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Company News, 2009-08-14, 07:30 AM

ThyssenKrupp in the first 9 months of 2008/2009

The overall economic environment deteriorated further in the 3rd quarter of fiscal 2008/2009. The materials and materials services business was impacted by sharply declining volumes and prices. Towards the end of the reporting period, however, there were initial signs of stabilization as a result of restocking. The capital goods business was also sucked into the global downturn, though the picture here was mixed: While business in plant technology, slewing bearings for the energy sector, and elevators and escalators remained relatively robust, underutilization in the international automotive, construction equipment and civil shipbuilding businesses had a severe impact. Against this background sales decreased to €30.7 billion in the first 9 months (prior year: €39.7 billion). Earnings before taxes fell to €(987) million (prior year: €2,297 million) and were significantly impacted by nonrecurring items – in particular restructuring expense, impairment charges and project costs. Excluding nonrecurring items, earnings before taxes amounted to €(402) million. 3rd-quarter earnings before taxes came to €(772) million, or €(452) million without nonrecurring items. In addition to the above-mentioned nonrecurring items, earnings were heavily impacted by inventory writedowns and lower revenues caused by the sharp price falls.

To manage the crisis, cost-reduction measures were introduced which have already led to cost savings of more than €750 million in the first 9 months of the current fiscal year.

By taking stringent measures to reduce net working capital, the Group improved its operating cash flow over the 9-month period to €1,954 million (prior year: €1,509 million). In the 3rd quarter, operating cash flow amounted to €1,331 million (prior year: €676 million). The Group's financial latitude was also significantly increased in the 3rd quarter by the positive free cash flow and the successful bond transactions. At June 30, 2009 the Group had altogether €8.8 billion in cash, cash equivalents and available credit lines.

Executive Board Chairman Dr. Ekkehard Schulz: "We are using the crisis as an opportunity. The measures we have introduced to improve efficiency and optimize our portfolio are now taking full effect. Over the next 15 months we will reduce the Group's cost base by well over €1 billion on a sustainable basis. Annual cost savings of €500 million from the reorganization of our Group will play a part in this. With regard to our transatlantic steel strategy, we welcome our partner Vale's decision to increase its stake in our Brazilian steel plant to around 27%. As well as clearly underlining the value of our investment, this move also confirms our industrial strategy."

The highlights for the first 9 months 2008/2009:
・ Order intake decreased by 31% to €28.5 billion compared with the first 9 months of the previous fiscal year.

・ Sales fell by 23% to €30.7 billion.

・ EBITDA came to €726 million, compared with €3,646 million in the prior year.

・ Earnings before taxes declined from €2,297 million in the prior year to €(987) million.

・ Earnings per share dropped from €3.06 to €(1.73).

・ Operating cash flow over 9 months increased from €1,509 million to €1,954 million.

・ Net financial debt at June 30, 2009 was €3,122 million, an increase of €1,538 million compared with September 30, 2008. Compared with March 31, 2009 net financial debt decreased by €565 million.
The highlights for the 3rd quarter:
・ 3rd-quarter order intake decreased year-on-year by 44% to €7.9 billion.

・ Sales were down by 34% to €9.3 billion.

・ EBITDA came to €(180) million, compared with €1,366 million a year earlier.

・ Earnings before taxes declined from €909 million to €(772) million.

・ Earnings per share fell from €1.21 to €(1.38).

・ Operating cash flow in the 3rd quarter increased from €676 million to €1,331 million.

ThyssenKrupp expects a significant drop in order intake and sales for full fiscal year 2008/2009. Price and volume declines will be only partly offset by falling input material prices and sustained efforts to enhance efficiency. However, targeted steps are being taken which will significantly reduce net working capital. In addition, measures are being carried out to reduce or postpone the investment program and portfolio optimizations are being implemented.

Executive Board Chairman Dr. Ekkehard Schulz: "We expect to end the current fiscal year with a loss before taxes and major nonrecurring items – in particular restructuring costs, impairment charges and project costs – in the upper three-digit million euro range. Earnings before taxes will be considerably impacted by restructuring expense for our cost-reduction programs and the reorganization. Impairment charges and project costs for the new steel plants will also have a major impact on earnings before taxes."

Online and downloadable versions of the full interim report are available in German and English at

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