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thyssenkrupp significantly increases operating earnings in first quarter


 Group’s adjusted EBIT 52 percent higher at €444 million

 Best Q1 earnings since the start of the Group’s transformation

 Net income up at €91 million

 Order intake 4 percent and sales 3 percent higher, excluding currency and portfolio effects

 Full-year forecast confirmed

The technology and industrial group thyssenkrupp made a good start to the new 2017 / 2018 fiscal year. Order intake, sales and earnings in the first three months were higher year-on-year. With adjusted EBITof €444 million, the Group reported its strongest operating
1st quarter since the start of the Strategic Way Forward.

“The positive earnings development shows that our performance programs are working. We’re continuing to make good progress with the transformation of thyssenkrupp into a strong industrial group. We’re therefore well on track to achieving our targets for the full year,” says thyssenkrupp CEO Dr. Heinrich Hiesinger.

Despite negative currency effects, the Group’s order intake and sales in the 1st quarter 2017 / 2018 were slightly higher year-on-year (up 1 percent each). On a comparable basis, i.e. excluding currency and portfolio effects, they were 4 and 3 percent higher, respectively. In the capital goods businesses Elevator Technology profited particularly from new installations business in North America. At Components Technology the car components business in Western Europe and China performed positively, among others. Orders in the largely project-based business of Industrial Solutions were down overall, the business having received a major order in the prior year and above all numerous small and mid-size orders in the reporting period. However the business’s project pipeline remains strong. The materials businesses profited from the recovery in prices.

The Group’s adjusted EBIT increased to €444 million, from €291 million in the prior-year quarter. In the capital goods businesses improvements were again seen at Components Technology (€77 million, up 2 percent) and Elevator Technology (€220 million, up 3 percent). Industrial Solutions reported adjusted EBIT of €12 million (prior year €42 million). The restructuring initiated in the last fiscal year is expected to provide a significant earnings improvement before the end of this year. The materials businesses significantly increased their earnings in a continuing good market environment.

Thanks to the price recovery and the initiated efficiency measures, Steel Europe clearly increased its adjusted EBIT to €160 million (prior year €28 million). At €51 million, adjusted EBIT at Materials Services matched the good prior-year level.

As a result of the good operating performance, thyssenkrupp increased its 1st quarter net income to €91 million (prior year €(6) million). This includes a one-time negative effect of €87 million on net income from the US tax reform enacted in the reporting period. This is purely an accounting effect; there was no outflow of cash. After deducting minority interest, net income in the 1st quarter was €78 million (prior year: €(13) million); earnings per share came to €0.12 (prior year €(0.02)).

Free cash flow before M&A improved by €170 million year-on-year (prior year €(1.7) billion) but as expected was negative at €(1.5) billion. The main reason for the cash outflow was a temporary increase in net working capital in the materials businesses due to higher volumes and as a result of material prices rising again. Accordingly the Group’s net financial debt increased to €3.5 billion (September 30, 2017: €2.0 billion).

For the current fiscal year 2017 / 2018 thyssenkrupp confirms its forecast. Adjusted EBIT is expected to increase to €1.8 to €2.0 billion (prior year, continuing operations: €1,722 million). On this basis the company forecasts clearly positive net income above the prior-year figure (prior year, continuing operations: €271 million). Free cash flow before M&A is expected to be positive again (prior year, continuing operations: €(855) million).

[1]  KPIs relate to the Group in its current structure (Group without Steel Americas).


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