Thyssenkrupp : Interview with the Executive Board

thyssenkrupp annual report 2020 / 2021

1 To our shareholders | Interview with the Executive Board

Interview with the Executive Board

"Moving ahead briskly"

thyssenkrupp is in the midst of a transformation to a high-performing group of companies.

The focus is on aligning the portfolio, structural change, employee development and measures to improve performance. At the same time, thyssenkrupp has embarked on the green transformation of its businesses. The company aims to

be completely climate-neutral by 2050 1). Martina Merz, Klaus Keysberg and Oliver Burkhard outline how thyssenkrupp is managing this dual transfor- mation, the progress made in the past fiscal year and the road ahead.

Dr. Klaus Keysberg, Martina Merz and Oliver Burkhard (from left)

1. In view of the current debate and the German Climate Change Act we are reviewing whether we can become climate-neutral at an earlier date.

Klaus Keysberg

Martina Merz

thyssenkrupp annual report 2020 / 2021

1 To our shareholders | Interview with the Executive Board

T R A N S F O R M AT I O N O F T H E T H Y S S E N K R U P P G R O U P

The past fiscal year was another challenging period for thyssenkrupp. In addition to the pandemic, the realignment of the group was once again the focus of attention. How is that progressing?

Martina Merz We've achieved quite a lot in the past months. We've worked through our priorities and restructured thyssenkrupp step by step - as well as dealing with the considerable challenges resulting from the coronavirus pandemic. We're moving ahead briskly, examples being the transactions in the Multi Tracks segment. We are continuing to move resolutely along the course we have set.

Sustainable profitability and a stable and positive cash flow are our key performance metrics at the moment. Here we're making good progress - and we're confident that we'll be able to achieve these goals in the present fiscal year.

"We're in the second year

of the transformation and we can see that the measures already introduced are having an impact."

Martina Merz

Profitability

3 Scale

• Improve
  (performance, growth, sustainability)

0

Size/volumes

• Focus

Fight

against the impact of the coronavirus pandemic

What makes you so optimistic?

We have a plan and we're optimistic that it will work. Last year we described our plan as a "U" lying on its side, encompassing four phases: following the fight against the impact of the pandemic, the next phases are focus, improve and scale. We're structuring the group's portfolio and simultaneously improving the profitability of all businesses. To achieve that, we're disposing of some activities and introducing measures to enhance performance everywhere in the group. Through the "Focus" and "Improve" phases, we're therefore laying the foundations that will enable us to concentrate on the scale phase - in other words, becoming profitable again. We said from the beginning that a realignment like this will take about three years - without taking the effects of the pandemic into account. We're in the second year of the transformation and we can see that the measures already introduced are having an impact. Now, it's particularly important to pave the way for growth. For us that does not simply mean focused invest- ments; it also means focusing on strengthening our competencies and thus on the development of our employees. I'll be perfectly honest: we're moving in the right direction but the road ahead remains challenging.

Klaus Keysberg The figures for the past fiscal year also show that our measures are having an

Oliver Burkhard

Martina Merz

Martina Merz

thyssenkrupp annual report 2020 / 2021

1 To our shareholders | Interview with the Executive Board

impact: all segments improved significantly and contributed to the group's positive net income. Another important factor is that in the past fiscal year the amount invested in our businesses was again well above depreciation and amortization. That means we're extending our core and actively shaping the future.

The realignment of thyssenkrupp also affects jobs. How much progress have you made with the job cuts you announced?

Oliver Burkhard We have now made about 7,800 of the 12,000 job cuts we announced. Together with our employee representatives, we've managed to find socially acceptable solutions for all employees affected. I'm particularly pleased that we've been able to arrange new employment opportunities for many employees outside the group with the aid of a professional outplacement support company. Nevertheless, reducing our head- count is painful for us all. However, it's the only way to build a successful future for thyssenkrupp.

Martina Merz

*1963, CEO since October 1, 2019, appointed until March 31, 2023

The realignment of the group includes disposing of some activities. What progress has been made with the restructuring of the portfolio in recent months? 2)

At the end of July, we signed the agreements on the sale of the mining business. Shortly after that, we took steps to divest the infrastructure business, carbon components and the Italian stainless steel plant AST. That shows we're moving ahead with the focusing of our portfolio ...

… while taking great care in the selection of the new owners. We want to make sure our employees are in good hands. The realignment of the portfolio means thyssenkrupp will become smaller in the first step. As a second

step, it will become stronger because it is more

focused. That will benefit everyone - investors,

customers and employees.

A stand-alone solution for the steel business is still a key project. What's the latest on that?

We're still convinced that a stand- alone solution offers the best future prospects for the steel business. We're continuing to focus on improving operating performance and implementing the steel strategy 20-30. When the time comes, we'll be able to assess whether and, if so how, the steel business can stand on its own feet. That remains a complex and economically challenging task. The decision depends on a wide range of factors - including external factors. We need a regulatory framework that offers planning

1. Further details can be found in the "Multi Tracks" section of the "Report on the economic position".

Martina Merz

Oliver Burkhard

thyssenkrupp annual report 2020 / 2021

1 To our shareholders | Interview with the Executive Board

certainty, especially with a view to the green transformation. We're working flat out on the is- sues, but it takes time, even though the present market trend is helpful.

Klaus Keysberg In any case, we've made good progress in improving our competitiveness thanks to our steel strategy 20-30. We're continuing along this route. That is shown not least by another portfolio adjustment, the closure of the heavy plate business, which we completed at the end of the last fiscal year as scheduled.

"Green steel is the future - and as one of the technology and innovation leaders in the sector, thyssenkrupp is at the forefront."

Dr. Klaus Keysberg

You mentioned the green transformation of the steel business. That's a herculean task, isn't it? 3)

Klaus Keysberg Green steel is the future - and as one of the technology and innovation leaders in the sector, thyssenkrupp is at the forefront. Basically, we're already right in the middle of the transformation to climate-neutral steel production.

In the long term, we want to completely avoid CO2 emissions in steel production. To do that, we're focusing on the direct reduction process. This process is an environment-friendly alternative to blast furnaces using hydrogen instead of carbon. We've proven that the technology works: our production process is TÜV-certified and we can supply the same quality of steel to our customers in the future - but climate-neutral.

That sounds promising but it requires considerable investment. Has thyssenkrupp got the

money for that?	3) You can find further details in the "Climate,
	energy and environment" and "Technology
	and innovations" sections.

Klaus Keysberg The switch to direct reduction plants is the biggest change in the steel industry since the invention of the blast furnace. At the same time, it's an enormous step towards reducing CO2 emissions throughout the industry. No steel producer can accomplish this transformation on its own. This is a task for society as a whole, for which we need a clear political will and an intelligent mix of instruments that facilitates the investments and cushions the higher operating costs. We also need to create incentives to develop attractive markets for green steel.

Our other businesses are also helping our customer industries to become climate -neutral. Therefore, I see the green transformation above all as an opportunity.

Klaus Keysberg

Martina Merz

Klaus Keysberg

thyssenkrupp annual report 2020 / 2021

1 To our shareholders | Interview with the Executive Board

And what contribution is thyssenkrupp mak- ing? 4)

Martina Merz I firmly believe that our engineering expertise can make a big contribution to the decarbonization of the industry. We want to make thyssenkrupp completely climate-neutral by 2050 5) - that means in terms of our own direct emissions, emissions from purchased energy and emissions along the entire value chain. In 2021, thyssenkrupp was included in the Carbon Disclosure Project's A list for the fifth time in suc- cession. That means we were once again singled out as one of the world's leading companies ...

… and we're currently examining how we could become climate-neutral even faster. Our groupwide Climate Action Program for Sustainable Solutions ensures that our climate targets are realized. Specifically, that means we're optimizing our own processes, enabling our customers to achieve their climate targets through

our products and solutions, and engaging in the socio-political debate on a climate-neutral future.

What does that mean exactly? 4)

As a company, we can become carbon-neutral by changing our own production processes, recycling resources, becoming more energy-efficient and, wherever possible, using electricity from renewables …

… as well as help our customers to achieve their climate targets. Take our automotive supply operations, for example: we're already 80 percent independent of the type of powertrain and we're concentrating on e-mobility,self-driving vehicles and sustainability. We embarked on the transformation of our powertrain components business very early on. Coming from the conventional combustion engine side, we started to develop and industrialize new products for electric vehicles about ten years ago. Today, we

1. You can find further details in the "Climate, energy and environment" and "Technology and innovations" sections.

1. In view of the current debate and the German Climate Change Act we are reviewing whether we can become climate-neutral at an earlier date.

Dr. Klaus Keysberg

*1964, CFO,

member of the Executive Board since October 1, 2019, appointed until July 31, 2024