ThyssenKrupp(TKAMY) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a positive EBIT adjusted of €78 million in Q1, with a year-on-year improvement of more than €260 million [6][13][25] - Free cash flow before M&A was €32 million, marking the first positive number in years and strengthening the net cash balance to €5.1 billion [8][9][17] - Sales are expected to grow in the high single-digit percentage range, with EBIT adjusted forecasted to improve significantly towards breakeven [26][27] Business Line Data and Key Metrics Changes - Automotive technologies and industrial components saw significant improvements, with automotive technologies benefiting from a demand upswing and new product introductions [14][20] - The industrial components segment achieved EBIT adjusted margins of over 16%, driven by strong demand from renewable energy applications and improved productivity [20] - Material services did not benefit from higher material prices in Q1, but is expected to improve in Q2 as it adjusts to market dynamics [18][81] Market Data and Key Metrics Changes - Demand from auto-related customer groups developed dynamically across all regions, contributing to higher sales in industrial components and automotive technologies [6][14] - The company noted that the visibility for the second half of the fiscal year is limited, influenced by the global automotive market and the ongoing pandemic [25][80] Company Strategy and Development Direction - The company is conducting an in-depth value assessment of strategic options for Steel Europe, including potential sale, standalone, or spin-off options, with a landmark decision anticipated in March [10][29] - The focus remains on enhancing performance across key value drivers and pursuing a green transformation, particularly in hydrogen production [30][92] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, acknowledging the strong demand but also the uncertainties related to market trends and external factors such as the pandemic and raw material prices [25][48] - The company is committed to restructuring efforts and performance initiatives to achieve competitive returns and drive cash generation [30] Other Important Information - The company reduced its headcount by more than 5,500 FTEs year-over-year, with a target reduction of 11,000 FTEs [15] - The restructuring costs for the year are expected to be in the low to mid three-digit million euro range [86] Q&A Session All Questions and Answers Question: On hydrogen business and capital deployment - Management acknowledged the need for strategic decisions regarding the hydrogen business and is evaluating options for capital deployment and organizational structure [34][36] Question: On European steel business and potential impairments - Management indicated that the decision regarding the steel business will depend on market valuations and is not solely based on book value [38] Question: On working capital and expected investments - Management noted that while Q1 showed strong performance, a higher net working capital level is expected for the rest of the year due to business dynamics [42] Question: On self-help cost savings measures - Management clarified that the positive surprise in Q1 EBIT was due to a combination of quicker-than-expected measures and cyclical factors, with ongoing caution regarding future visibility [44][48] Question: On elevator sale and financing options - Management confirmed that they are not considering financing options for potential buyers of the steel business, focusing instead on market valuations [53] Question: On Multi-Track business duration and divestiture plans - Management stated that the plan is to divest the Multi-Track businesses within three years, with ongoing evaluations of potential buyers [56][58] Question: On performance in industrial components and auto tech - Management highlighted that the performance improvements were driven by efficiency gains and restructuring efforts, despite some catch-up effects [61][66] Question: On steel guidance and market conditions - Management acknowledged the conservative guidance due to uncertainties in raw material prices and market demand, despite strong performance in green steel production [76][79]