thyssenkrupp Reports 9 Month Results
thyssenkrupp’s performance in the first 9 months of the current fiscal year was significantly impacted by the effects of the coronavirus pandemic. As a result of temporary plant closures at customers, production in many areas came almost to a halt at the start of the 3rd quarter. The materials and components businesses dependent on the auto industry were particularly hard hit. Added to this were structural challenges in the steel business in an already difficult general market environment. Against this background order intake in the first 9 months of the current fiscal year decreased year-on-year by 19 percent to EUR 19.8 billion. Sales were down by 15 percent to EUR 21.6 billion. Despite immediate countermeasures in response to the coronavirus pandemic, adjusted EBIT after 9 months at EUR (1,122) million was significantly lower than a year earlier (EUR 42 million). Particularly impacted by the pandemic, the 3rd quarter alone accounts for adjusted EBIT of EUR (679) million. In its last forecast thyssenkrupp expected a loss for the period April to June in the high three-digit million euro range and could not rule out a figure of up to a good EUR 1 billion.
Automotive Technology was hit particularly hard by the fallout from the coronavirus pandemic. The collapse in demand in the world’s biggest auto market China in February was followed from March by further plant shutdowns by big customers as a result of the lockdown particularly in Europe, the US, and Mexico. In China there were signs of a slight recovery from the end of April after the easing of restrictions. Order intake and sales in the first 9 months were down year-on-year by 14 percent and 12 percent respectively. This decline is also reflected in operating income. Adjusted EBIT at €(157) million was significantly lower than a year earlier (€17 million).
At Industrial Components the bearings unit continued to perform strongly thanks in particular to the good order situation for wind energy in Germany and China. The forgings business – operating in an already weak market for truck and construction machinery components – was impacted by slowdowns at all major plants in response to the coronavirus pandemic. Overall order intake and sales were down by 21 percent and 17 percent respectively. Adjusted EBIT at €122 million was lower than a year earlier (€168 million).
Plant Technology increased its sales in the first 9 months by 6 percent, with a major contribution coming from chemical plant engineering. Compared with the prior year, which included major mining equipment and fertilizer plant orders, order intake was 38 percent lower, mainly as a result of pandemic-related project deferrals. Despite sales increases in chemical plant engineering, stable service business and positive effects from the cost-saving program, adjusted EBIT decreased to €(135) million (prior year €(114) million). Negative impacts included lower sales due to slower progress on cement projects and deferrals in order intake as a result of the pandemic.
Order intake at Marine Systems was down by 7 percent. Sales too were 9 percent lower at €1.2 billion, reflecting temporarily slower progress on submarine projects. However, buoyed by performance measures, adjusted EBIT was positive at €6 million (prior year: €0 million).
Materials Services continued to feel the effects of pandemic-related weak demand and declining prices in virtually all product segments, in particular in the 3rd quarter. The exception was plastics, which profited above all from the sale of transparent plastic sheets as protection against coronavirus. The pandemic-related temporary closure of the Italian stainless steel plant AST from the second half of March had a negative impact. Order intake and sales each decreased by 18 percent. The situation particularly in warehousing and distribution, the auto-related service centers and at aerospace weighed on business and led to negative earnings effects. Accordingly, adjusted EBIT was down year-on-year at €(62) million (prior year: €119 million).
The performance of Steel Europe was again characterized by the extremely challenging situation in the steel sector. Demand from the auto industry, which was already noticeably lower in March, slumped further in the course of the 3rd quarter, also due to declining order volumes from other industrial customers. The performance of the packaging steel operations was stable. Overall, order intake and sales after 9 months were down 24 and 20 percent respectively from the prior year. As a result of declining shipments and continuing cost pressure, adjusted EBIT slipped further into negative territory at €(706) million (prior year: €77 million). Launched in March, the Steel Strategy 20-30 aimed at sustainably improving competitiveness will now be implemented even more rigorously.
Presented as a discontinued operation, the elevator business recorded order intake and sales level with the prior year in the first 9 months. While the new installations and service business in the USA performed positively, Elevator Technology saw declines in Asia and Europe due to the coronavirus pandemic. Adjusted EBIT at €613 million was slightly lower than a year earlier in particular due to the negative earnings effects in Europe (prior year: €642 million).
Source : STRATEGIC RESEARCH INSTITUTE