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Company News, Capital market-relevant press releases, 2017-11-23, 07:00 AM

thyssenkrupp remains on growth track: double-digit gains in order intake and adjusted EBIT / growth and earnings targets for 2016/2017 exceeded

  • Group’s adjusted EBIT: €1.9 billion (prior year €1.5 billion)
  • Adjusted EBIT of continuing operations (without Steel Americas): €1.7 billion (prior year €1.5 billion)
  • Highest order intake since start of Strategic Way Forward
  • Net financial debt substantially reduced, equity substantially increased
  • Dividend proposal: €0.15 per share
  • Forecast for 2017/2018: adjusted EBIT expected to increase from €1.7 billion to €1.8 to €2.0 billion
  • Hiesinger: “We exceeded our growth and earnings targets and took important steps on our path towards becoming a strong industrial group.”

The industrial and technology group thyssenkrupp continues its good operating performance, achieving important milestones on its Strategic Way Forward as a strong industrial group. “We achieved our best order intake since the start of the Strategic Way Forward. We exceeded our growth and earnings targets,” says thyssenkrupp CEO Dr. Heinrich Hiesinger. “The past fiscal year was a year of important decisions. The sale of the Brazilian steel mill CSA and the memorandum of understanding on a joint venture of our European steel activities with Tata Steel created strategic clarity. The capital increase widened our financial leeway,” adds Hiesinger.

With adjusted EBIT of €1,910 million for the Group and €1,722 million for the continuing operations (excluding Steel Americas), the Group exceeded its earnings targets. However, due to one-time earnings charges as a result of the sale of the Brazilian steel mill CSA in the 2nd quarter the Group recorded a net loss of €591 million (prior year net profit of €261 million). Excluding this one-time effect, net income was higher year-on-year and in line with the original forecast. After deducting minority interest the net loss was €649 million. As expected, cash flow was clearly negative.

The Group’s order intake in the past fiscal year increased year-on-year by 18 percent. Components Technology and Elevator Technology once again reported record figures. The third capital goods division, Industrial Solutions, achieved a turnaround in order intake: the business area recorded its highest figure in five years. The materials businesses profited mainly from the recovery in prices. The Group’s sales increased year-on-year by 9 percent.

The adjusted EBIT of the Group and of the continuing operations increased at double-digit rates in the reporting year (up 30 percent to €1,910 million for the Group and up 15 percent to €1,722 million for the continuing operations) and was significantly higher year-on-year in all four quarters. Earnings growth at Components Technology (up 12 percent to €377 million) and Elevator Technology (up 7 percent to €922 million) remained strong. At Industrial Solutions the low order intakes of prior years resulted in a large drop in earnings (down 69 percent to €111 million). The materials businesses recorded a noticeable earnings improvement. The reason for this was the recovery in prices. Materials Services more than doubled its adjusted EBIT (up 143 percent to €312 million). At Steel Europe, too, (up 74 percent to €547 million) the positive price effects were reflected in a significantly improved margin. The efficiency program “impact” again made a significant contribution to the Group’s earnings performance: With EBIT effects of €930 million the savings were again well above the set target of €850 million.

“The improved operating figures show that our performance programs are working. We will continue to drive forward the profitable growth of our capital goods, make targeted investments in research and development and work systematically to further improve efficiency across all our businesses. This is how we will generate more stable earnings in the future and continue to grow profitably,” adds Hiesinger.

Given the strategic progress made and further operating improvements as part of the Strategic Way Forward, the Executive Board and Supervisory Board are proposing to the Annual General Meeting an unchanged dividend of €0.15 per share. The proposal takes into account the expected further improvement in relevant earnings indicators.

Free cash flow before M&A at €(798) million was as expected significantly lower than the prior-year figure (€198 million). Above all the dislocations on the raw materials markets and attendant material price increases resulted in temporarily higher capital employed in the first 9 months of the past fiscal year, which was partially offset by strongly positive free cash flow before M&A in the final quarter.

At just under €2.0 billion, the Group’s net financial debt was significantly lower than the prior-year figure (€3.5 billion), mainly reflecting the cash inflows from the CSA transaction and from the capital increase in the 4th quarter. Taking into account available liquidity of €9.1 billion and the balanced maturity structure, thyssenkrupp is solidly financed.

The Group’s equity improved year-on-year from €2.6 billion to €3.4 billion, mainly as a result of the capital increase and the higher interest rate level, which required a remeasurement of pension obligations. This was partly offset by the net loss for the year. Overall, the gearing ratio, i.e. the ratio of net financial debt to equity, improved by around 77 percentage points to 57.5 percent.

thyssenkrupp is optimistic overall with regard to the current fiscal year 2017/2018(*1) . The Executive Board expects further progress on the Strategic Way Forward. With growth and improvements in our capital goods businesses, and depending on the continuance of the favorable materials market environment and possible translation risks, the Group aims to achieve a significant increase in adjusted EBIT to €1.8 to €2.0 billion (prior year, continuing operations: €1,722 million). The company likewise forecasts clearly positive net income above the prior-year figure (prior year, continuing operations: €271 million). Free cash flow before M&A is expected to be positive (prior year, continuing operations: €(855) million). Alongside strict implementation of the transformation processes, the efficiency program “impact” is again expected to contribute to the attainment of the Group’s targets with EBIT effects of €750 million.

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(*1)The following forecast relates to the full Group in its current structure (including the fully consolidated business area Steel Europe, i.e. excluding effects from the potential contribution of the European steel activities to a joint venture with Tata Steel); no longer included following successful disposal are the activities of the former business area Steel Americas.

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