business unit comprises the administrative functions of ThyssenKrupp Steel AG and manages the construction projects in Brazil and the USA. The costs of these projects were set against positive effects in connection with currency derivatives, resulting overall in a lower loss for the business unit.
Steelmaking
The Steelmaking business unit, which includes all of the metallurgical operations in Duisburg as well as the transportation companies, recorded a drop in sales due to a sharp fall in outside business and reduced transportation work. Profits were significantly down from the prior year. Crude steel production including supplies from investee company Hüttenwerke Krupp Mannesmann decreased year-on-year by 38% to 6.7 million tons.
Industry
Sales of the Industry business unit decreased considerably, mainly due to a sharp fall in shipments. Following a profit in the prior year, Industry made a loss. Low activity levels in practically all user industries had a massive impact on business in the Industry/Services profit center, resulting in a large loss. However, towards the end of the reporting period there was a marked rise in inquiries in some sections of the market, as many customers had run down their inventories. This benefited steel distributors and service centers, who use us to meet short-term demand. The Color/Construction competence center and Steel Service Europe also recorded lower sales and made a loss. With prices falling, the main reason here too was a sharp drop in volumes. In the Heavy Plate unit, business slumped even further in recent months. The worsening situation in the truck industry and continuing poor activity in the shipbuilding and construction equipment sectors made themselves increasingly felt. Earnings – though clearly positive – were lower year-on-year.
Auto
The continuing crisis in the automobile industry caused a sharp fall in sales at the Auto business unit. Drastic drops in volumes as a result of lower production figures in Germany and Europe were only partly cushioned by a high proportion of long-term contracts. The business unit recorded a considerable drop in earnings. The Auto division of ThyssenKrupp Steel AG, which accounts for more than four-fifths of the business unit's sales, was hit particularly hard by falling automobile industry output at the beginning of the reporting period, although orders from auto customers increased again slightly in the 3rd quarter. Sales at Tailored Blanks also decreased due to lower volumes, though less sharply than in the other businesses, and profits dropped significantly. Sales volumes at our steel service activities in North America decreased by more than half; unforeseeable production shutdowns by important customers aggravated an already difficult situation. Sales and profits were down from the prior year.
Metal Forming's performance also continued to be hit by the difficult situation in the auto industry. Sales were down year-on-year. The loss was lower, although the prior year was also impacted by significant restructuring expense.
Processing
The Processing business unit comprises our tinplate, medium-wide strip and grain-oriented electrical steel operations. Sales and profits declined overall. The tinplate business stood up comparatively well, but sales and earnings were down from the prior year. Positive price effects were outweighed by cost increases and a fall in volumes. Competition intensified appreciably as the relatively attractive prices and more stable demand drew competitors back to the tinplate market. The situation was much more difficult in the medium-wide strip business, which suffered a dramatic slump in volumes above all in the first few months of 2008/2009 due to its strong dependency on the automotive supply and cold rolling industries. Demand improved perceptibly in the 3rd fiscal quarter, which had a positive effect on shipments. Despite this, the business posted a loss, compared with a profit a year earlier. The business situation for grain-oriented electrical steel deteriorated in the course of the reporting period; sales declined due to lower volumes, which necessitated operating adjustments. With prices falling sharply, profit was lower year-on-year.
Stainless: Collapse in demand and earnings
| 9 months ended June 30, 2008 |
9 months ended June 30, 2009 |
3rd quarter ended June 30, 2008 |
3rd quarter ended June 30, 2009 |
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|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 5,883 | 2,992 | 1,732 | 1,207 | |||||
| Sales | million € | 5,726 | 3,191 | 1,933 | 1,030 | |||||
| Earnings before taxes (EBT) | million € | 86 | (826) | 93 | (204) | |||||
| Employees (June 30) | 12,037 | 11,869 | 12,037 | 11,869 |
The order situation at ThyssenKrupp Stainless deteriorated significantly due to the market recession. In terms of volumes, orders in the first 9 months of 2008/2009 were 25% down from the comparative prior-year period. Order volumes fell by 30% for cold-rolled stainless steel but rose by 15% for hot-rolled. Orders for nickel alloys and titanium also decreased significantly by 40% and 75% respectively. With prices also lower, the value of orders received slipped by as much as 49% to €3.0 billion.
Overall deliveries by Stainless in the reporting period reached 1,275,800 metric tons. This 28% year-on-year decline affected all product areas. As a result of the reduced shipments as well as lower base prices and alloy surcharges, sales decreased by 44% to €3.2 billion.
Compared with the prior year, earnings at Stainless in the first 9 months of the current fiscal year fell drastically by €912 million to €(826) million; all business units reported losses. This decline in earnings – unprecedented on such a scale – was triggered by a dramatic drop in demand from distributors as well as in all end customer segments and sales regions of the stainless steel market. This led to extreme underutilization of production capacities at all stainless steel manufacturers. The Stainless segment responded with massive production cutbacks and inventory reductions. Up to the end of the 2nd fiscal quarter, the recession on the stainless steel market was accompanied by a significant decline in base prices, which further exacerbated the loss situation. The €49 million inventory writedowns made necessary by this market environment additionally impacted earnings. Income was also affected by impairment losses on intangible assets and property, plant and equipment of €108 million. With nickel prices starting to recover from early April, the stainless steel markets are showing first signs of stabilization, backed by restocking at distributors who had run down their inventories to a minimum. At present it is not possible to foresee whether the current situation merely represents a temporary calming of the market or will turn into a sustainable market recovery.
Stainless responded immediately to the tight earnings situation. In addition to the Groupwide ThyssenKrupp PLuS cost-reduction program, further measures were initiated. This moderated the slump in earnings but was unable to offset it completely. To improve the tight liquidity situation, the ongoing investment program, including the construction of the American stainless steel mill, has been postponed. In addition, the segment is implementing a performance enhancement program to sustainably secure competitiveness and improve earnings.
At the end of June 2009 Stainless had 11,869 employees, 168 fewer than a year earlier. The weak order situation meant that the plants operated at well below capacity, especially in the 1st half of the fiscal year. As a result, short-time working had to be introduced in wide areas of the segment after working time accounts had been run down; roughly 5,200 employees were affected.
ThyssenKrupp Nirosta
In the reporting period, the situation at ThyssenKrupp Nirosta, as at the other stainless companies in the segment, was characterized by weak demand from distributors and reduced end customer business. Orders and production started to pick up slightly towards the end of the period. Despite this, the situation was negative overall. The decline in shipments and lower prices led to a severe downturn in sales. The drastic fall in base prices for austenitic and ferritic cold-rolled products and massive underutilization of capacity at the plants were also the main reasons for the collapse in earnings at ThyssenKrupp Nirosta. Inventory writedowns made necessary by the decline in raw material prices further increased losses. The measures introduced to cut costs only partly cushioned the earnings decrease.
ThyssenKrupp Acciai Speciali Terni
The performance of the Italian business unit ThyssenKrupp Acciai Speciali Terni was likewise characterized by the sharp fall in demand for stainless steel. This necessitated substantial production cutbacks which together with lower prices resulted in a significant drop in sales. At ThyssenKrupp Titanium, too, plant capacities were not fully utilized due to weak demand from the key aerospace and plant construction sectors. Full warehouses and low consumption by distributors and end users further exacerbated the demand situation. In this negative market environment, ThyssenKrupp Acciai Speciali Terni reported a huge loss, including necessary writedowns on inventories. Stable earnings at the forging operations and the cost-cutting programs introduced only slightly eased the loss situation.
ThyssenKrupp Mexinox
With the US and Mexican markets in recession, order intake and sales at ThyssenKrupp Mexinox fell significantly year-on-year. Production in Mexico also had to be cut back sharply; cost-reduction measures are being implemented. Plummeting base prices and inventory writedowns made necessary by the decline in raw material prices resulted in a dramatic decrease in earnings.
Shanghai Krupp Stainless
In a market environment characterized by overcapacities, Shanghai Krupp Stainless reported a severe decrease in orders and sales in the period under review. This led to a massive underutilization of production capacities. Very low shipments combined with weak prices and necessary inventory writedowns caused earnings to collapse. The cost-cutting measures implemented only mitigated the slump in earnings.
ThyssenKrupp Stainless International
As a result of weak global demand, the ThyssenKrupp Stainless International business unit also reported sharp declines in orders and sales. Combined with inventory writedowns at the service centers due to the fall in raw material prices, this led to a drastic drop in earnings.
ThyssenKrupp VDM
In the nickel alloy business of ThyssenKrupp VDM, order intake and sales were likewise down from the prior-year level. The situation was characterized by order postponements and cancellations from the aerospace sector, a severe downturn on the automotive market and increasing deferrals of major plant construction projects. The cost-cutting measures introduced only partly cushioned the significant year-on-year fall in earnings.
Technologies: Declining orders
| 9 months ended June 30, 2008 |
9 months ended June 30, 2009 |
3rd quarter ended June 30, 2008 |
3rd quarter ended June 30, 2009 |
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|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 9,717 | 7,987 | 3,397 | 1,367 | |||||
| Sales | million € | 9,208 | 8,060 | 3,357 | 2,483 | |||||
| Earnings before taxes (EBT) | million € | 566 | (128) | 201 | (187) | |||||
| Employees (June 30) | 54,334 | 49,349 | 54,334 | 49,349 |
Order intake at Technologies in the first 9 months of fiscal 2008/2009 was €8.0 billion, 18% lower than the high prior-year figure. In the 2nd and 3rd quarters there were also signs of uncertainty in plant construction as customers delayed investment decisions, due among other things to the financial bottlenecks in the banking sector, falling raw material prices and general market uncertainty. In this difficult environment, the booking of a major order for a low-density polyethylene plant in Qatar at Plant Technology and the initialing of a major submarine order for six material packages for the Turkish navy at Marine Systems, which is not yet included in order intake, were all the more pleasing. There was no significant recovery in demand in the automotive and construction machinery businesses. Order intake in the 3rd quarter was at the low level of the prior quarter and substantially down from the prior year. The Technologies segment's orders in hand of €15.8 billion at June 30, 2009 are mainly from long-term project business and will secure future sales in this area.
Although Plant Technology realized significantly higher sales on orders in hand, the segment's sales in the first 9 months were down 12% year-on-year at €8.1 billion. This was due to a sharp decline in the automotive and construction machinery business, portfolio changes and lower sales at Marine Systems.
Technologies reported a loss for the first 9 months of €128 million, which included expenses of €84 million for restructuring provisions. In the 2nd and 3rd quarters in particular, the segment had to deal with significant negative factors at Marine Systems including high restructuring expense for personnel adjustments, order cancellations, possible liability risks in civil shipbuilding and higher project costs for yachts. This was compounded by sharply declining sales, substantial restructuring expense, impairment of current and non-current assets and provisions for onerous contracts in the automotive and construction machinery businesses. Plant Technology's profit was higher than the prior year.
The number of employees decreased by 4,985, mainly due to low workloads. Most of the workforce changes related to the foreign subsidiaries of the Mechanical Components business unit, but there were also job cuts at Marine Systems and Plant Technology. In addition, the employment of more than 2,000 people from outside contractors has been terminated since the start of the fiscal year. Up to June 2009, around 15,700 employees were on short-time work in response to the declining workloads.
Plant Technology
Order intake at Plant Technology in the 2nd and 3rd quarters 2008/2009 was impacted by the postponement of investment decisions by customers. As a result, new orders in the first 9 months were significantly lower than the high prior-year level. This affected all areas of the business unit. One encouraging aspect was the acquisition of a major order to build a 300,000 ton per year low-density polyethylene plant in the chemical plant sector.
Thanks to the high level of orders in hand in the chemical and cement plant sectors, Plant Technology achieved a year-on-year increase in sales. The unit also bettered its high prior-year profit.
Marine Systems
Thanks to major orders for six material packages to build class 214 submarines for South Korea and two material packages for class 212A submarines for Italy, order intake at Marine Systems in the nine-month period to June 2009 was significantly higher than a year earlier. In addition, an agreement was initialed on July 02, 2009 for six material packages to build export class 214 submarines for the Turkish N.V.. The submarines, which will feature fuel cell technology, will be built and assembled at a Turkish shipyard. By contrast, the civil shipbuilding operations suffered numerous order cancellations for yachts and further cancellations for container ships in the 3rd quarter as a result of the severe drop in freight rates and financing problems at customers. Declining volumes in the global ocean freight trade also resulted in weaker repair and service business.
Sales at Marine Systems fell significantly year-on-year. The business unit reported a substantial loss, compared with a profit a year earlier. This was due to negative nonrecurring effects in the 2nd and 3rd quarters, including high restructuring expense for workforce adjustments, cancellations of container ship and yacht orders, possible liability risks in civil shipbuilding as well as higher project costs for yachts.
Mechanical Components
The Mechanical Components business unit is a manufacturer of high-tech components for the automotive and construction machinery sectors as well as for general engineering applications. Order intake in the first 9 months fell short of the prior-year level. The sharp drop in demand in the automotive and construction machinery businesses and in the engineering sector in general resulted in a substantial decrease in orders. This impacted all areas, but particularly the business with construction machinery components and forged crankshafts. There was also a structural effect from the disposal of a company in the 2nd quarter of the prior year.
Sales were also significantly lower than a year earlier. Mechanical Components achieved a small profit, but owing to sharply falling sales in the 2nd and 3rd quarters, substantial restructuring expense, impairment of current and non-current assets and the absence of a prior-year gain on the sale of a business, earnings were significantly lower year-on-year. With workloads declining, the cost-cutting measures already introduced were extended further, including reductions in the number of temporary workers, an increase in short-time working, savings on the healthcare program at the North American foundries and major personnel cutbacks at foreign locations.
Automotive Solutions
The Automotive Solutions business unit supplies innovative system solutions for the automotive industry in the areas of steering systems, dampers, body-in-white lines, body and chassis components as well as assembly systems for engines, transmissions and axles. Demand in the automotive industry continued to decline in the 3rd fiscal quarter and resulted in a year-on-year decrease in orders and sales in all areas.
As a result of falling demand, high provisions for onerous contracts, impairment of current and non-current assets and restructuring expense, the business unit reported a heavy loss. Here again, a variety of measures were implemented aimed at reducing costs and adapting to the lower workloads and the structural changes in the auto industry.
Transrapid
Transrapid generated a lower level of sales. Despite restructuring expenditure to adjust capacity in the 1st quarter and increased writedowns, a break-even result was achieved in the reporting period.
Elevator: Positive performance continued
| 9 months ended June 30, 2008 |
9 months ended June 30, 2009 |
3rd quarter ended June 30, 2008 |
3rd quarter ended June 30, 2009 |
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|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 4,254 | 3,937 | 1,324 | 1,186 | |||||
| Sales | million € | 3,559 | 3,964 | 1,211 | 1,328 | |||||
| Earnings before taxes (EBT) | million € | 301 | 465 | 92 | 163 | |||||
| Employees (June 30) | 42,108 | 42,761 | 42,108 | 42,761 |
The Elevator segment continued its positive performance in the first 9 months of the reporting year. Order intake fell 7% year-on-year to €3.9 billion as a consequence of the global financial and economic crisis and the associated decline in the market for new installations. However, thanks to the high level of orders received in the prior year, sales were up 11% to €4.0 billion.
On the back of strong sales and increased efficiency, earnings increased year-on-year by €164 million or 54% to €465 million. All business units generated profits.
The 653 rise in the number of employees was mainly due to growth in the service and modernization business as well as a stronger presence in the growth markets of China, India and the Middle East.
Central/Eastern/Northern Europe
Orders at the Central/Eastern/Northern Europe business unit fell noticeably year-on-year. This was due to the difficult market environment for new installations, in particular in the UK and Eastern Europe. In France, too, it was not possible to repeat the high order intake of the prior year, especially in the modernization business. By contrast, the business unit's sales increased due to the high level of orders in hand, with particular contributions coming from the French, German and Dutch operations. As a consequence of the higher sales, the business unit's profit also improved significantly. Earnings were also positively influenced by the reduction in restructuring costs compared with the prior year.
Southern Europe/Africa/Middle East
9-month order intake at the Southern Europe/Africa/Middle East business unit was slightly down from the prior-year level. Growth in the Gulf states and Portugal was unable to fully offset declines in the Spanish and Southeast European operations. The business unit's sales also fell slightly year-on-year, due mainly to a distinct decline in the Spanish new installations market. By contrast, sales expanded strongly in the Gulf region. Thanks largely to the strong earnings of the Spanish and Portuguese operations, the business unit achieved an appreciable year-on-year increase in profit. The reduction in restructuring costs compared with a year earlier also contributed to the profit improvement.
Americas
Despite positive exchange-rate effects, the Americas business unit failed to match its high prior-year order intake. In the USA and Canada in particular, orders fell appreciably as a result of the financial and economic crisis. By contrast, orders in South America were level with the previous year. Sales of the business unit rose substantially thanks to the high prior-year order intake. The US operations made a major contribution to this increase. The other operations also achieved higher sales. The business unit's profit was significantly higher than a year earlier due both to a further expansion in service business and positive exchange-rate effects.
Asia/Pacific
Order intake in the Asia/Pacific business unit was down slightly year-on-year. While strong improvements were reported in China and South Korea, new orders decreased in Australia in particular as well as India and Southeast Asia. The business unit's sales showed a pleasing improvement, driven primarily by the Chinese and Australian operations. Sales in South Korea were weaker due to a decline in the new installations market and strongly negative exchange-rate effects. By contrast with the prior year, the business unit recorded a profit in the first 9 months of 2008/2009.
Escalators/Passenger Boarding Bridges
Order intake at the Escalators/Passenger Boarding Bridges business unit was slightly lower than a year earlier. While the escalator operations failed to match the prior-year level, orders rose substantially in the passenger boarding bridges business, driven mainly by the major "Doha Airport (Qatar)" order. The business unit's sales showed a significant improvement. The Chinese escalator operations in particular reported strong sales growth. After recording a loss a year earlier, the business unit returned a profit for the first 9 months of the current fiscal year. Both the escalators and passenger boarding bridges businesses contributed to this with positive earnings.
Accessibility
The Accessibility business unit remained on growth course in the first 9 months of the fiscal year. Both the European and US operations achieved significant improvements in order intake and sales. In the USA, however, this increase was solely due to the acquisition of The National Wheel-O-Vator company in the past fiscal year. The business unit's earnings fell just short of the prior-year level. This was caused by a fall in profits at the US operations due to the difficult situation on the market for single-family homes.
Services: Earnings impacted by losses in warehouse business
| 9 months ended June 30, 2008 |
9 months ended June 30, 2009 |
3rd quarter ended June 30, 2008 |
3rd quarter ended June 30, 2009 |
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|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 12,950 | 8,516 | 4,677 | 2,256 | |||||
| Sales | million € | 12,702 | 9,168 | 4,603 | 2,539 | |||||
| Earnings before taxes (EBT) | million € | 515 | (171) | 248 | (123) | |||||
| Employees (June 30) | 46,506 | 43,620 | 46,506 | 43,620 |
The Services segment achieved sales of €9.2 billion in the first 9 months of 2008/2009, 28% lower than in the comparable prior-year period. The negative trend in volumes and prices compared with the record year 2007/2008 continued, though the fall in prices slowed toward the end of the reporting period; prices for some materials stabilized at a very low level or even rose slightly. However, writedowns on inventory totaling €65 million had to be recorded at June 30, 2009.
The substantial earnings fall in the materials business was only slightly offset by profits in other areas. As a result the segment recorded its weakest ever quarterly income, with losses for the current fiscal year increasing to €171 million. Further sustainable adjustment measures were initiated to supplement the cost-cutting measures already in place.
On June 30, 2009, the segment's headcount was 2,900 lower than the same date a year earlier. In the current fiscal year almost 2,400 employees joined Services, in particular due to the strong order situation for industrial and scaffold services in Brazil, North America and Egypt. Due to low workloads more than 5,300 jobs were cut in the segment, above all in the auto-related service business in Germany and in the materials services business outside Germany. Around 4,800 employees were affected by short-time working.
Materials Services International
The continuing poor economic conditions impacted all product areas of the Materials Services International business unit. This applied in equal measure to Germany, Western and Eastern Europe, South America and Asia. Both sales volumes and revenues declined significantly. In many areas, business was affected by customer creditworthiness or even insolvency issues. In addition orders were placed at increasingly shorter intervals and for smaller volumes. Demand remained very weak and was accompanied in the course of the fiscal year by a massive fall in prices, which only started to slow at a low level in the 3rd quarter. This affected rolled steel, stainless steel, nonferrous metals and tubes. Overall the business unit had to contend with massive inventory writedowns and sliding margins in the reporting period. The plastics business was weak as a result of the noticeable decrease in orders from industry and the construction sector. Due in particular to the massive fall in prices, the Materials Services International business unit reported a significant loss, compared with a profit in the prior year.
Materials Services North America
The persistent recession in the USA since late 2007 and the associated fall in demand and prices for carbon and stainless steel and nonferrous metals intensified further in the reporting period. As a result, sales at the business unit fell more sharply than in the rest of the world, despite the more favorable euro/US dollar exchange rate. The earnings situation also deteriorated further; Materials Services North America reported a substantial loss.
Industrial Services
The Industrial Services business unit achieved a slight year-on-year improvement in sales, but the global financial and economic crisis nonetheless left its mark. While the scaffold services business in North America performed excellently, business with the auto industry in particular declined sharply. Service business with the power generation and petrochemical sectors was significantly slower. As a result of the continued weak level of service activities for the automotive industry and the associated restructuring measures, earnings at Industrial Services were lower year-on-year but the business unit still returned a clear profit.
As reported, the Industrial Services business unit is to be sold. The businesses not up for sale – steel mill services and industrial services in Brazil – were therefore assigned to the Special Products business unit with effect from the beginning of fiscal 2008/2009.
Special Products
The Special Products business unit, which has always been very successful, also felt the effects of the global crisis. Having started the fiscal year with higher year-on-year sales, in the further course of the period the business unit was impacted by the demand slump and sharply falling prices in the raw materials business and failed to match its prior-year sales level. It was not until the 3rd quarter that alloy prices staged a slight recovery at a low level. Due to high export duties, much of the business with coke was transacted within China only. Increased deliveries of raw materials were made to a local coke plant in which the business unit holds an interest and where production is currently being expanded. The rolled steel and tube businesses and the technical trading operations recorded a significant drop in orders in recent months but held up well overall compared with the excellent prior year. Despite some weakening in the 3rd quarter, the contractors' plant and railway equipment operations remained stable. The Brazilian service activities were once again a highlight. Special Products failed to match its very good prior-year profit but still made the biggest contribution to the segment's earnings.
Corporate at ThyssenKrupp AG
Corporate includes the Group's head office and internal service providers as well as inactive companies not assignable to individual segments. Also included here is the non-operating real estate, which is managed and utilized centrally by Corporate. Sales in the first 9 months of the reporting year were €82 million compared with €83 million a year earlier.
Corporate reported a loss of €298 million, a year-on-year increase of €7 million. This is mainly the result of higher net interest expense due to increased borrowing. Running counter to this were effects from cross-currency swaps.
Consolidation mainly includes the results of intercompany profit elimination.