11.08.2021. In the third quarter of the current 2020/2021 fiscal year, thyssenkrupp continued its good performance of previous quarters and achieved a significant improvement on both the previous  quarter and the prior-year figures, which were severely impacted by the coronavirus pandemic. The group of companies recorded a third-quarter order intake of 8.8 billion € – almost double the figure for the prior-year period (4.8 billion €).

Results

Between April and June, sales increased by 51 % to 8.7 billion €. Adjusted EBIT amounted to 266 million €, up significantly from the prior-year figure of (693) million € and also from the prior quarter (220 million €). Almost all segments contributed to this positive performance with their earnings improvements. In particular, Materials Services posted record earnings. For the full year 2020/2021, thyssenkrupp has confirmed the earnings forecast raised recently with the half-year figures.

“We are on track with our transformation. The environment remains very challenging but we are delivering on those aspects that are in our control. The figures show that our numerous restructurings and performance measures are taking effect. With the sale of our mining business and the infrastructure business unit, we have also achieved major milestones in focusing our portfolio,” says Martina Merz, CEO of thyssenkrupp AG. “This will quickly have a positive effect. Nevertheless, our ‘Performance first’ principle remains our top priority. In other words, we’re on the right course and we’re progressing well. But we’re doing even more and not letting up.”

At the end of July, thyssenkrupp announced the sale of the Mining Technologies business unit to Danish company FLSmidth. In October 2020, the mining business was assigned to the Multi Tracks segment in order to find a new owner. With the sale, thyssenkrupp has successfully divested the first major portfolio company in this segment. In addition, just last week the company announced the sale of the infrastructure business unit from the Multi Tracks segment to FMC Beteiligungs KG. thyssenkrupp is already in the second phase of due diligence and in constructive negotiations with several potential buyers for the AST stainless steel plant in Terni, Italy and associated sales organisation.

Performance of segments

Materials Services

At Materials Services, the continuing strong rise in material prices and the tangible recovery in warehousing and distribution resulted in a substantial increase in order intake (+1.6 billion €) and sales (+1.4 billion €) to 3.6 billion € and 3.3 billion €, respectively. Adjusted EBIT also reached a new record of 232 million €, a significant increase on the prior year ((75) million €). This is attributable, on the one hand, to the increased prices for finished and stainless steel caused by the materials shortage and, on the other hand, to the effects of the consistent transformation based on innovations and optimisations. For example, the ongoing network consolidation resulted in a 5 % year-on-year reduction in the workforce and a significant increase of 38 % in productivity (warehouse sales per employee). As a further element of the site network optimisation, Materials Services opened a new logistics centre in Rotenburg, which will further increase the company’s efficiency thanks to its high degree of automation and digitisation.

Industrial Components

Industrial Components increased both order intake and sales by 40 %. At Bearings, growth was recorded for industrial applications in particular. After the pandemic-related global market collapse in the prior year the forgings business saw a significant recovery in all regions – both for car and truck components and for undercarriages for construction machinery. At 68 million €, adjusted EBIT was significantly higher than a year earlier (27 million €). The forgings business in particular contributed to this thanks to strong market growth and savings achieved by the early introduction of cost reduction and restructuring measures. As a result of increased material costs and unfavorable selling prices, earnings in the Bearings business were slightly lower but overall remained at a high level.

Automotive Technology

At Automotive Technology, order intake and sales in the third quarter increased by 53 and 50 % , respectively, compared with the weak prior year, which had been impacted by customers’ temporary pandemic-related production stoppages. With continued buoyant demand growth in China, the increases resulted mainly from the automotive original equipment business. Customers’ growth was curbed by bottlenecks in the supply of semiconductors and various primary materials, accompanied by cost increases for materials and logistics. This also impacted adjusted EBIT which, at 51 million €, was nevertheless significantly higher than a year earlier ((91) million €). All business units contributed to the growth in earnings by implementing operational improvements, especially with higher sales volumes, overall better capacity utilisation, a more profitable order structure and successful restructuring in areas such as Automotive Body Solutions (formerly part of System Engineering).

The shortage of semiconductors is likely to continue in the fourth quarter of the current fiscal year as well and further impact the automotive supply business, before the supply situation gradually normalises in the next fiscal year.

Steel Europe

Steel Europe also increased order intake and sales compared with the pandemic-impacted prior year. Order intake increased by 1.6 billion € to 2.5 billion € and sales grew by 1 billion € to 2.4 billion €. With significantly higher selling prices, business grew strongly, especially in the automotive and component supply industries. However, orders from industrial customers and steel service centers also rose significantly. Despite the strong increase in raw material costs and temporary production restrictions, adjusted EBIT improved substantially to 19 million € (prior year: (309) million €). This was reinforced by positive effects resulting from higher capacity utilisation, initial successes in the ongoing restructuring program and the performance measures initiated in connection with implementing Steel Strategy 20-30.

“At Steel too, the significant improvement in the third quarter shows that we are making progress,” says Klaus Keysberg, CFO of thyssenkrupp AG and the Executive Board member responsible for the Steel Europe segment. “This is a good thing, but our long-term contract structures mean there is a delay in increased raw material and steel prices feeding through to our revenues and earnings. In addition, there were temporary production restrictions, largely due to the relining of blast furnace 1 initiated in Duisburg in the third quarter.” Keysberg: “The positive effect on earnings will come. We’ll just see it later than our competitors.”

(Source: thyssenkrupp)