Charts: Steel Europe Strategie 20-30

thyssenkrupp Steel Europe Strategy 20-30

Ticker: TKA (Share) TKAMY (ADR)

March 2020

Strategy 20-30 designed to tackle the challenges and capitalize on opportunities in the steel market

Challenges		Opportunities

• Market environment - Steel índustry at cyclicallow-point
• • Increased raw material costs
  • Price pressure for steel products
  • Softer demand(Covid-19 to be considered)
  • Oversupply, intensified by imports
• SE organization and cost base
• • Increased personnel costs
  • Organisational inefficiencies, also due to legacy
• SE production process
• • Downstream footprint with inefficiencies, too fragmented

SE

20-30

• Steel Europe with strong USPs
• • Premium flat steel producer with (one of) the most efficient integrated production sites in Europe
• Market until 2030
• • Industry with moderate growth
  • Auto with moderate growth; most profitable segment
• Auto
• • Demand for thinner, wider and lighter flat steel products(hot-forming and multiphase steel products)
  • Demand shift from electrolytic tohot-dip galvanized coatings
  • Demand for "specialties" in Europe,
    e.g. grain-oriented electrical steel for e-engines

Countermeasures at Steel Europe needed right now!

2 March 2020

Steel Europe is (one of) the biggest, most efficient, integrated steel assets in Europe

Steel Europe operations in the Center of Europe and close to its main (auto) customers

500 km

Premium flat steel producer

Technology leader and full-service provider for high-quality flat carbon steel products

41%

250 km

Duisburg as strategic location with favorable logistics (Rhine)

Within a 500 km radius: ~40% of customers and ~60% of shipments

Strong focus on Europe, global network

Attractive steel products and services available worldwide

Reliable earnings and cash flow contributor

Steel Europe with major contribution to tk's performance improvements

				Hamburg
			Gelsenkirchen	Berlin
Rotterdam	Rhine		Bochum
			Dortmund
Antwerp	Duisburg		Hagen
		Finnentrop
	Brussels		Kreuztal-Ferndorf
Isbergues		Kreuztal-Eichen
	Andernach
	Luxembourg		Frankfurt

Stuttgart

Munich

Main production site

Further production sites

3 March 2020

Steel Europe with fundamental value through premium grade flat carbon steel

Reliable returns by benchmark position in products and processes

EBIT adj. [€mn]		•	Strategy 20-30
		•	Normalized market
		687	environment
	492	547
247	221	315
143		31

BCF [€mn]	673	715
		459
280	232
68		82
		-72
11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20	19/20+

Steel Strategy 20-30

• Performance andcost-reduction with effects in short-term to start NOW
• Immediate preparation of downstream network optimization
• Continue existing path toclimate-neutral steel products
• Reliable earnings and Cash Flow
• ROCE ≥ WACC over the cycle

4 March 2020

Strategy 20-30: strengthen competitiveness and downcycle resilience

Performance

• Better cost base, higher av. revenues/t,
• Add. ~€200 mn p.a. in EBIT and BCF

+

Portfolio

• Higher share of premium products
• More efficient downstream footprint
• Add. ~€400 mn p.a. in EBIT and BCF

• Headcount (FTE) reduction: 1,000 administration (SG&A); 800 production; 200 logistics and maintenance
• Optimization of processes and product quality in downstream network by additional investments of ~€800 mn over 6 years
• • Build on competitiveness of Duisburg production site
  • Close Bochum production site (Castroper Street); additional reduction of up to 1,000 FTE until 2026
  • Readiness for shipments of up to 11.5 mt/a, shift in product portfolio towards highly profitable focus segments
• Leverage leading product and technology expertise, support customers particularly in mobility:light-weigth high safety; superior surface quality; e-mobility
• Heavy Plate: Execution of "Sell" or "Close" until end FY 20/21
• Electrical Steel (GO): turnaround concept; focus onhigh-end silicon grades for Industry customers in Europe

Ramp-up of add. ~€600 mn p.a. in EBIT and BCF; upside from performance in short-term, from portfolio in mid-term

5 March 2020

Portfolio: Holistic approach across entire downstream network

Duisburg

Bochum

		Target	~
Concentration and higher utilization	FY
of integrated production:
17/18
-	Steel mill operations
-	Hot rolling operations		Coated,

- Coating processes for auto sheets	superior
surface quality

Closure of Bochum (Castroper Street) site

- Reduction of 1,000 FTEs until 2026

Hot-forming

Enabling of Bochum (Essener Street) site for advanced auto products

-	Non-grain-oriented electrical steel
	for e-engines	Chassis
-	High-end finishing lines for
	auto sheets

11.5 mt

11.3 mt

Non-grain-oriented electrical steel for e-mobility

Multiphase steels

6 March 2020

Focus segment products in relation to total shipments

Strategy 20-30: foster fundamental value of Steel Europe

	+~€600 mn EBIT/BCF
oBuild on Steel Europe's strong USPs	short-term ~€200 mn from cost reduction;
−technology leader in premium flat carbon steel	mid-term ~€400 mn from production network
optimization

• preferred supplier of German auto OEMs
• highly efficient integrated production site in Duisburg at river Rhine

1. Strengthen competitiveness by securínglong-term technology leadership and improving cost base

1. Initiate immediate restructuring, reduce headcount by 3,000 FTE in total (2,000 in next 3 years; plus 1,000 until 2026)

1. Holistic approach for production network optimization; additional investments of €800 mn over 6 year

1. Continue existing path forclimate-neutral steel products

7 March 2020

Disclaimer thyssenkrupp AG

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This presentation contains forward-looking statements that are subject to risks and uncertainties. Statements contained herein that are not statements of historical fact may be deemed to be forward-looking information. When we use words such as "plan," "believe," "expect," "anticipate," "intend," "estimate," "may" or similar expressions, we are making forward-looking statements. You should not rely on forward-looking statements because they are subject to a number of assumptions concerning future events, and are subject to a number of uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from those indicated. These factors include, but are not limited to, the following: (i) market risks: principally economic price and volume developments; (ii) dependence on performance of major customers and industries, (iii) our level of debt, management of interest rate risk and hedging against commodity price risks; (iv) costs associated with, and regulation relating to, our pension liabilities and healthcare measures; (v) environmental protection and remediation of real estate and associated with rising standards for real estate environmental protection; (vi) volatility of steel prices and dependence on the automotive industry; (vii) availability of raw materials; (viii) inflation, interest rate levels and fluctuations in exchange rates; (ix) general economic, political and business conditions and existing and future governmental regulation; and (x) the effects of competition.

Any assumptions, views or opinions (including statements, projections, forecasts or other forward-looking statements) contained in this presentation represent the assumptions, views or opinions of thyssenkrupp as of the date indicated and are subject to change without notice. thyssenkrupp neither intends, nor assumes any obligation, unless required by law, to update or revise these assumptions, views or opinions in light of developments which differ from those anticipated. All information not separately sourced is from internal company data and estimates. Any data relating to past performance contained herein is no indication as to future performance. The information in this presentation is not intended to predict actual results, and no assurances are given with respect thereto.

Throughout this presentation a range of financial and non-financial measures are used to assess our performance, including a number of the financial measures that are not defined under IFRS, which are termed 'Alternative Performance Measures' (APMs). Management uses these measures to monitor the group's financial performance alongside IFRS measures because they help illustrate the underlying financial performance and position of the group. These APMs should be considered in addition to, and not as a substitute for, or as superior to, measures of financial performance, financial position or cash flows reported in accordance with IFRS. APMs are not uniformly defined by all companies, including those in the group's industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies.

8 March 2020