Financial position
Analysis of cash flow statement
The amounts taken into account in the cash flow statement correspond to the balance sheet item "Cash and cash equivalents".
There was a cash outflow of €0.2 billion in the reporting quarter compared with €0.6 billion in the prior-year quarter. The roughly €0.4 billion improvement in operating cash flows was mainly due to the smaller rise in working capital.
Cash outflow from investing activities increased by €0.3 billion to €0.8 billion. This was primarily due to an increase of €0.1 billion to €0.9 billion in capital expenditure on property, plant and equipment, mainly for the construction of the steel mill in Brazil, and to a €0.2 billion decrease in proceeds from disposals of consolidated companies and property, plant and equipment.
As a result, free cash flow, i.e. the sum of operating cash flows and cash flows from investing activities, improved by €0.1 billion to €(1.0) billion in the reporting period.
Compared with a year earlier, cash outflow from financing activities increased by €0.2 billion to €0.2 billion. This was due in particular to the increased repayment of financial liabilities in the 1st quarter 2007/2008.
Analysis of balance sheet structure
The following balance sheet analysis includes assets and liabilities held for sale which are reported separately in the Group's consolidated balance sheet.
Compared with September 30, 2007, the balance sheet total decreased by €650 million to €37,424 million. This includes an exchange-rate-related reduction of €241 million.
The €532 million increase in non-current assets was mainly the result of a €521 million increase in property, plant and equipment owing to progress on the construction of the steel mill in Brazil.
The €383 million increase in inventories to €9,247 million was primarily due to a decline in shipments in the Steel segment at the end of the reporting period and to delayed customer orders in the Services segment. On account of the weaker business situation in the reporting quarter, the Stainless segment reported a volume- and price-related reduction in inventories.
Trade accounts receivable decreased by €631 million, and trade accounts payable by €567 million. In addition to exchange-rate effects, the reductions were attributable in particular to the lower volume of business in the Stainless segment in the reporting period as well as seasonal factors in the Technologies and Services segments. In the Technologies segment the decrease in trade accounts receivable was also influenced to a large degree by customer payments in the plant technology and marine systems businesses. The €291 million increase in current other non-financial assets includes €120 million higher advance payments.
The €1,243 million reduction in cash and cash equivalents to €2,415 million was mainly due to investment in property, plant and equipment (€867 million) and the repayment of interest-bearing financial liabilities (€205 million).
Total equity increased by €288 million to €10,735 million due to the net income of €435 million achieved in the reporting period and, running counter to this, currency translation expenses (€102 million) which are reported directly in equity, and unrealized losses from derivative financial instruments (€45 million).