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Forecast 9 months 2015/2016

Overall assessment by the Executive Board

  • Solid performance of the capital goods businesses overall in the first 9 months of the current fiscal year, overshadowed by sharp deterioration of materials environment:
    • Continuing high import pressure with heavy destocking in Germany and customer caution particularly in the 1st quarter and sharp fall in materials prices well into 2nd quarter
    • However in 3rd quarter clear signs of recovery with spot prices rising again from low level; significant quarter-on-quarter improvement in all materials businesses
  • On this basis revised full-year forecast for the Group affirmed

For further key assumptions and expected economic conditions see forecast section and “Macro and sector environment” in the report on the economic position in the 2014/2015 Annual Report and this interim report.

2015/2016 forecast

  • Group sales on a comparable basis to decline in the single-digit percentage range due to high import pressure on the materials markets
    • Capital goods businesses with organic growth at Components Technology and Elevator Technology in single-digit percentage range; slight downwards movement at Industrial Solutions
    • Materials businesses significantly weaker against high import pressure
  • Adjusted EBIT of Group at least €1.4 billion (prior year: €1,676 million), supported by at least €850 million planned EBIT effects from “impact”
  • Capital goods businesses above prior-year level overall; growth at Components and particularly Elevator Technology will outweigh decline at Industrial Solutions:
    • Components Technology: Slight year-on-year improvement in adjusted EBIT expected (prior year: €313 million) thanks to further ramp-up of new plants and efficiency programs, despite high price and margin pressure
    • Elevator Technology: Improvement in adjusted EBIT from sales growth and an increase in adjusted EBIT margin by 0.5 to 0.7 percentage points from restructuring and efficiency measures (prior year: €794 million; 11.0%)
    • Industrial Solutions: Decrease in adjusted EBIT expected (prior year: €424 million) mainly due to continued weak market environment for chemical plants; slight decline in sales with margin at bottom end of target range of 6-7%
  • Materials businesses down from prior year overall – particularly due to very weak environment in 1st half; strong improvement at Steel Americas overshadowed by sharp declines at Materials Services and Steel Europe:
    • Materials Services: Positive effects due to absence of impacts from strike at AST in prior year and progress with restructuring and efficiency programs and sales initiatives, overshadowed by margin pressure on materials markets and absence of income from divested operations (prior-year adjusted EBIT: €206 million)
    • Steel Europe: Positive effects from efficiency programs, overshadowed by high import and margin pressure (prior-year adjusted EBIT: €492 million)
    • Steel Americas: In a weak Brazilian steel market and particularly in 1st half difficult price environment, losses significantly reduced (prior-year adjusted EBIT: €(138) million) as a result of operating progress, efficiency programs, and positive exchange-rate effects at closing date; based on assumption of largely stable exchange rates for Brazilian real in 4th quarter
  • Net income: At prior-year level, partly due to reduced impact of special items (prior year: €268 million)
  • tkVA: Accordingly also at prior-year level (pro-forma prior-year comparative with current cost of capital: €(238) million)
  • FCF before M&A: Expected between low 3-digit million € negative and breakeven; dependent on payment timing on major orders (prior year: €115 million)
  • Capital spending: Expected to be below €1.5 billion (prior year: €1,235 million, or €1,335 million net of cash acquired in connection with the increased shareholding in Marohn Elevator at Elevator Technology and the consolidation of thyssenkrupp Uhde Chlorine Engineers at Industrial Solutions)

Interim Report 9 months 2015/2016, p. 15-16

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