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Ad Hoc Releases, 2013-11-29, 11:57 PM

Ad hoc statement in accordance with § 15 Securities Trading Act (WpHG)

ThyssenKrupp AG has achieved a sustainable solution for the Steel Americas business area. The ThyssenKrupp Steel USA rolling and coating plant in Calvert/Alabama is being sold to a consortium of ArcelorMittal and Nippon Steel & Sumitomo Metal Corporation (the consortium). At the same a long-term slab supply contract has been agreed that will secure the value of ThyssenKrupp CSA in Brazil. Upon closing, ThyssenKrupp will receive a purchase price of 1.55 billion US dollars from the consortium. In addition, the consortium will purchase two million tons of slabs per year from ThyssenKrupp CSA up to 2019. The plant in Brazil has an annual production capacity of around five million tons of slabs. The agreement now reached will reliably secure at least 40 percent capacity utilization of the plant for several years. In addition, stronger penetration of the slab markets in South and North America will further increase the plant's capacity utilization. The transaction is subject to the approval of regulatory authorities in the USA and a number of other countries.

ThyssenKrupp will now concentrate on operating improvements at the Brazilian plant. Over the past fiscal year technical performance has been further optimized and plant efficiency improved. The combination of the sale of ThyssenKrupp Steel USA and the slab supply contract for ThyssenKrupp CSA in Brazil will help ThyssenKrupp improve its cash flow profile and key financials in the future.

Against this background the Steel Americas business area has been re-included in the Group as a continuing operation at the end of fiscal year 2012/13. Until the closing of the transaction, the North American portion will be reported separately as a disposal group. At the reporting date (September 30) the carrying value of Steel Americas was around €3.1 billion, reflecting depreciation and amortization over the year, a revaluation in connection with the sale of the plant in the USA, and the re-inclusion of ThyssenKrupp CSA.

Settlement of financial receivable from Outokumpu and transfer of VDM and AST planned
From the sale of Inoxum ThyssenKrupp holds a 29.9 percent share in Outokumpu and a financial receivable which was written down to around 1 billion euros at September 30, 2013. In the context of the restructuring of Outokumpu's financing, ThyssenKrupp signed an agreement with Outokumpu on November 29, 2013 transferring 100 percent of the shares of VDM and AST as well as other smaller stainless steel service center activities to ThyssenKrupp. In return, the financial receivable created in connection with the Inoxum transaction will be transferred to Outokumpu.

In addition, ThyssenKrupp will fully divest its 29.9 percent shareholding in Outokumpu and terminate all other financial links with Outokumpu. In expectation of a capital increase at Outokumpu, the sale of the shares will probably result in a significant loss on our investment book value of 305 million euros. This will be offset by the elimination of balance sheet risks. Guido Kerkhoff will step down from the supervisory board of Outokumpu. The transfer will enable Outokumpu to fulfill the EU Commission's conditions for the Inoxum transaction in a way that preserves value. At the same time ThyssenKrupp is taking its responsibility to the employees seriously by creating the conditions for a sustainable refinancing of Outokumpu. The transaction is subject to the approval of the competent regulatory authorities and the cooperation and approval of shareholders, banks and creditors for the overall plan for a sustainable refinancing of Outokumpu. ThyssenKrupp will initially further develop the companies VDM and AST and take the necessary time to find a good solution.

Sustainable solution for Steel Americas and better assessment of the compliance risks: Capital increase planned
The Executive Board has always stressed that a decision on capital measures can only be made when a solution has been found for Steel Americas and a better assessment can be made of the compliance risks. The Group had already reported in the past fiscal year that the German Federal Cartel Office had imposed a final fine on ThyssenKrupp in the rail cartel case and that the amnesty program at ThyssenKrupp had been completed. In connection with the rail cartel case talks have been held with Deutsche Bahn for some time about compensation and a settlement. The negotiations are complete. ThyssenKrupp and Deutsche Bahn reached agreement in principle in mid-November. For both parties the settlement is subject to approval by the responsible bodies/funding providers.

The investigations by the Federal Cartel Office into possible price fixing in the delivery of certain steel products to the German automotive industry and its suppliers are still ongoing. The internal investigations launched in response to the investigations by the Federal Cartel Office are at an advanced stage but not yet completed. Based on the facts currently known to us significant adverse consequences with regard to the Group's asset, financial and earnings situation cannot be ruled out.

As clarity has now been achieved for Steel Americas and the Group can better assess the compliance risks, ThyssenKrupp is planning a capital increase, the timing of which will be decided depending on capital market conditions. The Executive Board is convinced that a capital increase excluding subscription rights of up to 10 percent will achieve an appropriate balance between shareholder interests and the requirements of other strategically important stakeholders.

Performance in fiscal year 2012/13: Operating targets achieved
Despite once again reporting a loss, ThyssenKrupp AG made important progress on its way to becoming a diversified industrial group in fiscal 2012/13. The operating targets for the continuing operations with regard to efficiency enhancement, earnings and cash flow were achieved or exceeded. Savings of €600 million were made under the efficiency program “impact 2015”, meaning that ThyssenKrupp exceeded its own ambitious target by 20 percent. Adjusted EBIT in the structure of the prior year was €1.1 billion. Adjusted EBIT in the new structure came to €599 million. For the first time in six years the full Group reported positive free cash flow of €600 million (prior year €(1.7) billion). As a result, net financial debt at the reporting date was down from €5.8 billion to €5.0 billion.

Despite the positive operating performance in the past fiscal year, the Group’s financials were weighed down by the problems in the Steel Americas business area. The operating losses and impairment charges at Steel Americas, expenses in connection with the shareholding in Outokumpu, the fine and provisions for compliance violations in the rail cartel case, and restructuring measures in connection with the reorganization of the Group resulted in a net loss of around €1.5 billion (prior year €(5) billion). For this reason the Executive Board and Supervisory Board will again propose to the Annual General Meeting this year that no dividend be paid.

Operating performance of the Group in fiscal year 2012/13
Order intake from continuing operations (including Steel Americas) came to €38.6 billion, down 12 percent year-on-year. On a comparable basis, excluding disposals, the decrease was only 8 percent. Sales from continuing operations (including Steel Americas) decreased by 7 percent to €38.6 billion. On a comparable basis sales were 3 percent lower. The main reasons for this were disposals and declines in the materials business. There were solid gains in the plant engineering business of the Industrial Solutions business area. The Elevator Technology business area set new records for orders and sales.

Adjusted for special items, EBIT from continuing operations (including Steel Americas) came to €599 million in fiscal year 2012/2013, up from the prior-year figure of €399 million. Adjusted EBIT from continuing operations in the structure of the prior year (excluding Steel Americas) was €1.1 billion, fully in line with the target for the fiscal year. EBIT from continuing operations (including Steel Americas) improved from €(3.7) billion in the prior year to €(595) million but was once again significantly impacted by special items. These decreased from €4.1 billion in the prior year to €1.2 billion and mainly related to impairment charges at Steel Americas, the fine and provisions for compliance violations in the rail cartel case, and restructuring measures in connection with the reorganization of the Group.

Outlook 2013/2014 (including Steel Americas, excluding VDM and AST): Significant improvement in adjusted EBIT to €1 billion
Even though the economic outlook remains subdued from today’s perspective, ThyssenKrupp expects the Group’s sales to grow year-on-year by a mid single-digit percentage rate. The Executive Board believes that adjusted EBIT will improve significantly from €599 million in the past fiscal year to around €1 billion. There are two main drivers for this: firstly the expected growth in the Group’s strong capital goods businesses, and secondly performance improvements from the efficiency program “impact 2015”. ThyssenKrupp expects a significant improvement towards break-even earnings for fiscal 2013/2014.

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