Financial Data and Key Metrics Changes - Sales for Q1 2024 were €8.2 billion, a decrease of 9% compared to the previous year, primarily driven by lower spot market prices in the materials businesses [15][20] - Adjusted EBIT for Q1 was €84 million, in line with expectations, but down from the previous year due to lower spot market prices and a temporary decline in Decarbon Technologies [16][21] - Free cash flow before M&A was negative at €531 million, typical for the season, but the company aims for a positive figure in the low three-digit million euro range by year-end [17][30] - Net cash position decreased by €0.4 billion to €3.8 billion, with pension liabilities increasing to €6.1 billion [19] Business Line Data and Key Metrics Changes - Automotive Technology saw a slight increase in adjusted EBIT to €48 million, benefiting from lower material costs but facing higher personnel expenses [23] - Decarbon Technologies experienced a decline in adjusted EBIT by €36 million year-on-year to €17 million, affected by competition and higher costs [24] - Materials Services recorded an adjusted EBIT of €26 million, up €6 million year-on-year, supported by efficiency measures despite weak market demand [25] - Steel Europe’s adjusted EBIT decreased by €21 million to €69 million, impacted by normalization of spot market prices [26] - Marine Systems maintained stability with adjusted EBIT down €2 million to €17 million, focusing on performance improvements [26] Market Data and Key Metrics Changes - The order backlog for Marine Systems stood at €12.7 billion at the end of Q1, indicating a stable demand outlook [26] - The macro environment remains challenging, affecting sales expectations, particularly in the materials businesses [30] Company Strategy and Development Direction - The company is focused on a transformation journey, simplifying its structure to five segments and creating Decarbon Technologies to leverage green technology opportunities [5][8] - The APEX performance program is underway, aiming to stabilize earnings and improve operational performance across segments [8][21] - The company is committed to a proactive role in green transformation, with contracts signed for projects aimed at decarbonizing emission-intensive industries [9][10] Management Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenging and volatile macro environment but confirmed that Q1 results were in line with expectations [4][14] - The full-year guidance for adjusted EBIT and free cash flow remains unchanged, with expectations for improved performance in subsequent quarters [29][30] - The company aims to pay a reliable dividend, reaffirming its commitment to shareholder returns [32] Other Important Information - The company has decided not to provide quarterly guidance moving forward, focusing instead on full-year guidance [55][56] - The company confirmed it will meet its €1.5 billion debt maturity due in February, ensuring liquidity is not a concern [62] Q&A Session Summary Question: Could the recent write-down in Steel be a prelude to a disposal? - Management clarified that the write-down was a technical adjustment related to WACC calculations and not indicative of an impending disposal [35][38] Question: What is the timeline for discussions regarding the future of the Steel Europe division? - Management stated that discussions are ongoing with no imposed deadline, focusing on building a new business plan [41][42] Question: What are the biggest factors expected to boost profits in the next nine months? - Management indicated that seasonal patterns typically show improvement in EBIT in subsequent quarters, supported by the APEX program [43][44] Question: What is the current status of annual contract negotiations in Steel Europe? - Management confirmed that contracts have been fixed above spot markets, but specific pricing details were not disclosed [57][58] Question: Is there any concern regarding the ability to repay upcoming debt? - Management confirmed that there are no liquidity issues and the €1.5 billion debt due will be repaid [61][62]
ThyssenKrupp(TKAMY) - 2024 Q1 - Earnings Call Transcript