Financial Data and Key Metrics Changes - The company reported a 6% decline in sales compared to the previous year for Q3, and a 9% decline year-to-date [14][18] - Adjusted EBIT for Q3 was €149 million, which included significant negative one-time effects of approximately €80 million related to Decarbon Technologies [15][18] - Free cash flow was reported at minus €256 million for Q3 and minus €983 million year-to-date, influenced by payment shifts and government funding timing [16][19] - The balance sheet remains solid with a stable equity ratio of 39% and net cash unchanged at €3.2 billion compared to the previous year [17] Business Line Data and Key Metrics Changes - Automotive Technology (AT) experienced a 6% decline in top line compared to the previous year, but bottom line development remained stable to slightly positive [19][20] - Decarbon Technologies (DT) saw a 10% increase in top line on a quarterly basis, driven by most businesses, despite a decline in order intake compared to a strong prior year [21][22] - Materials Services (MX) faced subdued demand, but adjusted EBIT was above the prior year due to positive contributions from international supply chain business [23] - Steel Europe (SE) reported a decline in sales and EBIT adjusted down by €90 million compared to the prior year, impacted by low demand and lower spot market prices [24][25] Market Data and Key Metrics Changes - The company noted muted market dynamics and demand across several industries, particularly in automotive, construction, and machinery [18] - The order intake for Decarbon Technologies has been less than expected due to postponed customer decisions, affecting growth momentum [62] Company Strategy and Development Direction - The company is focusing on green transformation, including the establishment of a new segment, Decarbon Technologies, and the development of a DRI plant at Steel Europe [4][9] - A performance program, APEX, is being implemented across businesses to adapt to market needs and improve performance [5][8] - The company is pursuing standalone solutions for Steel Europe and Marine Systems, with ongoing negotiations for joint ventures and restructuring plans [6][7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market environment and adjusted full-year guidance due to continued declines in sales [8][29] - The CFO emphasized the need for structural profitability improvements and contingency management in response to market conditions [12][13] - The company expects sales to decline by 6% to 8% compared to the previous year, with adjusted EBIT projected to exceed €500 million [29] Other Important Information - The company is actively working on a joint venture with EPCG for Steel Europe, with negotiations for a 50-50 partnership ongoing [6][31] - The due diligence phase for potential private equity partners in Marine Systems is progressing, with preparations for a spin-off as an alternative [7] Q&A Session Summary Question: Concerns about the timing of structural changes - Management expressed confidence in the ongoing process with KfW and the expected positive outcome in the coming months [30][31] Question: Capital structure for Steel and Marine spin-offs - Management indicated a combination of equity, shareholder loans, and external financing for Steel, while Marine is expected to be self-funded [33][34] Question: Key friction points in Steel Europe discussions - Management confirmed that discussions are ongoing and emphasized the importance of the business planning exercise [36][37] Question: Implications of the going concern audit - Management clarified that the audit is not binding and will provide an independent opinion on the sustainability of the business plan [38][39] Question: Details on the €80 million one-off cost at Polysius - Management explained that the amount relates to incorrect cost accounting and emphasized measures taken to strengthen internal controls [58][60] Question: Dependency of HKM transaction on Steel Europe sale - Management confirmed that the HKM sale and the additional 30% stake negotiations are independent processes [61][62]
ThyssenKrupp(TKAMY) - 2024 Q3 - Earnings Call Transcript