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Capital market-relevant press releases, 2012-05-15, 07:30 AM

ThyssenKrupp in the first half 2011/2012: Robust orders and sales

In the first half 2011/2012 (October 1, 2011 – March 31, 2012) the ThyssenKrupp Group’s orders from continuing operations (without Inoxum) increased by 2 percent to €21.7 billion, while sales, down 1 percent to €20.5 billion, were largely unchanged. Effects from the generally difficult market environment for materials were offset by increased contributions from practically all capital goods operations.

Adjusted EBIT decreased from €696 million in the prior-year period to €217 million. This reduction in earnings was mainly due to the generally weaker market environment and more intense competition in the materials sector. As expected, earnings in the first half 2011/2012 continued to be impacted by the startup losses at Steel Americas, though these were reduced both year-on-year and quarter-on-quarter. All other continuing operations delivered clearly positive earnings contributions. Overall, the ThyssenKrupp Group expects a moderate improvement in the second half of the fiscal year and adjusted EBIT for the full year in the mid three-digit million euro range.

Dr. Heinrich Hiesinger, Executive Board Chairman of ThyssenKrupp AG: “Demand in the capital goods segment is very pleasing. However, margins in the materials business are being impacted by intense competition and unsatisfactory prices. Overall we believe that we have passed the worst in terms of earnings. We are therefore cautiously optimistic about the second half.”

Positive performance in second quarter 2011/2012

In the second quarter 2011/2012 order intake (€11.6 billion, up 15 percent) and sales (€10.6 billion, up 7 percent) from continuing operations improved significantly quarter-on-quarter. Adjusted EBIT increased against the prior quarter (€134 million, up 61 percent). The materials businesses improved slightly overall in the second quarter. However, the typical seasonal volume improvement against the first quarter was offset by increased price and margin pressure particularly in the European steel business. The losses at Steel Americas were lower but could not be offset by positive earnings contributions from the Steel Europe and Materials Services business areas. Demand in the capital goods segment was pleasing: Orders in all business areas increased strongly quarter-on-quarter. Earnings too were up from the first quarter 2011/2012 as a result of higher contributions from the components and naval shipbuilding businesses.

The highlights for the continuing operations in the first half of the current fiscal year versus the first half 2010/2011 and the second quarter versus the first quarter 2011/2012 are as follows:
・ First-half order intake was 2 percent higher year-on-year at €21.7 billion. New orders in the second quarter increased quarter-on-quarter by 15 percent to €11.6 billion.
・ Sales decreased year-on-year by 1 percent to €20.5 billion in the first half 2011/2012. Sales in the second quarter were 7 percent higher than in the prior quarter at €10.6 billion.
・ Adjusted EBIT in the first half 2011/2012 came to €217 million compared with €696 million a year earlier. Quarter-on-quarter there was a 61 percent improvement to €134 million. Adjusted EBIT margin declined from 3.4 percent in the first half 2010/2011 to 1.1 percent in the first half 2011/2012.
・ EBIT in the first half 2011/2012 was €43 million, down from €696 million a year earlier. In the second quarter 2011/2012 EBIT increased to €76 million from €(33) million in the prior quarter.
・ Earnings per share in the first half 2011/2012 decreased from €0.80 to €(0.89). Quarter-on-quarter earnings per share declined from €(0.30) to €(0.59).
・ Net financial debt (including Inoxum) at March 31, 2012 came to €6,480 million, down slightly from the prior year (March 31, 2011: €6,492 million). Compared with December 31, 2011 (€5,937 million) net financial debt showed an increase, as in the previous year. Key factors were the ramp-up of the new carbon and stainless steel plants in Brazil and the USA and the dividend payment.
Implementation of strategic development program proceeding to plan

ThyssenKrupp continued to drive forward the strategic development and portfolio optimization in the 1st half 2011/2012. On January 31, 2012 ThyssenKrupp and the Finnish stainless steel producer Outokumpu agreed to combine Outokumpu and Inoxum, the stainless steel arm of ThyssenKrupp. The transaction is subject to approval by the competent regulatory authorities. It is still expected that the transaction will close by the end of 2012. In addition further steps were successfully implemented in the reporting period with the sale of the civil shipbuilding operations of ThyssenKrupp Marine Systems and integration of the chassis operations of the Bilstein group and Presta Steering into ThyssenKrupp Chassis. For the North American foundry Waupaca, ThyssenKrupp signed a stock purchase agreement with KPS Capital Partners of New York on May 14, 2012. The transaction is subject to approval by the supervisory bodies. The disposal processes for the springs and stabilizers business and ThyssenKrupp Tailored Blanks are being continued. ThyssenKrupp is currently in talks with various potential buyers for each of the businesses.

The implementation of the strategic development program adopted in May 2011 is therefore proceeding fully according to plan. Contracts have been signed or disposals completed for altogether around 90 percent of the sales volume to be divested. The corporate program impact is also delivering results and based on current planning will reduce costs Groupwide by around €300 million in the current fiscal year.

In February 2012 ThyssenKrupp issued a €1.25 billion bond with a maturity of five years. The issue made use of the favorable market environment to further strengthen the company’s solid financing.

Outlook for fiscal 2011/2012: Adjusted EBIT in mid three-digit million euro range expected

For fiscal year 2011/2012 ThyssenKrupp expects adjusted EBIT in the mid three-digit million euro range, with adjusted EBIT showing a moderate increase in the second half of the current fiscal year compared with the first half. In the materials operations, Steel Europe’s earnings are expected to come in at the level of the first half with volumes and prices influenced by continuing intense competition, while earnings at Materials Services should be better in the second half. At Steel Americas, the increased stability of the operational ramp-up will bring improvements; these will be set against continuing price pressure due to the market entry. In the capital goods operations ThyssenKrupp expects earnings contributions to improve at Plant Technology and hold steady at Elevator Technology. In the more cyclical Components Technology business, the good operating levels should continue into the second fiscal half. The earnings contributions from Marine Systems will normalize.

The full interim report is available in German and English for viewing online and downloading at http://www.thyssenkrupp.com.

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