By: ICN Bureau
Last updated : August 13, 2022 11:14 am
Portfolio and performance measures being driven forward resolutely: headcount reduced by a further 4,440 employees year-on-year
thyssenkrupp posted another good performance in the 3rd quarter of fiscal 2021/2022. Despite the persistent challenges caused by the war in the Ukraine, the Covid pandemic and the disruption of global supply chains, the Group raised order intake by 13 percent year-on-year to €10.0 billion in the period April through June. Sales improved by 26 percent to €11.0 billion.
thyssenkrupp almost tripled adjusted EBIT to €721 million (prior year: €266 million). Alongside the improvement in performance and efficiency resulting from implementation of the strategy, the main drivers of this development were higher revenues and improved margins at Materials Services and Steel Europe.
By contrast, the ongoing supply chain problems and higher factor costs again had a marked adverse impact, especially in Automotive Technology and Industrial Components. In view of the good business development in the first 9 months, thyssenkrupp has confirmed its full-year forecast for adjusted EBIT and the free cash flow before M&A.
Klaus Keysberg, CFO of thyssenkrupp AG: “In the third quarter, we once again demonstrated our improved efficiency. We will not be reducing our efforts. Given the ongoing challenges and risks in our environment, stepping up our performance is particularly important. At the same time, we are keeping a close eye on the continuing development of our businesses. Current examples include the expansion of production capacity in Marine Systems and the dynamic growth of our hydrogen business.”
thyssenkrupp made further progress with its strategic transformation in the 3rd quarter: in June, thyssenkrupp Marine Systems signed an agreement to acquire MV Werften Wismar, expanding its strategic options for the construction of submarines and surface vessels and embarking on the next chapter in its growth story.
A stock market listing remains the preferred choice for the hydrogen business, thyssenkrupp nucera, to benefit from the growth prospects for green electrolysis plants as a global technology leader. The potential for water electrolysis remains substantial. This is documented not least by the order backlog at thyssenkrupp nucera, which has now grown to around €1.4 billion.
A decision on the timing of a possible IPO depends on the situation on the capital markets. In the automotive business, thyssenkrupp is exploring a possible joint venture with the Japanese industrial group NSK. In addition, thyssenkrupp is in talks with potential buyers for the Automation Engineering business unit and has started preparations for an M&A process for Springs & Stabilizers.
Progress is also being made with the adjustments to the workforce: Of the more than 12,000 jobs to be reduced by fiscal year 2023/2024, the company has already found socially acceptable solutions for around 9,500 employees – including around 1,700 in the first 9 months of 2021/2022. Compared with the prior-year (to June 30, 2021), the number of employees decreased by 4,400.
thyssenkrupp ended the 3rd quarter of the present fiscal year with net income of €92 million (prior year: €145 million). This includes impairment losses of around €480 million, mainly due to the sharp rise in interest rates as of the reporting date and the associated increase in the cost of capital. €390 million of this amount relates to Steel Europe. After deducting non-controlling interest, net income was €76 million (prior year: €125 million); earnings per share came to €0.12 (prior year: €0.20).
Sharply higher commodity and materials prices and delays in customer call-offs led to a further strong price-driven rise in net working capital in the 3rd quarter. The free cash flow before M&A was negative as expected at €(412) million, but this was a considerable improvement compared with the previous quarter (€(772) million).
Klaus Keysberg: “In the 3rd quarter, we were again affected by the rise the price of commodities and other materials. However, we expect a considerable easing of net working capital and a clearly positive cash flow in the fourth quarter. A return to a sustained positive free cash flow before M&A - on a full-year view - remains our priority goal. We are confident that we will achieve this through the systematic realization of our transformation and the continuous structural improvement of our businesses.”
The group’s net financial assets as of June 30, 2022 stood at €2.0 billion (March 31, 2022: €2.4 billion). With cash and cash equivalents and undrawn committed credit lines totaling €7.5 billion, thyssenkrupp has a very good liquidity position.
Equity improved significantly to €14.1 billion in the 3rd quarter (March 31, 2022: €12.8 billion). As well as the net income achieved, higher interest rates and the resulting remeasurement of pension obligations in particular delivered positive effects of around €1.1 billion.
Forecast for adjusted EBIT and free cash flow before M&A confirmed
Notwithstanding the continuing uncertainty about the further development of the geopolitical and macroeconomic environment and the associated limited ability to predict the effects reliably – particularly with regard to the necessary supply of fossil fuels – thyssenkrupp is reiterating its sales and earnings forecast for 2021/2022.
Sales are expected to be up significantly year-on-year with an increase in the low double-digit percentage range (prior year: €34 billion). For adjusted EBIT, thyssenkrupp still anticipates a significant improvement to at least €2.0 billion (prior year: €796 million).
In the case of free cash flow before M&A, the company expects a significant year-on-year improvement to a negative figure in the mid-three-digit million euro range (prior year: €(1.3) billion)The forecast for net income now takes into account the impairment losses triggered by the rise in interest rates in the 3rd quarter. thyssenkrupp expects net income to be in the high-three-digit million euro range (previously: at least €1.0 billion; prior year: €(25) million).