ThyssenKrupp(US:TKAMY)2021-08-11 18:10Financial Data and Key Metrics Changes - The company reported a significant year-on-year increase in sales by 14% and order intake by 28%, with nine-month order intake totaling €25.3 billion and sales reaching €24.6 billion [5][6]. - Adjusted EBIT for Q3 was €266 million, a 21% increase from €220 million in Q2, and a substantial improvement from a loss of €1.16 billion in the same period last year [6][7]. - Free cash flow before M&A improved to minus €953 million from minus €4 billion year-on-year, with Q3 contributing a free cash flow of minus €235 million, an improvement from minus €750 million in Q2 [7][8]. Business Line Data and Key Metrics Changes - Materials Services: Achieved a 70% increase in shipments year-on-year, with adjusted EBIT improving to €232 million in Q3, benefiting from strong market recovery and higher material prices [21][23]. - Industrial Components: Recorded a 40% increase in order intake and sales year-on-year, with strong demand for forged technologies, although bearings faced challenges due to product mix and higher steel prices [25][26]. - Automotive Technologies: Experienced a 53% increase in order intake and 49% in sales year-on-year, despite semiconductor shortages, with improved EBIT driven by high plant utilization and cost savings [29][30]. - Steel Europe: Shipments increased by 5% and sales rose by 74% year-on-year, reflecting strong demand recovery, although higher material costs and production constraints impacted EBIT [32][34]. Market Data and Key Metrics Changes - The demand for steel has significantly increased across Europe and North America, particularly for carbon steel, although supply constraints from steel mills have limited recovery [22]. - The automotive market is expected to grow, with IHS predicting global automotive production to reach 80 million units in 2021, still below pre-pandemic levels [31]. - The company anticipates a positive mid-term trend for wind turbines, driven by rising energy demand and larger turbine sizes [28]. Company Strategy and Development Direction - The company is focused on a portfolio transformation, including the sale of non-core businesses and restructuring efforts to streamline operations [14][15]. - A decision regarding the future of Steel Europe is expected in spring next year, with ongoing assessments of market conditions and performance gaps [15][75]. - The company aims to enhance its position in green hydrogen electrolysis, leveraging its technological expertise and market leadership [51][52]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to recover and improve profitability, despite current challenges such as semiconductor shortages and high raw material prices [90][92]. - The company is committed to achieving a positive free cash flow while continuing to invest in restructuring and core business areas [61][68]. - Management highlighted the importance of long-term contracts in stabilizing revenues and margins, although benefits may take longer to materialize compared to competitors [92]. Other Important Information - The company has achieved a cumulative headcount reduction of approximately 6,900 FTEs as part of its restructuring program, with a target of over 12,000 FTEs [11][17]. - The balance sheet remains strong, with a net cash position of €4 billion, supporting ongoing transformation efforts [53]. Q&A Session Summary Question: Free cash flow expectations for next year - Management indicated that free cash flow will still be impacted by net working capital swings and restructuring cash outflows, with a target for positive cash flow [59][60]. Question: Timing of decision on Steel Europe - Management stated that a decision will be made in spring next year, emphasizing the need for thorough preparation and visibility on performance gaps [70][72]. Question: Cost of blast furnace reline - The cost for the blast furnace reline in Q3 was a low two-digit number, with expectations of a high two-digit cost in Q4 [81][82]. Question: Pension liability management - Management acknowledged the large pension liabilities and indicated that decisions regarding funding will be made after assessing the portfolio's future [85][86]. Question: Steel business recovery potential - Management expressed confidence that the steel business can recover to previous EBITDA levels, citing long-term contract structures as a reason for delayed benefits [90][92]. Question: Multi Tracks business divestment - Management confirmed that divestment processes for remaining businesses in Multi Tracks will resume in the next fiscal year [100][102].