Adjusted, operating EBIT target achieved with €399 million (without Inoxum, with Steel Americas) / Adjusted EBIT of future continuing operations €1.4 billion / Portfolio optimization program executed / Sale process for Steel Americas plants running to plan / Impairment charge of €3.6 billion at Steel Americas / Group financing on secure basis / Corporate program “impact” with further €2 billion positive EBIT effect over the next three fiscal years / Outlook: Adjusted EBIT in fiscal year 2012/2013 around €1 billion / No dividend payment for past fiscal year

In its meeting today the Supervisory Board of ThyssenKrupp AG adopted the financial statements for fiscal year 2011/2012. Due to the advanced status of the sale process for the plants in Brazil and the USA the Steel Americas business area is classified as a discontinued operation for fiscal year 2011/2012. In this connection impairment charges of €3.6 billion were recorded for Steel Americas. In addition, the Supervisory Board in its meeting accepted the proposal of the personnel committee to terminate the appointments of the Executive Board members Dr. Olaf Berlien, Dr. Jürgen Claassen and Edwin Eichler by mutual consent effective December 31, 2012. The decision is in connection with the overall responsibility of the Executive Board for the management of business and the leadership culture of the Group. The Supervisory Board of ThyssenKrupp AG thanks the three Executive Board members for their work and for agreeing to the termination of their contracts, thereby enabling a restructuring of the Executive Board.

Dr. Heinrich Hiesinger, Chairman of the Executive Board of ThyssenKrupp AG: “The Steel Americas project and the various compliance violations have not just caused immense financial damage. We have thereby also lost trust and credibility. With the changes on the Executive Board, the Supervisory Board has sent out a clear signal for a fresh start. The decisions were made in close consultation with myself. We are systematically establishing a new leadership culture based on honesty, transparency and performance orientation. That is the commitment of the Executive Board.”

Operating performance: All continuing operations profitable

In fiscal year 2011/2012 ThyssenKrupp achieved order intake from its continuing operations (without Inoxum and Steel Americas) of €42.3 billion, a drop of five percent from the prior year. Sales from continuing operations in the reporting period came to €40.1 billion, down around six percent from the comparable prior-year figure. The order and sales declines are mainly due to lower volumes and prices in the materials operations. However in the capital goods operations the positive trend further continued. Order intake and sales increased to new record levels.

Adjusted EBIT from continuing operations at €1.4 billion was down from the prior-year figure of €2.8 billion, mainly due to weaker materials business. However, all continuing operations achieved clear positive adjusted EBIT contributions. The capital goods operations were less volatile and much more robust than the materials operations. Adjusted EBIT from the capital goods operations came to an unconsolidated €1.7 billion. The two business areas in the materials division, Materials Services and Steel Europe, achieved unconsolidated adjusted earnings of €0.6 billion.

ThyssenKrupp’s earnings target for fiscal year 2011/2012 was adjusted EBIT in the mid three-digit million euro range (excluding Inoxum, but including Steel Americas). Despite the weak economic climate the Group achieved this target with €399 million. However, EBIT for the whole Group (including Inoxum and Steel Americas) was €(4.4) billion, well below the prior-year figure of €(1) billion. This is due to the losses of the discontinued operations and particularly to the impairment charge at Steel Americas of €3.6 billion.

The net loss of the whole Group came to €(5.0) billion, an increase of €(3.2) billion from the prior year. Net loss attributable to ThyssenKrupp AG shareholders came to €(4.7) billion, and €(194) million for earnings from continuing operations.

Although ThyssenKrupp’s general aim is dividend continuity, the Group will not pay a dividend for the past fiscal year as the parent-company financial statements of ThyssenKrupp AG show no distributable profit.

Performance of the business areas

The business areas performed as follows in fiscal year 2011/2012:

• Steel Europe’s performance was impacted by the persistent market weakness in the second half of the year. The disposal of the Metal Forming business also contributed to a decline in order volumes. Order intake decreased overall by 15 percent to €10.5 billion, sales by 14 percent to €10.9 billion. Adjusted EBIT reached €247 million, compared with €1,133 million a year earlier. In addition to lower shipments, high price pressure and increased expense for input materials had an impact.
• Sales at Materials Services dropped by eleven percent to €13.2 billion. Negative factors in this were the disposal of the Xervon group, slower demand and the price decline observed since mid 2011. However sales increased significantly in materials and logistics business with the aerospace industry. Adjusted EBIT decreased year-on-year by 42 percent to €311 million.
• Elevator Technology achieved new record levels of both orders (€6.1 billion, up 16 percent) and sales (€5.7 billion, up nine percent). The main driver was business in Asia. For this reason ThyssenKrupp is currently investing in China and India, building two new plants there. The new installations business in southern Europe remained weak, impacting earnings and margins. In fiscal year 2011/2012 the business area achieved adjusted EBIT of €587 million, compared with €641 million in the prior year.
• The Plant Technology business area received new orders worth €4.0 billion in fiscal year 2011/2012 (prior year: €4.5 billion). Sales increased slightly year-on-year by two percent to €4.1 billion. Capacity utilization remained good in all plants, with many operating at their capacity limit. Plant Technology improved on its already good prior-year earnings, achieving adjusted EBIT of €520 million in the reporting year (prior year: €506 million). To further strengthen its market position for chemical engineering in the global oil and gas business, Plant Technology also acquired the UK consulting firm Energy & Power Global.
• Order intake in the Components Technology business area was unchanged year-on-year at €6.9 billion despite the disposal of the US foundry Waupaca and the chassis component manufacturer ThyssenKrupp Automotive Systems Industrial do Brasil. Both disposals were part of the Group’s strategic development program. Sales increased slightly from €6.9 billion to €7.0 billion. Demand increased particularly for car and truck components. Although the auto market in Europe was generally weaker than the US market, the business area profited from the good performance of important customers and keen demand in the midsize and premium segments. Adjusted EBIT came to €453 million, down ten percent from the prior year. Startup costs for new products and plants and declining demand in the wind energy and infrastructure sectors in China weighed on business.
• After successful realignment Marine Systems is now focused exclusively on naval shipbuilding. Thanks to higher demand for frigates and submarines outside Europe order intake increased by 21 percent to €3.6 billion. Orders in hand rose to a record level of €9.0 billion. Sales dropped from €1.5 billion to €1.2 billion. Adjusted EBIT remained good at €169 million (prior year: €213 million).

Financing of the Group on secure basis

At €5.8 billion, the Group’s net financial debt at September 30, 2012 was higher than a year earlier (€3.6 billion) but was held as planned at the level of the third quarter. In the course of the year it was influenced by cash outflows at the discontinued operations Steel Americas and Inoxum. Thanks to available liquidity of €6.7 billion (cash and cash equivalents and undrawn committed credit lines), the Group’s financing is on a secure basis.

Sale process for Steel Americas proceeding to plan

The sale process for the Steel Americas business area’s plants in Brazil and the USA is proceeding to plan. In the second phase, which commenced in November 2012, a selection of interested parties are being given the opportunity to analyze the plants in a due diligence process and submit binding purchase offers.

In connection with the classification of Steel Americas as a discontinued operation, a write-down to fair value of €3.6 billion was necessary. The fair value was determined from internal calculations and knowledge from the ongoing sale process.

Strategic development program firmly on track

The Group made major progress with the strategic development program launched in May 2011. The portfolio optimization program announced at the time, involving businesses with sales of more than €10 billion, was executed in full. Of particular importance is the combination of the stainless steel business Inoxum with the Finnish competitor Outokumpu, which was contractually agreed in January 2012. The approval of the EU Commission followed on November 07, 2012. The transaction will be closed before the end of the year and result in a significant reduction in net financial debt.

Dr. Heinrich Hiesinger: “With the completion of our portfolio optimization program and the sale of Steel Americas the weight of our capital goods operations within the Group will increase significantly. Without Inoxum, Steel Americas and some smaller disposals, steel production’s share of sales drops from 40 percent to only around 30 percent. To put it another way: 70 percent, by far the larger share, relates to materials and logistics services and capital goods business.”

ThyssenKrupp also plans to substantially improve the Group’s efficiency and further reduce costs. In fiscal 2011/2012 the performance measures under the corporate program “impact” achieved a positive EBIT effect of more than €300 million. Building on this, a further cumulative positive EBIT effect of €2 billion is to be achieved by the cost reduction and efficiency enhancement program in the next three years. Key factors in this will be performance and efficiency improvements in the business areas, various cross-cutting initiatives across all business areas and a streamlining of the Group’s leadership structure.

To reduce the complexity of the Group, the two business areas Plant Technology and Marine Systems will be combined into a joint business area called “Industrial Solutions” at January 01, 2013. Both areas pursue similar business models and will profit from synergies as a result of the combination. In addition, the Group companies Fördertechnik and Polysius within the Industrial Solutions business area will also be combined with effect at January 01, 2013. Both companies are important partners to the cement and mineral industries. This step, too, will eliminate overlaps and increase efficiency.

In addition to these measures, ThyssenKrupp plans to expand and accelerate the already started process of cultural change in the Group. This will include a review of the entire leadership model.

Dr. Heinrich Hiesinger: “We are redefining processes, optimizing structures, clarifying roles, rules and responsibilities. We aim to be working in the revised Group structure by October 2013.”

Outlook

From today’s perspective, the Group’s performance in the 2012/2013 fiscal year will be characterized to a very large extent by the continued absence of a global economic recovery, with an unsolved debt crisis in particular in the euro zone and slower growth in the emerging economies. Based on the assumption of stagnation for the most part in the core markets of our more cyclical materials and components business, where in the current economic environment visibility does not extend much beyond a quarter, the Group’s expectations for sales and adjusted EBIT are currently as follows:

• ThyssenKrupp expects the Group’s sales from continuing operations to remain at the prior-year level of around €40 billion in fiscal year 2012/2013, provided there are no major dislocations on the raw materials markets. Sales lost due to portfolio measures, in particular at Steel Europe and Components Technology, should be largely offset by organic growth in the capital goods businesses.
• Assuming that the slower activity on the materials markets at the beginning of the new fiscal year compared with the prior year continues but does not progressively worsen, adjusted EBIT from the Group’s continuing operations should be around €1 billion.

Dr. Heinrich Hiesinger: “In the past fiscal year we made major progress with our strategic development program, in particular with the portfolio measures. Now we are focusing on further improving our operating performance and our leadership culture: We need more efficiency, transparency and honesty at all levels. Only then can we increase our profitability and unlock the potential for value growth available in our Group.”

The annual report is now available for downloading at https://www.thyssenkrupp.com.

Innovations and technical progress are key factors in managing global growth and using finite resources in a sustainable way. With our engineering expertise in the areas of “Material”, “Mechanical” and “Plant”, we enable our customers to gain an edge in the global market and manufacture innovative products in a cost and resource efficient way.