Ad Hoc Releases, 2011-12-02, 10:52 AM
ThyssenKrupp in fiscal year 2010/2011
The Supervisory Board of ThyssenKrupp AG today approved the annual financial statements for fiscal year 2010/2011 as prepared by the Executive Board of the company. In connection with the consolidated financial statements prepared by the Executive Board on November 29, 2011, the Group recorded impairment charges of €2.1 billion at Steel Americas and €800 million at Inoxum (formerly Stainless Global).
Operating performance: Growth targets achieved
ThyssenKrupp achieved its growth targets in the past fiscal year. Order intake increased by 22 percent from €41.250 billion to €50.247 billion [continuing operations, without Inoxum: up 22 percent from €37.013 billion to €45.118 billion (Notice: Inxoum is classified under "discontinued operations" in the annual financial statements of ThyssenKrupp. This effect reduces the sales and order intake of the continuing operations)]. The Group’s sales rose by 15 percent from €42.621 billion to €49.092 billion [continuing operations, without Inoxum: up 15 percent from €37.711 billion to €43.356 billion]. Demand was particularly strong for flat carbon steel, components for the auto industry, and in naval shipbuilding.
The Group’s operating performance in the reporting year was positive. All business areas except Steel Americas contributed to this. The Group’s adjusted EBIT increased by 42 percent from €1.241 billion to €1.762 billion [continuing operations, without Inoxum: by 36 percent from €1.293 billion to €1.762 billion], despite operating losses of €1.071 billion at Steel Americas.
Five business areas increased their earnings substantially year-on-year. The Elevator business held steady at a high level. The biggest earnings contribution, €1.133 billion, came from the Steel Europe business area. The Technologies business areas contributed by far the dominant share, with total earnings of €1.863 billion.
The impairment charges result in negative reported EBIT of €(988) million compared with €1.346 billion in the prior-year period [continuing operations, without Inoxum: €(188) million compared with €1.398 billion in the prior-year period] and a net loss in the consolidated financial statements of €(1.783) billion compared with a net profit of €927 million in fiscal year 2009/2010 [continuing operations, without Inoxum: €(954) million compared with €1.020 billion in 2009/2010].
Net financial debt, which stood at €3.578 billion at the end of fiscal 2010/2011, showed a slight improvement from the prior-year period (€3.780 billion). One factor in this, alongside the sale of treasury stock, was that, as predicted, the Group generated a positive free cash flow of €1.037 billion in the fourth quarter.
After carefully weighing all the circumstances, the Executive Board and Supervisory Board of have decided to maintain the policy of dividend continuity. The Executive Board and Supervisory Board will therefore propose to the Annual General Meeting the payment of a dividend of €0.45 per share for the past fiscal year, as in the prior year.
Impairment testing of the assets of ThyssenKrupp showed that the book values of assets in the Steel Americas business area and the former Stainless Global business area, now Inoxum, were no longer in line with market conditions. The necessary impairment charges total €2.9 billion.
The main reasons for the impairment at Steel Americas are:
･ Cost overruns on the construction of the plant in Brazil and the delayed ramp-up, particularly of the plant in Brazil. These additional costs cannot be offset in the short term.
･ The relative strength of the Brazilian currency, both now and expected in the near future, which is adversely affecting the cost position, particularly in the ramp-up phase, and an increase in the cost of capital factor.
･ The renewed weakness of the markets in the USA and Europe, which is hampering market entry for the products of the Steel Americas business area.
ThyssenKrupp remains convinced that the Americas market offers great prospects for its premium steel products and that the company can differentiate itself successfully from the competition there as in Europe. The commercial ramp-up of the plants in Brazil and the USA and the resultant cost optimization are important prerequisites for leveraging the value potential of the Americas for the Group. For the current fiscal year, a significant improvement is not expected until the second half with the start-up of the third coke oven battery and an improvement in input material consumption rates.
The total impairment charge at Inoxum is €800 million. Of this, €290 million relates to goodwill impairment and €510 million to a fair value adjustment in connection with the carve-out of the entity. There are two main reasons for the impairment charges at Inoxum:
･ The capital market is demanding high risk premiums in the valuation of stainless steel producers. This is a consequence of the financial crisis and the high risk aversion of investors.
･ High discounts are being applied to the valuation of stainless steel assets due to the unsolved structural problems on the stainless steel market.
ThyssenKrupp will report on the approval of the annual financial statements in a press conference after the Supervisory Board meeting at 2:00 p.m. The press conference will be streamed live on the internet https://www.thyssenkrupp.com. A conference call for analysts and investors will he held at 4:00 p.m.
The Annual Report is now available for download at https://www.thyssenkrupp.com