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Capital market-relevant press releases, 2012-02-14, 07:30 AM

ThyssenKrupp in the first quarter: Order intake and sales stable in difficult environment

In an economically slow first quarter 2011/2012 (October 1, 2011 – December 31, 2011), the ThyssenKrupp Group was able to hold orders (€10.1 billion, up 1 percent) and sales (€9.9 billion, down 1 percent) from continuing operations (without Inoxum) steady year-on-year. Demand in the Technologies division was largely favorable, with strong increases in orders and sales in the elevator and automotive component businesses. By contrast, the Group recorded declining volumes in most areas of the Materials business, where customers were cautious due to the uncertainty caused by the sovereign debt crisis.

The economic slowdown and in particular the declining volumes at Steel Europe and Materials Services were more visible on the earnings side. Adjusted EBIT from continuing operations came in at €83 million, compared with €261 million in the prior-year quarter. All continuing business areas reported positive adjusted EBIT in the first quarter 2011/2012 with the exception of Steel Americas, where the ramp-up was additionally hampered by technical problems and a weak market environment in the reporting quarter. The Technologies businesses (Elevator Technology, Plant Technology, Components Technology, Marine Systems) achieved solid adjusted EBIT of €409 million. At Materials, however, the €288 million loss recorded by Steel Americas could not be offset by the Steel Europe and Materials Services business areas.

Earnings before interest and taxes (EBIT) from continuing operations fell to €(33) million from €261 million in the corresponding prior-year quarter. This includes net negative special items of €116 million − in particular goodwill impairment at Marine Systems in connection with the disposal of the civil shipbuilding operations. After-tax earnings from continuing operations were €(172) million, compared with €90 million a year earlier.

The highlights for the reporting quarter versus the prior-year quarter are as follows:
・ Order intake from continuing operations increased by 1 percent or €81 million to €10.1 billion.

・ Sales from continuing operations decreased by 1 percent or €124 million to €9.9 billion.

・ Adjusted EBIT from continuing operations came to €83 million, compared with €261 million in the prior year.

・ EBIT from continuing operations was €(33) million, down from €261 million a year earlier. EBIT margin slipped from 2.6 percent to (0.3) percent.

・ Earnings per share from continuing operations decreased from €0.29 to €(0.30).

・ Net financial debt (including Inoxum) was €5,937 million at December 31, 2011. On December 31, 2010 net financial debt stood at €5,814 million. The rise is due both to the increase in net working capital and the ramp-up of the new carbon and stainless steel mills in Brazil and the USA.
In the first quarter 2011/2012 ThyssenKrupp successfully continued the strategic development program adopted in May 2011. Including the combination of Inoxum and Outokumpu announced on January 31, 2012, nine months after adoption of the strategic development program ThyssenKrupp has signed sale agreements or already closed transactions for around 80 percent of the sales volume up for disposal. The sale of the civil shipbuilding activities to UK-based Star Capital Partners is now also completed following the closing on January 31, 2012.

Dr. Heinrich Hiesinger, Executive Board Chairman of ThyssenKrupp AG: “In the first quarter of the current fiscal year, our Technologies businesses once again delivered stable earnings contributions. This shows that our strategy of focusing more strongly on these businesses in the future is the right one. We have already made good progress on implementing the measures to develop the company into a diversified industrial group.”

The continuing uncertainty of the macroeconomic situation still makes it impossible to provide a reliable full-year forecast at present. “As we always have negative seasonal effects in the first quarter of our fiscal year and we expect the losses at Steel Americas to be lower in the second half, the adjusted earnings of the first quarter 2011/2012 will not be representative of the year as a whole,” said Dr. Heinrich Hiesinger.

The view of the second quarter 2011/2012 is as follows:
・ At Materials, ThyssenKrupp expects shipments and volumes to increase versus the first quarter. Softer prices in contract business resulting from the weaker environment in the first quarter will be offset by rising prices in shorter-term transactions and on the spot market. The losses at Steel Americas are expected to be lower. However, higher volumes and improved productivity will continue to be offset by technical startup costs.

・ At Technologies, adjusted EBIT is expected to be level with the prior quarter. Higher earnings contributions are anticipated from Components Technology as a result of continuing strong demand from car makers. By contrast, earnings contributions from Plant Technology could decline temporarily; the projects due to be billed there will result in lower adjusted EBIT.
With a view to the second half of the current fiscal year, the Group expects the following developments:
・ For Materials, ThyssenKrupp currently sees encouraging signs on the price and volume side. Despite this, the uncertain economic parameters still make it impossible to provide a reliable forecast for the third and fourth quarters. The losses at Steel Americas should continue to decline.

・ At Technologies, the structure of orders in hand of the Group’s Plant Technology business continues to provide high planning certainty; earnings contributions from this business should be higher in the second fiscal half than in the first. The Components Technology business is more cyclical, so ThyssenKrupp does not expect the strong current overall operating levels to continue in the second fiscal half. Earnings contributions from Marine Systems are expected to be at a normalized level in the 2nd half of the year.
“With the economic environment remaining uncertain, we will continue to work systematically on the operational and structural improvement of the Group and rigorously implement our integrated strategic development plan,” said Dr. Heinrich Hiesinger.

German and English versions of the full interim report are available for downloading and as an online version at http://www.thyssenkrupp.com.

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