REG-ThyssenKrupp AG 1st Quarter Results

Fri Feb 13, 2009 2:09am EST

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LONDON--(Business Wire)--


ThyssenKrupp in the 1st quarter 2008/2009

Global recession depresses sales and profits

Earnings severely impacted by writedowns on inventories

Capital goods and services robust in the crisis

The global recession left a clear mark on ThyssenKrupp in the 1st quarter
2008/2009. The drastic drop in demand for carbon and stainless steel and in
materials trading combined with sharply falling prices had a considerable impact
on the Group`s business. By contrast, its activities in capital goods, elevators
and industrial services were largely robust. Year-on-year, 1st quarter order
intake was down by a moderate 3% to €12.9 billion and sales by only 6% to €11.5
billion. The drop in profits was much steeper. However, this was influenced to a
significant extent by writedowns on inventories in the amount of €250 million.
Correspondingly, Group earnings before taxes decreased from €646 million in the
prior year to €240 million. As in previous periods, earnings were again impacted
by substantial pre-operating costs for the new plants in Brazil and the USA
which amounted to €83 million in the past quarter. Operating earnings before
these pre-operating costs and restructuring measures at Metal Forming and
Elevator were €333 million. Steel and Technologies made a very solid
contribution to the Group`s earnings before taxes. Elevator reported record
quarterly profits. Income at Stainless and Services was depressed by inventory
writedowns. Despite this, Services reported positive earnings. 

The highlights for the 1st quarter 2008/2009:

* Despite the current economic circumstances, order intake was €12.9 billion, 3%
down from the prior-year quarter. 
* Sales decreased by 6% to €11.5 billion. 
* EBITDA came to €764 million, compared with €1,083 million a year earlier. 
* Earnings before taxes slipped year-on-year from €646 million to €240 million. 
* Earnings per share dropped from €0.85 to €0.36. 
* Net financial debt at December 31, 2008 was €3,514 million, an increase of
€1,930 million compared with September 30, 2008, when we reported net financial
debt of €1,584 million. This rise is due to capital expenditure - in particular
for our major investment projects - and also to the effects of the economic
downturn and the associated impact on our operating business. At the end of the
quarter, the Group had cash funds and committed, undrawn credit facilities in
the total amount of over €5 billion. The equity ratio is around 26%.

Outlook

ThyssenKrupp expects a significant drop in sales in fiscal 2008/2009. This will
be reflected in earnings. Price and volume risks will only be partly offset by
declining input material prices and an extensive additional action program to
increase efficiency. In addition, measures are being taken to significantly
reduce net working capital. 

ThyssenKrupp expects the 2nd quarter to be more difficult than the 1st.
Expectations for the individual segments in the 2nd quarter are as follows:

* Steel - further production cuts and underutilization of core units,
stabilization of shipments, largely unchanged costs for raw materials and
declining prices for shorter-term deals. 
* Stainless - continued production cuts and underutilization, continuing weak
sales markets; further inventory writedowns cannot be ruled out. 
* Technologies - high level of planning confidence for revenues and earnings in
project business due to high order backlog with good earnings quality. Only the
automotive business will be impacted by production cuts by OEMs. 
* Elevator - sustained effect of performance programs with earnings higher
year-on-year. 
* Services - predominantly weak demand and continued price falls in materials
business at Materials Services and Special Products; the same applies to
metallurgical raw materials and coke; Industrial Services predominantly stable,
construction and rail equipment activities will profit from high infrastructure
spending.

ThyssenKrupp expects business and earnings to be at the level of a normal
recession in the 2nd half of the fiscal year. As this happens, the earnings
contributions from the materials-related businesses in the Stainless and
Services segments are expected to improve. Steel faces continuing price pressure
and inadequate volumes but expects lower raw material costs and positive effects
from ongoing cost-reduction measures. Technologies plans to maintain its strong
earnings despite a continuing difficult market environment. For the Elevator
segment the Group expects the good earnings picture to continue. 

Executive Board Chairman Dr. Ekkehard Schulz: "I will not be able to give you a
concrete forecast for the 2008/2009 fiscal year today. I stick by what I have
already said: A serious business forecast for the coming months is not yet
possible. But our first quarter shows that as a balanced and value-based
conglomerate we are well equipped to meet the crisis. In addition we have
initiated various measures: Under our Groupwide ThyssenKrupp PLUS program we
will reduce costs by €1 billion year-on-year and significantly reduce our net
working capital to produce a positive effect of €2.3 billion. Due to market
conditions in the USA we have also introduced greater flexibility to our capital
expenditure program. Among other things, this will mean that our new stainless
steel mill will not start production until early 2012." 

ThyssenKrupp expects sales and earnings to stabilize again in 2009/2010. In the
longer term, particularly after completion of the major investments of Steel and
Stainless in North and South America and those of the other segments in other
regions, the Group forecasts earnings before taxes and major nonrecurring items
of €4.0 to 5.0 billion and sales of around €65 billion. 

Online and downloadable versions of the full interim report are available in
German and English at http://www.thyssenkrupp.com. 

A copy of the interim report has been submitted to the UK Listing Authority, and
will shortly be available for inspection at the UK Listing Authority´s Document
Viewing Facility, which is situated at: 

Financial Services Authority
25 The North Colonnade
Canary Wharf
LONDON E14 5HS
Tel. No. (0)20 7676 1000 





ThyssenKrupp AG 

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