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Capital market-relevant press releases, 2014-05-13, 07:06 AM

Half-term report: ThyssenKrupp raises full year forecast for sales and adjusted EBIT

• All 1st half operating and strategic targets achieved • Order intake, sales and adjusted EBIT improved in 1st half and 2nd quarter • First net profit after two years

After a successful 1st half 2013/2014 ThyssenKrupp is raising its forecast for the full year . The industrial group now expects to achieve sales growth in the mid to higher single-digit percent region on a comparable basis. Adjusted EBIT is forecast to almost double year-on-year (prior year €586 million, previous guidance around €1 billion). The company continues to expect a significant improvement towards break-even earnings. ThyssenKrupp met all its operating and strategic targets in the 1st half. Order intake, sales and adjusted EBIT increased year-on-year both on a cumulative basis in the 1st half and in the 2nd quarter. The Group recorded a net profit after minority interest of around €269 million. Earnings per share came to €0.37 in the 1st half and €0.48 in the 2nd quarter (prior year €(0.26) and €(0.25) per share respectively).

“We have achieved positive net income for the first time in seven quarters. This shows that our efficiency program impact is working and our culture change is really bringing about a stronger performance ambition,” says CEO Dr. Heinrich Hiesinger. There were three main drivers behind the improvement: firstly the efficiency gains, secondly strong growth in the capital goods businesses, and thirdly the elimination of losses as well as disposal gains from divestments and restructurings.

Order intake from continuing operations came to €20.9 billion in the 1st half, up 4 percent from the prior year despite negative exchange rate effects. On a comparable basis, i.e. excluding currency and portfolio effects, order intake increased by 6 percent. 2nd quarter order intake was €10.2 billion, slightly higher year-on-year (up 2 percent on a comparable basis).

Sales from continuing operations came to €19.4 billion in the 1st half and €10.3 billion in the 2nd quarter, and were higher year-on-year in all business areas except Steel Europe, where sales decreased due to disposals. On a comparable basis sales climbed year-on-year by 7 percent in the 1st half and 9 percent in the 2nd quarter.

Adjusted EBIT from continuing operations increased significantly year-on-year to €555 million in the 1st half and €309 million in the 2nd quarter. At €848 million (prior year €738 million) the capital goods operations achieved much higher operating earnings in the 1st half than the materials operations, which however even including Steel Americas generated a clear positive contribution of €128 million (prior year €(29) million).

The Group’s net financial debt at March 31, 2014 was reduced further to €4 billion, down significantly from both a year earlier (€5.3 billion) and the balance sheet date September 30, 2013 (€5 billion).

Performance of the business areas in the 1st half 2013/2014

Components Technology continued its good performance in the 2nd quarter. Order intake and sales both increased to €3.0 billion in the 1st half 2013/2014, corresponding to growth of 12 and 10 percent respectively year-on-year (prior year both €2.7 billion). On a comparable basis the increases were 15 and 13 percent respectively. Adjusted EBIT rose year-on-year by €35 million to €138 million (prior year €103 million). The strong performance was mainly due to efficiency gains under performance programs initiated in the prior year.

Elevator Technology once again put in a positive performance. Although order intake in the 2nd quarter 2013/2014 was down slightly from a year earlier due to negative exchange rate effects, orders for the 1st half were 4 percent higher year-on-year at €3.4 billion (prior year €3.2 billion), driven mainly by pleasing business in China, the USA and South Korea. On a comparable basis the increase was 9 percent. Sales at €3.0 billion were also 4 percent higher (prior year €2.9 billion), on a comparable basis the gain was 8 percent. The positive performance was also reflected in improved adjusted EBIT, which rose by 7 percent to €338 million in the 1st half 2013/2014 (prior year €315 million) despite negative exchange rate effects.

At Industrial Solutions order intake in the 1st half 2013/2014 at €3.5 billion was largely stable versus the prior year (down 3%) and virtually unchanged on a comparable basis (prior year €3.6 billion). The high order backlog of €15.1 billion at March 31, 2014 secures continuing good workloads, offers planning certainty and contributes to growth prospects. Sales at Industrial Solutions came to €2.9 billion, up 5 percent year-on-year (prior year €2.7 billion). On a comparable basis the increase was 9 percent. Sales benefited from the initial recognition of revenues from a number of major contracts, especially at Process Technologies. 2nd quarter adjusted EBIT improved significantly quarter-on-quarter. Total 1st half adjusted EBIT came to €372 million, up 16 percent year-on-year (prior year €320 million). This was due to order billings at Process Technologies and efficiency gains in all business units.

In a difficult price and competitive environment, Materials Services held up well in the reporting period thanks to higher volumes, benefiting in particular from intensive sales initiatives. The inclusion of the VDM and AST groups as of March 1, 2014 affected sales and order intake to the tune of €300 million each and earnings in the amount of €(3) million. 1st half order intake was 9 percent higher year-on-year at €6.3 billion (prior year €5.8 billion), on a comparable basis the increase was 6 percent. Sales at €6.1 billion also rose by 6 percent (prior year €5.7 billion); on a comparable basis the gain was only 3 percent for price reasons. With 2nd quarter adjusted EBIT higher quarter-on-quarter, the 1st half figure of €90 million was roughly level with the prior-year period (€98 million).

Steel Europe reported a slight decrease in business volume in the 1st half 2013/2014 due to disposals and prices. Business was again affected by continuing pressure on prices, while volumes improved and became steadier in the course of the period. 1st half order intake at €4.7 billion and sales at €4.5 billion were each 6 percent lower year-on-year (prior year order intake €5.0 billion, sales €4.8 billion); on a comparable basis, both figures were stable. The measures implemented under the “Best-in-Class Reloaded” program already had a significant positive impact on earnings. Adjusted EBIT in the 1st half 2013/2004 came to €81 million, double the prior-year figure (€39 million).

At Steel Americas, order intake at €1.2 billion (prior year €1.1 billion) and sales at €1.1 billion (prior year €989 million) in the 1st half 2013/2014 increased by 11 percent and 8 percent respectively year-on-year. On a comparable basis, orders were up by 15 percent and sales by 12 percent. This was due to higher volumes and prices. 1st half adjusted EBIT improved by more than €100 million to €(43) million. Key reasons for this significant improvement included higher and more efficient capacity utilization, lower costs, and the positive impact of currency effects and market prices in the USA.

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