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Capital market-relevant press releases, 2008-08-14, 07:30 AM

ThyssenKrupp in the first nine months of 2007/2008

In the first nine months of fiscal year 2007/2008, ThyssenKrupp once again demonstrated the earnings power of its business portfolio. Despite the slowing of the world economy, the Group generated higher sales than in the prior-year period. The Group’s earnings before taxes have improved from quarter to quarter in the current fiscal year (1st quarter: €646 million, 2nd quarter: €742 million, 3rd quarter: €909 million) and amounted to €2,297 million; this was higher than planned. Excluding major nonrecurring items, comprising the pre-operating costs for the new steel mills, restructuring expense in the Steel and Elevator segments and disposal gains in the Technologies segment, earnings are €1,073 million for the third quarter and €2,572 million for nine months. As expected, earnings failed to match the prior-year level, which was characterized by an exceptional situation on the stainless steel markets.

The highlights for the first nine months of 2007/2008 were as follows:
・ Order intake was €41.5 billion (nine monthas 2006/2007: €42.8 billion), 3% lower than a year earlier.
・ Sales rose by 2% to €39.7 billion (€38.9 billion).
・ EBITDA was €3,646 million, compared with €4,266 million in the prior year.
・ Earnings before taxes decreased to €2,297 million from €2,853 million in the previous year. Before major nonrecurring items, EBT would have been €2,572 million (prior year €3,294 million).
・ Earnings per share fell from €3.25 to €3.06.
・ Net financial debt at June 30, 2008 was €2,127 million. One June 30, 2007, net financial debt stood at €806 million.
The highlights for the 3rd quarter of 2007/08 were as follows:
・ Order intake was €14.2 billion (3rd quarter 2006/2007: €15.6 billion).

・ Sales rose to €14.2 billion (€13.4 billion).

・ EBITDA was €1,366 million (€1,728 million).

・ Earnings before taxes were €909 million compared with €1,219 million in the prior year. Before major nonrecurring items, EBT would have been €1,073 million (prior year €1,180 million).

・ Earnings per share were €1.21, compared with €1.49 in the prior year.
Executive Board Chairman Dr. Ekkehard Schulz: “Our performance to date impressively demonstrates the advantages of our balanced portfolio of activities in Steel, Capital Goods and Services and our strategy of occupying at least top 3 positions in attractive markets. For the current fiscal year we are raising our earnings forecast to over €3.2 billion before taxes and nonrecurring items. As things stand at present we also expect sales to increase to €53 billion. This will fulfill our expectations of a good fiscal year.”

Earnings expectations for the Group take into account the fact that the Steel segment will not be able to pass on the sharp rises in raw material prices – in particular for iron ore and coking coal – in full to customers in the current fiscal year due to contract structures. Demand for steel products remains very pleasing, as reflected in continued price increases, fully confirming the expectations of another good steel year.

In the Stainless segment, base prices are improving more slowly than expected. Demand is stable, while service centers are being cautious in view of the nickel price trend. Due to the weakness of the US dollar there are signs of further imports from the US dollar zone, which could slow prices in the second half of the year. Nevertheless, the segment is expected to deliver a positive earnings contribution.

Technologies continues to profit in particular from infrastructure development and urbanization in the world’s growth regions. A high order backlog, stretching several years into the future with increasing earnings quality, provides a high degree of planning certainty.

Thanks to its high service share, the Elevator segment continues to deliver a very stable earnings contribution.

Services is profiting from rising demand for materials in the growth regions. With material prices continuing to rise sharply, very encouraging growth in earnings is expected to continue in the further course of the year.

CEO Schulz on the longer-term outlook: “We expect sales to continue to grow in 2008/2009 provided no unforeseen economic downturns impact our business. Growing sales will also be reflected in earnings. The mid-term sales target for ThyssenKrupp is €60 billion, while our mid-term goal for sustainable earnings before taxes and nonrecurring items is €4 billion. In the longer term, especially after the startup of the Steel segment’s new slab mill in Brazil, the Steel and Stainless segments’ new steelmaking and processing plant in the USA and the investments of the other segments in other regions, we expect to achieve sales of around €65 billion and earnings before taxes and nonrecurring items of €4.5 to 5.0 billion.”


Online and downloadable versions of the full interim report are available in German and English at http://www.thyssenkrupp.com.

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