In the past fiscal year thyssenkrupp achieved slight growth in a difficult economic environment. Order intake and sales both rose to
The capital goods businesses made a major contribution to this growth overall. In the materials businesses, on the other hand, growth was slowed by the increasingly weaker global economy, the substantial slowdown in the automotive sector and continued high import pressure on steel. This was accompanied by a massive rise in raw material prices. These factors also impacted operating earnings - particularly in the auto components and materials businesses. The Group's adjusted EBIT 1 of
'The performance of many of our businesses is not satisfying. This is also due to the fact that necessary structural improvements and restructuring measures were not implemented with the necessary consequence. We will now tackle this. Swiftly and systematically,' says
Against this background, the newly formed Executive Board has set itself four clear priorities and is focusing on the performance topic, the Elevator transaction, the future viability of the steel business and the further development of the organization.
'Performance first': further decisions taken
The company's primary objective continues to be increasing the performance of its businesses. Numerous measures are already underway in all areas.
The Executive Board has taken further decisions in this regard in recent weeks: Industrial Solutions will focus on the operational turnaround. At the same time, thyssenkrupp sees opportunities to further develop the various plant engineering businesses together with partners or under a new roof. To that end, information on the businesses is currently being prepared in the form of so-called fact books in order to quickly establish a solid basis for discussions with potential interested parties.
At System Engineering, the restructuring process has already begun. There will be a reduction of approx. 640 jobs. Overall, thyssenkrupp has earmarked a mid triple-digit million EUR amount for pending restructuring measures in the current fiscal year.
thyssenkrupp expects all the performance measures initiated to result in operational improvements which will not yet however take full effect in the current fiscal year. This will change the overall basis for achieving the Group's goals. thyssenkrupp will therefore not achieve the medium-term targets set in
'Dual Track' for Elevator: Preparations on schedule
To increase the financial leeway for the restructuring of the Group, thyssenkrupp is pressing ahead with the planned Elevator transaction as a second priority. The Group remains on the 'dual track' and is working on all options. The preparations are timed in such a way that thyssenkrupp is expected to be able to make a sound decision in the first quarter of 2020 on which options to pursue primarily. Internal preparations for an IPO will be completed by the end of the year. thyssenkrupp has already received indicative offers from strategic and financial investors. Based on a due diligence, thyssenkrupp expects binding offers as a basis for potential negotiations in the next year.
Future concept for steel in progress
As the number three priority, the Group will address performance issues and structural challenges in the steel sector. The aim is to give steel a long-term perspective. To this end, the Steel Executive Board is currently working on a concept for the future which will initially be presented to the Supervisory Board of thyssenkrupp
Organization: Headquarters with new role - businesses streamlined
The fourth priority is the further development of the organization. With flatter hierarchies and a more direct style of collaboration, a new organization should further strengthen the direct responsibility of the businesses. At the end of September, thyssenkrupp had already presented the framework of the future structure internally. For example, the Group is eliminating the matrix organization. At Components Technology and Industrial Solutions, the management companies will essentially be dissolved. At headquarters, the number of corporate functions will be trimmed from 15 to 10. The staff at our headquarters of almost 800 employees will be reduced to around 430 within the next 12 months.
Past financial year 2018/2019 strongly impacted by external effects
Despite the increasingly weaker market dynamics in the course of the year - particularly in the automotive sector - the Components Technology business area significantly improved its order intake and sales year-on-year. The increases resulted mainly from industrial components (wind energy, construction machinery, heavy trucks). By contrast, the weak performance of passenger car components in
In the business area Elevator Technology , thyssenkrupp booked orders worth
Industrial Solutions increased its sales by 10 percent in the past fiscal year. The construction of chemical plants was a major contributor to this increase. Order intake was lower than in the previous year due to the restrained awarding of major projects. Earnings were weaker than in the previous year. This was due to lower margins on projects in progress and a partial underutilization of capacity. Overall, Industrial Solutions recorded an adjusted EBIT of
The marine business more than tripled its order intake in the past fiscal year. A major order for four frigates from
The Materials Services business area also felt the impact of economic uncertainties and the difficult market environment in the automotive sector. Order intake and sales were significantly negative. Decreasing market prices and a very weak demand, above all in the stockholding and direct trade businesses as well as in the automotive-related service centers in
Steel
thyssenkrupp is making progress with the reduction of administrative costs at headquarters and in the regional organization significantly faster than planned. As a result, corporate costs in the past fiscal year were overall reduced to
All in all, thyssenkrupp posted a net loss of
At
The Group's net financial debt amounted to
Equity decreased from
Against the background of the weak operating performance and the financial situation, the Executive Board and Supervisory Board will propose to the Annual General Meeting on
Forecast 2019/2020
thyssenkrupp is generally cautious about the current fiscal year 2019/2020 . Economic and geopolitical uncertainties provide the Group with only limited visibility. Particularly in the cyclical materials and automotive components businesses, this leads to limited predictability.
Against the background of overall progress in the capital goods businesses and a weaker earnings trend in the materials businesses, the Executive Board expects adjusted EBIT to be at the prior-year level. Free cash flow before M&A is expected to be below the prior-year level. Inflows will come from operating improvements, depending on order intake inflows and the payment profile of projects in plant construction and at Marine Systems. The expected antitrust fine and the significantly higher payments for restructuring in the mid triple-digit million EUR range as a result of the implementation of 'newtk' will have a negative impact. The expenses for the intensification of restructuring (special effects) will result in a significantly higher net loss for the year than in the previous year.
The reclassification of the steel activities as 'continued operations' leads to retrospective recognition of the previously suspended scheduled depreciation. Earnings in the first half of 2018/2019 were subsequently negatively impacted by
Contact:
Email: engineered.thyssenkrupp.com
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