Business area review
Steel Europe
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 5,568 | 8,205 | 2,223 | 2,706 | |||||
| Sales | million € | 7,325 | 7,835 | 2,151 | 2,887 | |||||
| EBT | million € | 142 | 450 | (312) | 183 | |||||
| Adjusted EBT | million € | 294 | 450 | (172) | 183 | |||||
| Employees | June 30 | 36,607 | 34,434 | 36,607 | 34,434 |
The Steel Europe business area brings together the Group's carbon flat steel activities, mainly in the European market. As the main sales driver, the ThyssenKrupp Steel Europe operating unit delivers high-grade flat-rolled carbon steel products directly to the market and also supplies starting material, e.g. for tinplate, electrical steel and tailored blanks, to the Processing operating unit, which is mainly active in downstream production areas.
Orders improved, sales stabilized
Aided by the more favorable market environment, order intake in the first 9 months of the reporting year climbed 47% year-on-year to €8.2 billion. This was mainly due to higher volumes: they increased year-on-year by 96% but leveled off again slightly recently. Production has in the meantime reached the capacity limit. Sales rose by 7% to €7.8 billion. Shipments also steadily improved and were 33% up from the prior year. This positive volume trend was partly offset by negative price effects. Although average selling prices were largely stable throughout the reporting period, they were significantly down from the extremely high prior-year levels. However, in the 3rd quarter steel prices increased from the previous quarter. Due to the ongoing long-term contracts, there will be a time lag before the cost-related rises in market prices are reflected in average selling prices.
Steel Europe achieved a pre-tax profit of €450 million, €308 million up from the prior-year period. This was mainly due to the positive trend in volumes and the continuing cost-reduction and earnings-improvement programs. In the corresponding prior-year period the market downturn and significant restructuring costs had a negative impact.
The companies of the business area employed a total of 34,434 people on June 30, 2010. The reduction by 2,173 from a year earlier was mainly due to personnel adjustments under the 20/10 program at ThyssenKrupp Steel Europe AG and in the metal forming business.
Performance of the operating units
The ThyssenKrupp Steel Europe operating unit increased its sales. A steep rise in volumes more than offset the fall in selling prices. The increase in industry sales was due in particular to outside-customer business, which recorded a sharp decline a year earlier and now profited mainly from restocking but also from the growth in real demand in individual sectors. The strongest impetus came from distributors and steel service centers. Shipments to automotive customers stabilized increasingly, but following last year's collapse were still significantly lower than the record levels of previous years. With the cost reductions achieved and higher sales volumes, ThyssenKrupp Steel Europe significantly improved its pre-tax profis.
Equipment utilization increased further as a result of higher demand in the 3rd quarter of the fiscal year. After blast furnace A was fired back up at investee company Hüttenwerke Krupp Mannesmann in January 2010, all available blast furnaces are now once again in use. Crude steel production including supplies from Hüttenwerke Krupp Mannesmann was 9.9 million metric tons in the reporting period, 49% higher than the prior-year level. This meant that the metallurgical operations had a full workload. Capacity utilization improved significantly in the downstream processing lines so that as of May 2010 no further short-time working was necessary.
The downstream activities combined in the Processing operating unit showed a mixed picture. Overall, sales were slightly higher year-on-year and pre-tax earnings improved.
The tinplate business continued to hold up well in a market characterized by demand overhangs, and sales increased slightly. The strong volume-related increase in sales of medium-wide strip was mainly due to improved workloads at automotive suppliers and rerollers. Sales of electrical steel were higher year-on-year because the production of non-grain-oriented electrical steel previously part of ThyssenKrupp Steel Europe was allocated to the electrical steel unit effective October 01, 2009. In heavy plate, market factors caused sales and selling prices to fall; shipments have recently picked up considerably.
The tailored blanks unit achieved significant growth in business; volumes continued to be favorably influenced by government stimulus programs for the auto industry in many European countries and the USA. The metal forming business also benefited from this and increased its sales. Following the successful restructuring of this business, a best-owner solution is now being sought. Color/Construction recorded a lower volume of business. Despite improving volumes in individual segments such as the garage door industry and parts of the automotive industry, the market as a whole remained tight.
Steel Americas
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 0 | 47 | 0 | 24 | |||||
| Sales | million € | 0 | 47 | 0 | 24 | |||||
| EBT | million € | (117) | (98) | (19) | (62) | |||||
| Adjusted EBT | million € | (117) | (98) | (19) | (62) | |||||
| Employees | June 30 | 1,590 | 2,876 | 1,590 | 2,876 |
With the Steel Americas business area we are tapping into the North American market for premium flat-rolled steel products. The business area includes the steel making and processing plants under construction in Brazil and the USA. It also organizes slab logistics between Brazil, Germany and the USA.
Inauguration of the steel mill in Brazil
On June 18, 2010 the new integrated iron and steel mill of ThyssenKrupp CSA Siderúrgica do Atlântico
near Santa Cruz in the west of Rio de Janeiro was officially opened in the presence of Brazil's President
Luiz Inácio Lula da Silva. With an investment budget of €5.2 billion, it is the biggest foreign investment
for ThyssenKrupp in the history of the Group. It is also the biggest industrial investment project in Brazil
in the past ten years and the first major steel mill to be built in the country since the mid-1980s. It will
have the capacity to produce around 5 million metric tons of crude steel per year.
Construction work is nearing the finishing line. The port terminal and materials handling facilities have been completed; battery A of the coke plant and the melt shop are at an advanced stage of completion; the power plant, sinter plant and blast furnaces were technically completed in the first half of 2010, and the two gas turbines went into operation in the past quarter. Work on the ancillary facilities, such as power distribution and water treatment, and on other infrastructure facilities is also progressing well.
Following the startup of the first blast furnace, which took place during the inauguration ceremony for the iron and steel mill, the first full production line with blast furnace, melt shop converter and continuous caster will go into operation at the end of August 2010; a second melt shop line will follow as soon as the first line is operating stably. The startup of the second blast furnace is being planned flexibly, depending on the requirements of the market; as things stand, this is likely to be before the end of 2010.
At the end of June 2010 almost 24,000 people were working on the construction site, and CSA in Brazil had almost 1,900 employees.
Processing plant in the USA
Construction work on our processing plant in Calvert, Alabama/USA is also well advanced. The investment budget amounts to 3.6 billion US dollars. Construction is largely on schedule. The hot rolling mill came on line at the end of July 2010. The cold rolling mill, pickling line and finishing lines will start production in the 2nd half 2010. Due to the economic situation, completion of the coating lines will be postponed until next fiscal year, with the individual coating lines being completed step by step. The total hot rolled capacity of around 5 million tons/year includes the rolling capacity needed for Stainless Global's stainless steel plant in Alabama.
At the end of June 2010 around 7,000 people were working on the construction site; ThyssenKrupp Steel USA had around 1,000 employees.
Earnings situation and workforce
The earnings situation is dominated by the startup costs for the projects and the ramp-up of production. In the first 9 months 2009/2010, the business area reported a pre-tax loss of €98 million. In addition to the project startup costs, this figure was mainly influenced by positive currency effects due to the movement of the real against the euro, and the capitalization of interest costs during construction.
On June 30, 2010 the Steel Americas business area had 2,876 employees, 1,286 more than a year earlier.
Entry to the NAFTA market
In parallel with the construction work we have systematically continued our market analyses of price and volume trends and customer requirements in the NAFTA region and optimized our sales plans for the ramp-up phase in line with the wishes of our customers and the available product specifications. For this, our sales experts are intensifying their visits to key customers in the target automotive and electrical sectors as well as steel service centers and the tube/pipe industry, with the result that the first commitments have already been obtained from customers in the NAFTA region.
Stainless Global
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 2,992 | 3,820 | 1,207 | 1,317 | |||||
| Sales | million € | 3,191 | 4,379 | 1,030 | 1,708 | |||||
| EBT | million € | (812) | (112) | (202) | 64 | |||||
| Adjusted EBT | million € | (706) | (112) | (156) | 64 | |||||
| Employees | June 30 | 11,869 | 11,150 | 11,869 | 11,150 |
As a world-leading producer of stainless steel, the Stainless Global business area specializes in premium-quality stainless steel flat products and high-performance materials such as nickel alloys and titanium. The business area also includes the stainless steel mill in Alabama, which is being built in cooperation with Steel Americas.
Orders and sales improved, losses further reduced
Stainless Global's order situation improved in the first 9 months 2009/2010 compared with the year before. The volume of orders received increased by 17%, with demand for stainless cold-rolled up by as much as 27%. Order volumes were also higher for nickel alloys, and steady for titanium. In terms of value, the business area's order intake climbed by 28% to €3.8 billion – mainly due to the year-on-year rise in alloy surcharges.
Overall deliveries were up 30% at 1.7 million metric tons. While shipments of stainless increased, deliveries of titanium and nickel alloys declined year-on-year. Overall the business area's sales grew by 37% to €4.4 billion.
Stainless Global improved its EBT by €700 million to €(112) million and achieved a pre-tax profit in the 3rd quarter 2009/2010. With the exception of ThyssenKrupp Stainless USA all operating units of the stainless steel business reported substantially reduced losses in the first nine months, thanks mainly to significantly lower inventory writedowns and impairment charges, targeted cost reductions, and a generally improved market situation permitting higher base prices and better utilization of production capacities. We continued to systematically implement the restructuring measures resolved at the end of 2008/2009 at all locations. Our SPRINT performance-enhancement program is already helping achieve a sustainable improvement in our earnings and competitiveness and a further flexibilization of our cost base.
At June 30, 2010, Stainless Global had 11,150 employees, 719 fewer than a year earlier.
Performance of the operating units
Rising demand for stainless flat products led to significantly improved order volumes and higher shipments at ThyssenKrupp Nirosta and ThyssenKrupp Acciai Speciali Terni. Sales in these operating units were also substantially higher. Following a heavy loss in the prior-year period, EBT improved at both ThyssenKrupp Nirosta and ThyssenKrupp Acciai Speciali Terni in the first 9 months 2009/2010, but remained negative. Higher base prices, increased cold- and hot-rolled volumes and intensified implementation of the restructuring measures played a role in this. Continued stable growth in the forging operations additionally bolstered earnings at ThyssenKrupp Acciai Speciali Terni.
ThyssenKrupp Mexinox and Shanghai Krupp Stainless also recorded higher order and shipment volumes, improved sales and virtually break-even results. Hire rolling orders from the Chinese market led to increased utilization of capacities at Shanghai Krupp Stainless; in conjunction with higher shipments and improved prices, this significantly reduced the pre-tax loss.
As a result of the worldwide recovery in demand, both shipments and sales at ThyssenKrupp Stainless International were almost doubled.
Business at ThyssenKrupp VDM was impacted by the postponement or cancellation of customer projects. While order intake increased for nickel alloys and remained stable for titanium mill products, sales in both businesses decreased year-on-year. Earnings remained negative despite the introduction of restructuring measures and the virtual absence of inventory writedowns.
Stainless steel mill in the USA
A modern, integrated stainless steel mill is being built in Alabama/USA in cooperation with Steel Americas at a cost of around 1.4 billion US dollars. The startup phase for the stainless steel mill is being extended. It is planned to start production with one cold rolling mill and an annual cold-rolled capacity of 100,000 metric tons in October 2010, expanding capacity in the subsequent period to a maximum of 140,000 tons per year. In preparation for the hot commissioning of the line, the first white coils were delivered to the USA by ThyssenKrupp Nirosta in June 2010. Startup of the hot-rolled annealing and pickling line has been brought forward to 2011. The ramp-up of the remaining facilities is still being kept flexible. The same applies to the startup of the melt shop, which was planned for early 2012 and can be delayed by up to 24 months. The site will initially be supplied with starting material from the European mills.
Materials Services
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 9,204 | 9,435 | 2,469 | 3,695 | |||||
| Sales | million € | 9,855 | 9,239 | 2,751 | 3,598 | |||||
| EBT | million € | (204) | 316 | (128) | 144 | |||||
| Adjusted EBT | million € | (204) | 235 | (128) | 144 | |||||
| Employees | June 30 | 44,744 | 32,096 | 44,744 | 32,096 |
With 500 locations in 40 countries, the Materials Services business area specializes in materials distribution, logistics and services, the provision of technical services as well as services for industrial plants and steel mills. In addition to rolled steel, stainless steel, tubes and pipes, nonferrous metals, specialty materials and plastics, Materials Services also offers services from processing and logistics to warehouse and inventory management through to supply chain and project management.
Recovery strengthening – cost-reduction programs taking effect
In the first 9 months 2009/2010, the business area achieved sales of €9.2 billion, 6% lower than in the corresponding prior-year period. While 1st-half sales were 21% lower year-on-year, sales in the 3rd quarter for the first time significantly exceeded the 2008/2009 figures. This was due to both growth in volumes and substantially increased selling prices. Following their disposal in the 1st quarter, ThyssenKrupp Industrieservice and ThyssenKrupp Safway are included in the sales figures of the current year on a prorated basis only.
Materials Services reported 3rd-quarter EBT of €144 million, which means that its earnings before nonrecurring items improved significantly from quarter to quarter. Including nonrecurring gains of €81 million on the disposal of ThyssenKrupp Industrieservice and ThyssenKrupp Safway, the business area generated EBT of €316 million in the first 9 months; excluding this amount EBT was €235 million. Alongside the economic recovery, the growth in earnings was attributable above all to sustainable cost reductions in all areas.
At the end of the reporting period, the business area had 32,096 employees, 12,648 fewer than a year earlier. The reduction was mainly attributable to the disposals at Industrial Services. However, the number of employees also decreased at nearly all companies of the Metal Services operating unit.
Performance of the operating units
The Metal Services operating unit combines our global materials, warehouse, service and direct-to-customer business activities. Sales in the first 9 months 2009/2010 showed a year-on-year decline, mainly as a result of continued lower average price level. In our key European and North American markets there were signs of a recovery towards the end of the 2nd quarter which strengthened in the 3rd quarter. Demand from manufacturing industry, the engineering sector and to a limited extent the construction sector increased appreciably, though not to the same extent as prices. Major structural measures significantly improved the operating unit's business situation. Thanks to demand from the automotive industry, the auto-related service center activities again showed a major improvement on the very weak prior-year period. International direct-to-customer business continued to suffer from subdued demand and fierce competition for the few major projects available. Customers are exercising increasing restraint, placing orders on a purely project-related basis and at very short notice. Following a substantial loss in the prior-year period as a result of drastic price falls which necessitated high writedowns on inventory, the operating unit achieved a significant improvement in profits in the 3rd quarter and reported the business area’s best earnings over the 9 months.
The Special Services operating unit encompasses the materials and supply chain management activities for the aerospace industry and the plastics business. It also includes raw materials trading, system solutions in railway and construction equipment, and steel mill and technical services. The operating unit's overall sales were higher year-on-year. The plastics business picked up noticeably after the long weather-related winter break placing constraints on the construction industry. The aerospace business remained on a stable growth track. New projects and contracts were signed in Europe and North America in the reporting period. Following the marked improvement in workloads in the steel industry, the raw materials business grew strongly. Sales in the railway and construction equipment business were impacted by weather-related postponements, delays in the implementation of stimulus programs, financing difficulties for major projects and also increased competitive pressure. The workload in Brazil for our steel mill services stabilized at an encouragingly high level. In the reporting quarter the first major projects were billed for the CSA steel mill in Brazil. Capacity utilization in Germany increased due to the upturn in the steel industry. Overall the operating unit achieved a clear profit and exceeded its prior-year earnings.
The Industrial Services operating unit's figures were dominated by the disposals of ThyssenKrupp Industrieservice and ThyssenKrupp Safway. Sales and earnings are included on a prorated basis only. The remaining unit was impacted with a time lag by the general economic crisis; orders from the chemicals and energy sectors remained slow. Sales and pre-tax profits excluding nonrecurring items in the first 9 months of the current fiscal year were down from the prior-year period.
Elevator Technology
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 3,937 | 3,835 | 1,186 | 1,390 | |||||
| Sales | million € | 3,964 | 3,760 | 1,328 | 1,313 | |||||
| EBT | million € | 474 | 459 | 166 | 151 | |||||
| Adjusted EBT | million € | 474 | 459 | 166 | 151 | |||||
| Employees | June 30 | 42,761 | 43,066 | 42,761 | 43,066 |
The Elevator Technology business area supplies passenger and freight elevators, escalators and moving walks, passenger boarding bridges, stair and platform lifts as well as service for the entire product range. More than 43,000 employees at over 900 locations provide a tight-knit service network to keep us close to customers.
Good performance
Despite a continued difficult market environment, the business area performed well in the first 9 months 2009/2010. At €3.8 billion, orders almost reached the prior-year level. A decline in new installations and modernization business was offset by strong growth in service business. In addition, exchange-rate factors boosted order intake by €31 million. While most operating units reported slightly lower orders, the Asia/Pacific unit achieved significant growth.
Due to the weaker new installation and modernization business, sales slipped 5% to €3.8 billion, offset slightly by exchange-rate effects of €25 million. At the same time sales in the service business increased, with the number of maintenance units under contract continuing to rise.
Elevator Technology generated EBT of €459 million, maintaining its strong prior-year performance. All operating units contributed to this profit.
At 43,066 the number of employees on June 30, 2010 was slightly higher than a year earlier, due mainly to the growth in the workforce of Asia/Pacific. In the Americas operating unit the headcount decreased slightly.
Performance of the operating units
Order intake in the Central/Eastern/Northern Europe operating unit was slightly lower due to a decline in France. All other regions remained stable. Sales were likewise down from the prior-year period, due mainly to the United Kingdom and France. In all other markets sales were essentially level. The weaker performance in the United Kingdom and France also resulted in a significant decline in EBT.
Orders in the Southern Europe/Africa/Middle East operating unit fell just short of the prior-year level, due in particular to weaker activity in the new installations and modernization business. Unfavorable factors were the negative market environment on the Iberian Peninsula and the return to normal of the Egyptian operations. These were partly offset by substantial growth in the Gulf region. Thanks to strong expansion above all in the Gulf states, Egypt and Italy, the operating unit reported a small increase in sales. Pre-tax income was slightly lower year-on-year.
Despite small positive exchange-rate effects, the Americas operating unit reported lower orders, sales and EBT. In addition, the new installation and modernization business in North America suffered a sharp decline, while service business improved further. Focused on Brazil, the South American activities again achieved significant growth in orders, sales and in particular EBT.
The Asia/Pacific operating unit performed significantly better year-on-year, bolstered on the whole by exchange-rate effects. Order intake and sales rose steeply due in particular to the continued pleasing growth in China. Pre-tax earnings exceeded the prior-year level thanks mainly to the Chinese and Korean activities.
Business was weaker in the Escalators/Passenger Boarding Bridges operating unit. While the escalator activities performed steadily, orders, sales and pre-tax earnings for passenger boarding bridges fell short of the good level of the prior year for project-related reasons.
Despite growth in Europe and Asia, order intake, sales and pre-tax earnings in the Accessibility operating unit were slightly lower year-on-year. Due to the continuing crisis on the US housing market, business in the USA declined and in response strict cost-reduction measures are being implemented.
Plant Technology
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 3,075 | 2,948 | 807 | 800 | |||||
| Sales | million € | 3,366 | 2,864 | 1,101 | 970 | |||||
| EBT | million € | 238 | 230 | 65 | 62 | |||||
| Adjusted EBT | million € | 244 | 230 | 66 | 62 | |||||
| Employees | June 30 | 13,062 | 12,975 | 13,062 | 12,975 |
The Plant Technology business area is a leading international supplier of chemical plants, refineries, cement plants, innovative solutions for the mining and handling of raw materials and minerals, and production systems and assembly lines for the automotive industry. The business area's plants and processes open up new possibilities for environmental protection and sustainable development.
Stable performance in more difficult market environment
Thanks to the continued good order situation at Uhde, Fördertechnik and System Engineering, the Plant Technology business area achieved order intake of €2.9 billion in the first 9 months, almost matching the prior-year level. Individual areas of the plant engineering market were subject to intensified competition, with increased surplus capacities on the supply side and a lower number of projects up for award. However, the rallying raw materials markets led to increased orders for projects in the mining and minerals segment.
Sales in the first 9 months 2009/2010 fell 15% to €2.9 billion due to billing technicalities. Orders in hand of around €6.5 billion at June 30, 2010, mainly for long-term project business, continue to secure over one year’s sales.
With a pre-tax profit of €230 million, Plant Technology again delivered a pleasing result in the first 9 months of the current fiscal year. The main earnings drivers were Uhde, Polysius and Fördertechnik.
At 12,975, the number of employees at June 30, 2010 decreased only insignificantly from a year earlier.
Performance of the operating units
Thanks to major orders for several fertilizer plants in Abu Dhabi and Egypt, a coke plant with gas treatment in Taiwan and a hydrogen plant in India, Uhde's order intake in the first 9 months 2009/2010 was markedly higher than the prior-year figure. Sales however were substantially down from the prior year, when several major orders were billed. Pre-tax profit significantly exceeded the already high prior-year level.
At Polysius, one of the leading engineering companies for equipment for the cement and minerals industries, order intake was considerably lower than in the prior year. This was due to several major orders that positively influenced the prior-year order intake and to delays in the award of several projects in the reporting period. Due to high orders in hand, however, sales were slightly higher than a year earlier. Pre-tax profit was slightly down from the strong prior-year figure.
Orders received at Fördertechnik in the first three quarters 2009/2010 were pleasing, exceeding the prior-year level significantly. Major factors in this were the orders from Brazil for surface mining equipment including two fully mobile crusher plants, a power station coaling plant in South Africa, as well as the very good order situation in India. Sales also increased again from their high prior-year level. EBT likewise came in level with the good prior year.
At System Engineering – specialists in production systems and assembly lines for the auto industry – the order situation improved further. Higher orders mainly in the body-in-white business significantly outweighed declining orders for parts production caused by lower production volumes and temporary plant closures at individual customers in the first months of the current fiscal year. However, sales were lower year-on-year due to billing technicalities. Lower orders for parts production and underutilization in the assembly systems business contributed to negative pre-tax earnings.
Components Technology
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 3,205 | 4,090 | 899 | 1,584 | |||||
| Sales | million € | 3,462 | 4,149 | 1,063 | 1,568 | |||||
| EBT | million € | (95) | 164 | (101) | 58 | |||||
| Adjusted EBT | million € | (44) | 211 | (76) | 105 | |||||
| Employees | June 30 | 27,963 | 28,860 | 27,963 | 28,860 |
The Components Technology business area supplies a broad range of high-tech components for wind turbines, the automotive and construction equipment industries, and general engineering applications. Our automotive operations are focused on crankshafts and camshafts, steering systems, dampers, springs and the assembly of axle modules.
Positive performance continued
The pleasing positive performance of the Components Technology business area continued. In the first 9 months 2009/2010 order intake improved by 28% to €4.1 billion. Sales rose by 20% to €4.1 billion. In the 3rd quarter 2009/2010 sales were up almost 50% from the weak prior-year quarter. The pick-up in demand in the auto industry was due among other things to the economic recovery, government stimulus programs in many countries and stockbuilding by our customers.
After a loss in the prior year the business area achieved a pre-tax profit of €164 million in the first 9 months 2009/2010. Stronger demand from the auto industry and lower restructuring and impairment charges played a role in this. In addition, the restructuring measures initiated in the prior year and continued this year had a positive effect. These measures are mainly focused on structural capacity adjustments and include both personnel cutbacks and closures of plants in Europe and the USA. Further cost-reduction programs were also implemented. Excluding restructuring and impairment charges, adjusted EBT came to €211 million.
At the end of June 2010 Components Technology employed 28,860 people, 897 more than a year earlier. Thanks to the improved demand situation on the international auto markets, more employees were hired in particular in the USA as well as in Brazil and China; in Germany the number of employees declined.
Performance of the operating units
The performance of the operating units was positive on the whole.
The automotive operations continued to perform well. Thanks to higher orders from the auto industry Presta Camshafts, Presta Steering and the Bilstein group achieved significantly higher sales of assembled camshafts, steering systems, dampers, springs and axle modules in the first 9 months 2009/2010. Presta Camshafts and Presta Steering improved their earnings and generated a pre-tax profit; earnings at the Bilstein group were impacted by restructuring and impairment charges.
The forging group increased its sales of forged car and truck crankshafts significantly and returned to the profit zone. Demand was higher particularly on the Brazilian and US markets. The market improved also in Europe, causing rising sales in the 3rd quarter in particular.
The American foundries of Waupaca, which produce components for cars, trucks and other applications, also profited from higher market demand as well as from further savings in the health care program and structural capacity adjustments. Sales increased substantially year-on-year and a pre-tax profit was achieved.
In Berco’s construction equipment business, demand improved from March 2010. From a low base level in the prior year, sales almost doubled in the 3rd quarter, due among other things to customers replenishing their depleted inventories. Sales also increased year-on-year. An extensive cost reduction program including structural capacity adjustments was initiated to further improve competitiveness. Restructuring and impairment charges as well as increased material costs resulted in a loss.
With demand in the general engineering sector still weak and wind energy customers placing orders for immediate needs only, order intake for slewing bearings and rings at the Rothe Erde operating unit had been weaker in the 1st half 2009/2010. However, in the 3rd quarter orders improved significantly both year-on-year and quarter-on-quarter, so overall order intake in the first 9 months 2009/2010 was level with the prior year. Sales failed to reach the prior-year level but the trend in the 3rd quarter was rising. Rothe Erde remained the business area’s main earnings contributor but was unable to equal the high profit of the prior year.
Marine Systems
| 9 months ended June 30, 2009 | 9 months ended June 30, 2010 | 3rd quarter ended June 30, 2009 | 3rd quarter ended June 30, 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Order intake | million € | 1,710 | 357 | (339) | 108 | |||||
| Sales | million € | 1,238 | 964 | 321 | 423 | |||||
| EBT | million € | (211) | (40) | (127) | (23) | |||||
| Adjusted EBT | million € | (45) | (1) | (31) | (4) | |||||
| Employees | June 30 | 8,057 | 6,588 | 8,057 | 6,588 |
With the restructuring of our shipyards, the Marine Systems business area will focus increasingly in the future on its outstanding global position in naval shipbuilding.
Order intake and sales down, earnings improved
The market environment for Marine Systems was mainly unfavorable in the reporting period. In the naval business, tight public finances in important customer countries had a negative effect. However in recent months freight rates for merchant shipping have improved significantly, boosting the market for repairs, refits and conversions.
Against this background, order intake in the first 9 months 2009/2010 decreased by 79% to €357 million; most of the orders were for smaller projects. The contract with Turkey for six material packages to build export class 214 submarines, which was initialed in the last fiscal year, is expected to come into effect in the current fiscal year after the financing conditions are clarified.
Sales in the first 9 months of the current fiscal year came to €964 million. The main reason for the 22% decline was the absence of sales from the submarine orders for Greece, which were canceled in September 2009. The increase in freight rates made it possible to sell new container ships canceled by customers to third parties.
Earnings before taxes improved year-on-year by €171 million to €(40) million and included in particular charges due to Hellenic Shipyards in Greece. Excluding these nonrecurring items, earnings were almost breakeven.
Due to the restructuring of the shipyards the number of employees at June 30, 2010 was 1,469 lower than a year earlier at 6,588.
Restructuring of the shipyards
The restructuring of the Marine Systems business area was continued in the first 9 months 2009/2010:
The design and project management unit of the surface naval vessel business at Blohm + Voss Nordseewerke is to be transferred to a 50/50 joint venture with the Abu Dhabi MAR Group. At the same time it was agreed to sell 100% of the mega yacht construction business and an initial 80% share of both the ship repair and component production activities. In addition, Abu Dhabi MAR will acquire the employees and facilities of the merchant shipbuilding operations of HDW-Gaarden in Kiel, which were discontinued in fall 2009. The contracts for these agreements were signed on April 13, 2010.
The corresponding regulatory approval procedures for these restructurings have been initiated and in part already completed.
Talks over a possible sale of Hellenic Shipyards in Greece to Abu Dhabi MAR are also in progress with the involvement of the Greek government, which takes a positive view of such a solution.
Corporate at ThyssenKrupp AG
Corporate comprises the Group’s head office including management of the business areas. It also includes the business services activities in the areas of finance, communications, IT and human resources, as well as non-operating real estate and inactive companies. Sales of services by Corporate companies to Group companies in the reporting period came to €94 million, compared with €82 million a year earlier.
Corporate’s earnings before taxes came to €(442) million, a year-on-year deterioration of €15 million.
Consolidation mainly includes the results of intercompany profit elimination.
