Q2 2023/24 Results
Conference Call
Ticker: TKA (Share) TKAMY (ADR)
May 2024 | Essen
Management summary Q2 23/24
Portfolio
• Steel Europe: First step towards 50/50 Joint Venture achieved - EPCG acquires 20%
• Marine Systems: Due diligence phases progressing (KfW, PE) as well as spin-off in elaboration
• Decarbon Technologies: Board set-up completed; closing of transaction of the remaining 55% stake in tk Industries India (POL)
Performance
Green Transformation
- Q2 in line with expectations, full-year guidance confirmed for EBIT adj. and FCF bef. M&A
- APEX well on track with incremental improvements across all businesses
- Steel Europe: Structural realignment to boost competitiveness and profitability in preparation
- Materials Services: Start of fundamental structural transformation of tk Schulte's business model
- Uhde: Development of conceptual design study for reduced-emission fertilizer plant (EnviNOx®)
- Polysius: Start of construction of one of the 1st carbon-neutral cement plants ("pure oxyfuel")
- thyssenkrupp on the CDP "Climate A List" for the 8th time in a row
- No 1 position (MDAX) in a buyside Corporate Governance ranking
2 thyssenkrupp AG l Conference Call Q2 2023/24
Steel Europe: First step towards 50/50 Joint Venture achieved
EP Corporate Group (EPCG) acquires stake of 20% and aims for another 30%
• | Signing of acquisition of 20% stake in tkSE by EPCG |
• | Transaction is: |
− Expected to be closed in FY 23/24 | |
20% | − Subject to the approval of the relevant authorities |
and the Supervisory Board of tkAG
Targeted | |
50% | tkSE |
shareholding | |
structure |
30%• In negotiation (tkAG with EPCG)
- Target: Equal 50/50 Joint Venture
tkAG | EPCG |
Combining materials capabilities of tkSE with the energy expertise of EPCG for the decarbonization of the steel industry
Create a high-performing and
profitable steel company
Reduce costs of decarbonization
to a more competitive level
Ensure economic independence
and business success
3 thyssenkrupp AG l Conference Call Q2 2023/24
APEX well on track
Recap: APEX launch in Nov-23 | APEX Q2 status update |
• Solid APEX governance and functional processes set up
− Measures within segments & corporate defined
− Effective cross-segment approach used to define large-scale initiatives (e.g. procurement, digitalization)
• More than 4,600 measures identified with value of ~€1.8 bn (from ~€1.3 bn in Q1)
• Significant momentum achieved while implementation is progressing
APEX is the key enabler to achieve our mid-term targets
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Performance highlights
Well on track to reach full-year guidance
Sales
Q2 €9.1 bn
-10% YoY
H1 €17.2 bn
-10% YoY
EBIT adj. Margin
€184 mn 2.0%
-10% YoY
€268 mn 1.6%
-28% YoY
FCF bef. M&A
-€197 mn
+€20 mn YoY
-€728 mn
-€146 mn YoY
Margin increase in Q2 - Earnings development of all | Q2 FCF bef. M&A still negative, but improved YoY |
businesses as expected | |
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Balance sheet highlights
Our Group transformation journey is backed by a strong balance sheet and enabling us to capture strategic opportunities
Net cash
€3.5 bn
-€0.9 bn YTD
Pensions
€5.8 bn
+€0.4 bn YTD
Lower QoQ
(-€0.2 bn)
Equity ratio
37.6 %
-0.5%-pts. YTD
Providing resilience while navigating through macro uncertainties | Interest rate development i.a. driving pensions and equity ratio |
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Q2 Group performance
Efficiency measures and increased resilience fully offset top-line trend
Sales | -10% | ||
€ bn | 10.1 | 8.2 | 9.1 |
- Materials businesses significantly lower (price and volume), partially offset by stronger sales at Decarbon Technologies
- Ongoing muted demand (e.g. auto, construction, wind China)
EBIT adj.
€ mn; %
-10% | ||
205 | Pos. one-timer | 184 |
84 | ||
2.0% | 1.0% | 2.0% |
- Top-linetrend compensated by efficiency measures and increased resilience
- Performance improvements gaining momentum
- APEX supported performance at all businesses
- PY affected by positive one-timer at Automotive Technology (mid 2-digit €mn)
FCF bef. M&A | +20 | • Fully in line with expectations | ||||||||||
€ mn | ||||||||||||
• Weaker H1 with typical seasonality - uptick in H2 | ||||||||||||
-216 | -197 | |||||||||||
• On track to achieve full-year guidance | ||||||||||||
-531 | ||||||||||||
Q2 22/23 | Q1 23/24 | Q2 23/24 |
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Q2 EBIT adj. by segment
Sound performance across the group in an ongoing challenging market environment
25 | YoY segment comments | ||||||||
68 | |||||||||
184 | AT | Rather stable ex PY one-timer: Lower material | |||||||
-42 | |||||||||
and transport costs vs. volume decline, higher | |||||||||
personnel expenses and non-conformity costs | |||||||||
69 | DT | Performance and efficiency measures only | |||||||
partially compensate weak wind market and | |||||||||
business ramp-up at tk nucera | |||||||||
Margin | 2.0 % | MX | Lower average price levels and shipments | ||||||
partially offset by e.g. lower freight costs | |||||||||
15 | SE | Cost improvements (mainly energy and raw | |||||||
49 | |||||||||
materials), partially offset by lower spot market | |||||||||
prices and lower shipments | |||||||||
MS | Successful focus on performance improvement; | ||||||||
initiatives secure margins in new orders and | |||||||||
AT | DT | MX | SE | MS | HQ/ | Group | stabilize profitability of order backlog | ||
Others | |||||||||
∆YoY | -60 | -34 | -16 | +83 | +11 | -5 | -21 |
PY with positive one-timer
(mid 2-digit € mn)
Note: Figures in € mn
8 thyssenkrupp AG l Conference Call Q2 2023/24
Outlook FY 23/24
Sales
EBIT adj.
FCF bef. M&A
FY 22/23 | Outlook FY 23/24 |
€37.5 bn | Below the prior-year |
(prior: At the prior-year level) | |
High 3-digit € mn range
AT Up; low-mid3-digit € mn range
DT Largely stable
€0.7 bn
MX Up; low 3-digit € mn range
SE Largely stable (prior: Up; mid 3-digit € mn range)
MS Up; high 2-digit € mn range
€0.4 bn | Low 3-digit € mn range |
9 thyssenkrupp AG l Conference Call Q2 2023/24
Q&A Session
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ThyssenKrupp AG published this content on 15 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 11:49:17 UTC.