For the first time in three years, ThyssenKrupp has generated a net profit. In the 2013 – 2014 fiscal year, the company achieved net earnings of €195 million (net income attributable to the shareholders of ThyssenKrupp AG came to €210 million). This corresponds to earnings per share of €0.38. The year before, a loss of around €1.6 billion was reported, of which €1.4 billion was attributable to shareholders of ThyssenKrupp AG (€(2.79) per share).
"The 2013 – 2014 fiscal year represents a milestone in our earnings situation. We have demonstrated that we are making progress with our transformation into an efficient and profitable diversified industrial group on our Strategic Way Forward," said CEO Dr. Heinrich Hiesinger aheadof the Group's annual press conference. At the same time Hiesinger emphasised that the turnaround is not yet complete. For this the Group needs to generate not only a net profit for the year but also stable free cash flow before divestments. "And that's why we will not let up in ourefforts but will keep the pressure on. That applies to our efficiency programme as well as our operating performance," continued Hiesinger.
The CEO went on to underline the importance of the Group's setup as an integrated network of businesses, regions and corporate headquarters. "The sum of the Group's parts generates more value than the individual businesses could ever do alone. As an integrated group organisation we will continue to grow profitably if we combine our forces internally," said Hiesinger.
Financial performance (2013 – 2014)
Adjusted EBIT from continuing operations climbed from €586 million to €1.3 billion in the fiscal year and therefore more than doubled (+127%). The capital goods businesses – Components Technology, Elevator Technology and Industrial Solutions – increased their adjusted EBIT by 13% y/y from €1.555 billion to €1.758 billion. The materials businesses – Materials Services, Steel Europe and Steel Americas– generated €369 million in total, compared with a loss of €116 million in the 2012 – 2013 fiscal year. This is the first clearly positive contribution in two years – even including Steel Americas, VDM and AST, which were negative this year.
Order intake from continuing operations reached €41.4 billion, up 7% y/y in a continuing challenging economic climate (prior year €38.6 billion). On a comparable basis, i.e. excluding currency and portfolio effects, order intake likewise increased by 7%. At €18.7 billion, order intake in the capital goods businesses improved significantly year-on-year. On a comparable basis new orders were 10% higher. In the materials activities, Materials Services and SteelAmericas recorded order growth. Steel Europe was unable to increase its order intake, mainly due to low steel prices.
Sales from continuing operations at €41.3 billion (prior year €38.6 billion) were higher year-on-year in all business areas except Steel Europe, where sales fell due to disposals. On a comparable basis sales increased by 7%, profiting in particular from the strong growth and high orders in hand of the capital goods operations. Elevator Technology and Industrial Solutions achieved new record sales levels.
The Group's net financial debt was reduced significantly by more than €1.5 billion from €5.0 billion at 30 September 2013 to €3.5 billion. Equity was increased from €2.5 billion to €3.2 billion. Accordingly, the Group's gearing improved by around 92 percentage points to 109%.
The positive trend in earnings in the reporting year mainly reflected the efficiency measures under the "impact 2015" programme. At €1 billion, the original savings target of €850 million was significantly exceeded. Savings of €1.6 billion have therefore already been achieved in the past two fiscal years. On this basis, the overall target for September 2015 is now being raised to around €2.5 billion, around 8% or €200 million more than the €2.3 billion target set at the beginning of the fiscal year.
Despite the growing uncertainty over the economic climate and limited visibility in the materials businesses, the Executive Board is confident about the prospects for ThyssenKrupp in the 2014 – 2015 fiscal year. On a comparable basis, the Group's sales are expected to grow year-on-year by a single-digit percentage rate.
The targeted measures under the efficiency programme will continue to have a major effect and create additional savings of €850 million. The Group's adjusted EBIT is expected to improve to at least €1.5 billion, with all business areas except Steel Americas generating strong EBIT contributions. Steel Americas will at least make a clear improvement towards break-even EBIT. The aim is to achieve a significant improvement in the Group's net income. At the same time clear progress is expected in terms of cash generation, with at least break-even free cash flow before divestments.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.worldcement.com/europe-cis/20112014/thyssenkrupp-generates-net-profit-for-the-first-time-in-three-years-889/