Thyssenkrupp Reports Improved Financials for Fiscal Year
Strategic Research Institute
Published on :
25 Nov, 2021, 5:16 am
From October 2020 to September 2021, thyssenkrupp group of companies recorded incoming orders of a total of EUR 39.6 billion, which corresponds to an increase of 41 percent. Sales improved by 18 percent to EUR 34.0 billion. Adjusted EBIT rose to EUR 796 million (previous year: EUR minus 1,759 million). All segments contributed to this positive development with, in some cases, significant improvements in earnings. The materials businesses in particular benefited from rising sales volumes and prices. Accordingly, thyssenkrupp was able to meet the earnings forecast raised in May at the upper end of the range. thyssenkrupp AG CEO Ms Martina Merz said “After a good two years of intensive transformation, we can say today: the trend reversal is recognizable, things are going in the right direction at thyssenkrupp. Our performance improves significantly, which is also reflected in the numbers. We want to take this momentum with us into the next phase of our transformation in order to grow profitably in our businesses again. Nevertheless, there are still major challenges, particularly due to the semiconductor shortage and the uncertainties due to the corona pandemic."
Against the background of the macroeconomic recovery and the further expected structural improvement in business, thyssenkrupp is generally confident about the current financial year 2021/2022 . Uncertainties, and thus only limited reliable planning, exist in particular with regard to the further development of delivery bottlenecks for semiconductors and other preliminary products. This will lead to temporary burdens in the current financial year. The Group's sales are expected to grow in a mid-single-digit percentage range for the entire 2021/2022 financial year. The adjusted EBIT is to be roughly doubled compared to the previous year to a value between EUR 1.5 and 1.8 billion. This takes into account a significant improvement in earnings at Steel Europe and a significantly lower loss at Multi Tracks. For the net income ThyssenKrupp expects a value of at least EUR 1 billion, the highest net income since fiscal year 2007/2008. With further payments for restructuring and retention of the current high capital expenditure in the future topics of thyssenkrupp, a significant increase in the area of balanced value is forecast for the free cash flow before M&A.
As announced, thyssenkrupp made important decisions in the Multi Tracks segment in the past fiscal year and thus continued to focus its portfolio. The sale of the mining business was signed in July, followed by the sale of infrastructure shortly afterwards. The Carbon Components division was sold in August. Thyssenkrupp last agreed to sell the Italian AST stainless steel plant in mid-September. As a further portfolio measure, the heavy plate plant in Duisburg was closed as planned at the end of the past financial year.
At Uhde Chlorine Engineers, thyssenkrupp sees great potential in the area of ??water electrolysis and wants to benefit from the strong demand for green hydrogen. The company is therefore intensively examining how the hydrogen business can be further developed in the best possible way. Thyssenkrupp is currently planning an IPO as a preferred solution. In any case, thyssenkrupp would retain a majority in the business.
In addition to making targeted investments to improve the competitiveness of its businesses, thyssenkrupp has also made further progress with the necessary adjustment in employment. Of the more than 12,000 jobs announced by fiscal year 2023/2024, thyssenkrupp has cut around 7,800 jobs in a socially responsible manner in the past two fiscal years. Many employees were able to find new jobs.
Steel Europe increased incoming orders and sales significantly by 31 and 27 percent, respectively, compared to the previous year, which was weak due to the pandemic. Adjusted EBIT improved to EUR 116 million (previous year: EUR minus 820 million). The revival in demand combined with rising market prices and the performance measures introduced in the course of implementing the steel strategy 20-30 had a positive impact. By the end of the past financial year, more than half of the planned reduction of 3,750 jobs at Steel Europe by 2026 had been managed in a socially responsible manner. On the other hand, the sharp rise in raw material costs and temporary restrictions in production had a dampening effect - mainly due to the need to reload blast furnace 1 in Duisburg.
Thyssenkrupp is still convinced that an independent structure will open up the best possible future prospects for Steel Europe. However, making the steel division independent is a very complex project that is economically challenging and characterized by numerous imponderables. A final decision depends on a large number of factors, including external ones. Among other things, planning security is required for the regulatory framework, especially with regard to the green transformation. In addition to preparing the usual carve-out topics, thyssenkrupp is conducting a feasibility study to determine the conditions under which the steel division can become independent.