Capital market-relevant press releases, 2015-02-13, 07:05 AM
Good start to new fiscal year: Operating targets achieved in 1st quarter 2014/2015: Adjusted EBIT up 29 percent/net income of €43 million/full-year outlook confirmed
The industrial and technology group ThyssenKrupp achieved its operating targets in the 1st quarter of the 2014/2015 fiscal year and confirmed its forecast for the full year. Sales, adjusted EBIT and net income increased in part significantly. “We are on course. Our earnings performance in the quarter shows that we are on the right track with the transformation of the Group. The economic environment remains uncertain and the geopolitical risks high. That is why we are continuing to concentrate on the things that we can influence ourselves and working hard to improve our efficiency,” says ThyssenKrupp CEO Dr. Heinrich Hiesinger.
In a continuing challenging economic climate, order intake came to €10.1 billion, down 5 percent from the prior year. This decrease was mainly due to a major contract at Marine Systems in the prior-year quarter. All other capital goods businesses recorded stable to significantly higher order intake year-on-year. The Elevator Technology business area once again achieved record orders.
Sales rose by 11 percent year-on-year to €10 billion. On a comparable basis (excluding portfolio and exchange rate effects) sales were up 5 percent from the prior year. The main reason for this was strong organic growth in the capital goods businesses.
Adjusted EBIT from continuing operations in the 1st quarter climbed by 29 percent to €317 million (prior year €245 million). The main driver behind this improvement was the successful implementation of efficiency measures. The ThyssenKrupp Group generated net income of €43 million in the 1st quarter (prior year €(70) million); after deduction of minority interest, net income was €50 million (prior year €(65) million); earnings per share came to €0.09 (prior year €(0.12)).
Free cash flow before divestments in the 1st quarter was as expected lower than a year earlier at €(651) million but fully within the forecast corridor. Among other things the normalization of inventories after the relining of a blast furnace at Steel Europe, the strike at AST in Italy and major contracts at Materials Services led to a temporary increase in net working capital. The Group’s net financial debt therefore increased by €535 million to €4.2 billion in the reporting quarter, but was around €390 million lower than a year earlier.
The full-year outlook for 2014/2015 remains unchanged. On a comparable basis, the Group’s sales are expected to grow by a single-digit percentage rate. Adjusted EBIT will improve to at least €1.5 billion. With the exception of Steel Americas, all business areas will generate clearly positive contributions. Based on operating progress, ThyssenKrupp expects at least a clear improvement towards break-even EBIT at Steel Americas. The Executive Board also expects a substantial improvement in net income (prior year €195 million). There will also be significant progress in cash generation from operating activities: Free cash flow before divestments should be at least break-even.
Performance of the business areas in the 1st quarter 2014/2015
All business areas achieved year-on-year improvements in 1st quarter adjusted EBIT; the only exception was Materials Services, which was impacted by the strike at AST in Italy. All business areas with the exception of Steel Americas made a positive contribution to earnings; Steel Americas generated break-even earnings. The adjusted EBIT of the capital goods businesses came to €337 million in the first three months. Including Steel Americas and despite the strike in Italy, the materials businesses generated a clear positive contribution of €81 million.
Components Technology reported a pleasing performance, profiting from positive currency translation effects and the continued recovery in car and wind turbine components. Order intake and sales each rose to €1.6 billion (prior year €1.4 billion). This represents a year-on-year increase of 13 and 12 percent respectively. On a comparable basis orders and sales were up 9 and 8 percent respectively. Adjusted EBIT at €67 million was 6 percent higher than the prior-year figure (€63 million).
Elevator Technology continued its excellent performance and reported new records for order intake and orders in hand. Order intake and sales rose year-on-year by 4 and 11 percent to €1.9 billion and €1.7 billion respectively (prior year €1.8 billion and €1.5 billion respectively); on a comparable basis order intake was unchanged and sales increased by 7 percent. The new installations business performed particularly well in the USA, China and South Korea. The positive operating performance was also reflected in adjusted EBIT, which rose by 14 percent to €178 million (prior year €156 million).
The positive performance of the Industrial Solutions businesses continued in general in the 1st quarter 2014/2015. However, due to a major order at Marine Systems in the prior-year quarter, order intake at €1.1 billion was significantly lower than the very high year-earlier figure (€2.3 billion). The high level of orders in hand at December 31, 2014 (€13.5 billion) provides long-term planning certainty and secures capacity utilization for the next two to three years. Industrial Solutions reported sales of €1.4 billion, up 7 percent from the prior year (€1.3 billion); on a comparable basis, sales grew by 8 percent. Adjusted EBIT at €92 million was slightly higher than a year earlier (€91 million).
In a difficult price and competitive environment, Materials Services performed well due to higher volumes. Order intake and sales each increased by 25 percent to €3.5 billion and €3.4 billion respectively (prior year €2.8 billion and €2.7 billion respectively). On a comparable basis the gains were 6 and 8 percent respectively. Adjusted EBIT at €2 million was below the prior-year figure of €34 million, mainly as a result of the strike at AST in Italy. The Special Materials business unit including VDM and AST weighed down earnings with a loss of €33 million. Excluding this business unit, adjusted EBIT increased slightly year-on-year.
Steel Europe reported a decrease in orders and sales in the reporting quarter due to lower prices and volumes. There are two main reasons for this: Firstly the sustained decline in steel prices. Secondly volumes were impacted by production bottlenecks due to the delayed completion of a continuous caster modernization which in turn delayed the start-up of a relined blast furnace. At €2.1 billion, order intake was down 8 percent from the prior-year figure (€2.3 billion). Sales fell by 4 percent year-on-year to €2.0 billion (prior year €2.1 billion). On a comparable basis, order intake and sales also decreased by 8 and 4 percent respectively. However, adjusted EBIT climbed significantly by €61 million to €79 million (prior year €18 million). Measures under the efficiency program “Best-in-Class Reloaded” had a positive impact on earnings, while lower raw material costs also contributed.
Order intake at €475 million (prior year €609 million) and sales at €502 million (prior year €538 million) at Steel Americas were respectively 22 percent and 7 percent lower year-on-year due to the disposal of ThyssenKrupp Steel USA. On a comparable basis, order intake was up 5 percent and sales 9 percent. Following a loss of €19 million in the prior-year quarter, Steel Americas generated break-even adjusted EBIT. This clear improvement was mainly due to lower raw material costs and positive price effects on the North American flat steel market.