Capital Market Day 2016 Meet Management

Transcription

1 Capital Market Day 2016 Meet Management

2 Capital Market Day 2016 Meet Management Components Technology Essen, December 9 th, 2016 Karsten Kroos (CEO) Carsten Evers (CFO)

3 thyssenkrupp a diversified industrial group Sales 39.6 bn; EBIT adj. 1.5 bn Components Technology (CT) 6.8 bn 335 mn Elevator Technology (ET) 7.5 bn 860 mn Industrial Solutions (IS) 5.7 bn 355 mn Materials Services (MX) 11.9 bn 128 mn Steel Europe (SE) 7.6 bn 315 mn Steel Americas (AM) 1.5 bn (33) mn Financial figures FY 15/16 2 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

4 Mission critical components for leading automotive and industry customers Sales 6.8 bn Chassis ~60% of sales Powertrain Industry ~20% of sales ~20% of sales Steering Damper Camshafts Bearings Automotive Systems Springs & Stabilizers Forging & Machining Undercarriages More than 1 million parts/systems per day 3 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

5 Key business regions expansion into best cost countries Sales 6.8 bn by customer location [%] Sales per Region [incl. Exports] Employees per Region +24% +12% 5.5 8% 10% 18% 6.8 3% 17% 27% 27,561 17% 9% 12% 30,751 10% 19% 16% 62% 52% 62% 55% 2007/ / / /16 Others South America Asia NAFTA Europe 4 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

6 Steady growth and margin improvement [ mn] 13/14 14/15 15/16 16/17E Sales 6,172 6,753 6,807 Demand growth in automotive and wind industry vs. challenging markets for trucks and construction EBIT adj EBIT adj. margin [%] Operational improvements and growth BCF Investments in growth and innovation Upside powered by program as part of 5 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

7 Positive mid-term outlook in all major markets towards 2020 Light vehicles 1 Heavy duty 2 Construction equipment Wind power Production in mn units Production in mn units Sold units in Connected capacity in GW % % % % +3% 15 16e 18e 20e 15 16e 18e 20e 15 16e 18e 20e 15 16e 18e 20e Steady growth towards 100mn cars Opportunities from technology shifts % CAGR Decline in 2016 esp. NA class 8 Mid-term rebound 1. Light vehicles < 6 ton, only CBU (completely built up) units 2. Heavy duty vehicles > 6 ton Sources: LV: IHS LV Global Production Forecast (09/2016) HV: IHS HV Global Production Forecast (Q3/2016) CE: Off-Highway Research (08/2016) WP: MAKE Consulting (Q3/2016) 6 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology Slow recovery after bottoming out Projections towards 700k units Sustainable level of 60GW to Regulatory effects Growing turbine sizes % Offshore wind CAGR

8 Light vehicles: China remains future growth driver Light vehicle (LV) production forecast [mn units] Europe NAFTA China +3.5% % % e 18e 20e 15 16e 18e 20e 15 16e 18e 20e Continued growth esp. in Eastern Europe Stronger Pickups/SUV demand, soft LV demand New normal growth between 3-5% p.a. Source: IHS global LV forecast (09/2016), only CBU (completely built up) units 7 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

9 Growth Performance Strategic Way Components Technology Benchmark profitability target supported by performance and growth plan Plant network Procurement Operational excellence (OPX) 4.3% 4.6% 4.9% Growth Performance EBIT adj. margin 6-8% + Customers Markets 13/14 14/15 15/16 Target Innovations 8 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

10 Procurement capturing synergies and optimizing processes Examples: procurement initiatives World class procurement e.auctions Value chain engineering Global benchmarking initiative >20 deep-dive assessments >1,100 measures executed State-of-the-art tools and clear 2020 strategy > 1 bn PVO by e.auctions; further increase planned Dedicated, advanced auction models >40% saving on single items Roll out of Design-to-Cost Standard-tool (apriori) Cross-functional approach 9 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

11 OPX next level operational performance initiatives to continue track record Examples: OPX initiatives OPX management system Speed factory Energy savings Annual plant benchmarking Close KPI/measure tracking Best practice sharing 700 OPX experts trained >600 measures ongoing Optimized intra-logistics Automated ground vehicles (AGVs) and Human-Machine Interfaces (HMI) 50% - 60% reduction of manual logistics operations Oven, process, heat recovery Close tracking and mgmt. Continued savings increase 14/15: 30 GWh ( 3.5 mn) 15/16: 40 GWh ( 5.0 mn) 10 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

12 Strong and balanced customer portfolio enhanced in recent years Example LV: Solid market positions with established OEMs and new players Established premium and mass market OEMs NEW Electric vehicle OEMs NEW Chinese OEMs Well established partner of leading automotive OEMs Supplier for key EV players Serve top Chinese OEMs 11 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

13 Steady growth by our innovation pipeline for tomorrow s mobility Examples: innovation projects Steer-bywire Automated driving Joint R&D platform Active damping Carbon fiber reinforced plastic components Single-wheel Steering / Torque Vectoring Trusted development partner for leading OEMs and new entrants 12 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

14 Unique skill-set to capitalize on further opportunities Material competence Process know-how Mechatronic capabilities Material science Vast range of materials Process engineering (low-/high-volume) Automation / standardization Just-in-sequence Software Electrics / Electronics Digitization expertise Performance Processes Growth Products 13 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

15 Committed to realize the value upside from tk s Strategic Way Forward Best-in-class engineering and processes Growth prospects from steady stream of innovations + 4.3% 4.6% 4.9% Growth Performance EBIT adj. margin 6-8% Expanding global production network 13/14 14/15 15/16 Target Strong customer portfolio with long-term contracts 14 December 9 th, 2016 Capital Market Day 2016 Meet Management Components Technology

16 Capital Market Day 2016 Meet Management

17 Capital Market Day 2016 Meet Management Elevator Technology Essen, December 9 th, 2016 Andreas Schierenbeck (CEO) I Ercan Keles (CFO)

18 thyssenkrupp a diversified industrial group Sales 39.6 bn; EBIT adj. 1.5 bn Components Technology (CT) 6.8 bn 335 mn Elevator Technology (ET) 7.5 bn 860 mn Industrial Solutions (IS) 5.7 bn 355 mn Materials Services (MX) 11.9 bn 128 mn Steel Europe (SE) 7.6 bn 315 mn Steel Americas (AM) 1.5 bn (33) mn Financial figures FY 15/16 thyssenkrupp 2 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

19 Elevator Technology: Strong market position and balanced footprint Elevator & Escalator Sales 7.5 bn FY 15/16 40% Americas 13% # 3/4 Accessibility PBB 30% EMEA # 2 # 1 30% Asia-Pacific thyssenkrupp 3 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

20 Elevator World Project of the Year elevators I 28 escalators 22 award-winning iwalks Medina Airport, Saudi Arabia thyssenkrupp 4 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

21 Largest PBB contract ever at Istanbul Grand Airport 143 Passenger Boarding Bridges World s largest airport by 2020 thyssenkrupp 5 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

22 Cloud-connected Service at One World Trade Center 71 elevators I 12 escalators MAX & HoloLens services Fastest elevator in Americas

23 Predictable and recurring service oriented business Business Model Characteristics Manufacturing ~50% New Installation Conversion Rate ~80% Installation 19 plants ~900 branches 1.3 mn units under maintenance 24,000 service technicians Service Ø sales per customer < 50 k Modernization ~50% Maintenance Top 10 customers <3% of sales thyssenkrupp 7 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

24 Benchmarking with global competitors Margin [%] 19.7 A Target 15 % B 11.7 C Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Source: Publicly available information thyssenkrupp 8 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

25 CMD 2013 Recap Management strategy EBIT margin 15% EBIT margin 1 bn EBIT Target level Profitability! 1 Manufacturing NI 1 2 Manufacturing Service Modernization NI 3 Portfolio Restructuring 24 5 Growth Emerging Markets M&A Growth! Sales thyssenkrupp 9 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

26 Growth Performance Strategic Way Elevator Technology Clearly defined measures to reach financial targets Manufacturing NI Capital Market Day 2013 Service Modernization Portfolio I Restructuring + 15% EBIT adj. margin > 1 bn EBIT adj. Growth Markets M&A thyssenkrupp 10 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

27 Track record shows consequent strategy execution Order Intake Sales 6, % 7,631 5, % 7,468 11/12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 EBIT adj. Business Cash Flow % 9.7% +66% 10.5% 11.0% % % /12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 thyssenkrupp 11 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

28 16 quarters yoy profitability improvement Quarter 1 Quarter 2 Quarter 3 Quarter 4 9.4% 9.9% 10.4% 10.1% 10.9% 8.7% 9.2% 9.6% 10.1% 10.6% 9.1% 9.7% 10.8% 11.3% 11.8% 9.2% 10.1% 11.3% 12.1% 12.7% /12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 thyssenkrupp 12 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

29 Outperformance against peers EBIT adj. margin +1.9%-P B +1.2%-P 0 C -1.0%-P A -2.3%-P Source: Publicly available information thyssenkrupp 13 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

30 Management commitment to continuous growth and margin improvement [ mn] 13/14 14/15 15/16 16/17E Order Intake 6,819 7,704 7,631 Stable on a high level Sales 6,416 7,208 7,468 Moderate growth supported by strong order backlog EBIT adj EBIT adj. margin [%] Operational improvements BCF Investments in growth Operational improvements supported by program as part of thyssenkrupp 14 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

31 Change & Performance Program >1, ACCEL Innovation MULTI MAX HOLOLENS 15% % % 10.5% 11.0% 11.5% Performance Manufacturing New Installation Service Modernization Portfolio Restructuring 4 Emerging marktes 5 M&A 11/12 12/13 13/14 14/15 15/16 thyssenkrupp 15 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

32 Manufacturing/NI: optimization unlocks efficiency gains Elevator Production System 5% <0.4% >98% Improvement in productivity Cost of poor quality Delivery reliability Closure Plant FY15/16 Closure Plant FY14/15 Multi-purpose facility Plant & Test-tower Multi-purpose facility thyssenkrupp 16 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

33 Field Operations: from freestyle to franchise Field Performance improvement Transfer of knowledge Staffing standards Standard operating procedures Savings achieved in USA 60 mn thyssenkrupp 17 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

34 Portfolio: reduction of product complexity Product Platforms -27% -50% Baseline Today Target thyssenkrupp 18 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

35 M&A: continuous portfolio optimization examples Divestments Acquisitions Finland FY 15/16 Marohn majority August 2015 Serbia FY 14/15 LES December 2014 South Africa FY 14/15 Eggert September 2013 Greece FY 13/14 Amco December 2012 thyssenkrupp 19 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

36 Innovation: driving future business and growth MULTI Test-tower MAX HoloLens MIT Award 2015 MULTI shaft 1st in Industry 1st in Industry New Installation Service thyssenkrupp 20 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

37 Committed to realize the value upside from tk s Strategic Way Forward Leading position in an industry with stable growth Long-term growth perspective from urbanization and urban mobility trends Change & Performance Program Low volatility and high visibility through high share of service revenues High profitability, strong cash conversion and low capital intensity + 15% EBIT adj. margin > 1 bn EBIT adj. Differentiation with strong innovation pipeline thyssenkrupp 21 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

38 Our Commitment CMD % FY 11/12 9.1% CMD % 11.5% 15% EBIT adj. margin & > 1 bn EBIT adj. thyssenkrupp 22 December 9 th, 2016 Capital Market Day 2016 Meet Management I Elevator Technology

39 Capital Market Day 2016 Meet Management

40 Capital Market Day 2016 Meet Management Industrial Solutions Essen, December 9 th, 2016 Stefan Gesing (CEO/CFO) Johan P. Cnossen (COO)

41 thyssenkrupp a diversified industrial group Sales 39.6 bn; EBIT adj. 1.5 bn Components Technology (CT) 6.8 bn 335 mn Elevator Technology (ET) 7.5 bn 860 mn Industrial Solutions (IS) 5.7 bn 355 mn Materials Services (MX) 11.9 bn 128 mn Steel Europe (SE) 7.6 bn 315 mn Steel Americas (AM) 1.5 bn (33) mn Financial figures FY 15/16 2 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

42 Industrial Solutions 19,000 engineers serving clients globally Integrated and end-to-end engineering services tailored to customer needs Engineering (E) Procurement (P) Construction (C) Services (S) 3 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

43 Engineering excellence for wide range of customers New structure as of October 1 st, 2016 Former Process Technologies / Chemicals Former Resource Technologies Fertilizer & Syngas Electrolysis & Polymers Industrial Specialties 2 Mining Cement System Engineering Marine Systems ~1,200 1 of sales ~2,000 1 of sales ~1,000 1 of sales ~1,600 1 of sales Service Network of Excellence - worldwide project implementation - pooling and combined competencies Regional Clusters - enhanced customer proximity Increased market focus, leveraged resources and a new service setup 1. Sales in mn: FY 2015/16 according to old BA structure (Service share included in Business Units) 2. Coking Plants, Oil & Gas, Refining, 3 rd party contracting 4 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

44 Global player with international business footprint Sales 5.7 bn by customer location [%] North America 17% South America 10% Europe (ex. Germany) 10% Germany 12% Middle East/ Africa 27% India 4% China 5% Asia/ Pacific 15% Headquarters of Regional Clusters 5 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

45 Good market fundamentals with long-term growth opportunities Market development [ ] Chemicals Mining Construction Automobile Marine Systems 3.5% 3.4% 3.3% 1.9% 3.0% Solid fundamentals, e.g. growth of population and urbanization, favorable for our markets Note: Market figures (CAGRs) based on IHS studies; Marine Systems numbers based on internal analysis 6 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

46 External and internal challenges hit our financials Short-term focus on reversing trend in order intake and cash flow 13/14 14/15 15/16 Order intake 5,732 4,871 3,461 Order backlog 13,974 12,307 9,908 Sales 6,271 6,256 5,744 EBIT adj EBIT adj. margin [%] BCF /17E Support by project funnel across all businesses Improvement at Cement and SY compensate for softer development at Marine Systems Plant Technology at lower end of margin range, MS temporarily below Significant improvement (towards breakeven) Achieving turnaround through transformation program as part of 7 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

47 New and fully committed management team driving performance Fertilizer & Syngas Electrolysis & Polymers Industrial Specialties 1 Cement Mining System Engineering Marine Systems Service Network of Excellence (worldwide project implementation) More than 50% of Regional Clusters newly appointed Strong expertise in industry and engineering / know-how Change in mindset Shift in personal objectives and business targets to be aligned with business objectives 1. Coking Plants, Oil & Gas, Refining, 3 rd party contracting 8 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

48 Strategic Way Industrial Solutions 450 mn in savings targeted over next 3 years Transformation program focusing on 5 levers Fix cost reduction Short-term capacity adj. (execution and overheads) Reduction of indirect spend and structural costs Project margin improvement Procurement excellence Execution excellence Procurement savings in order backlog Value engineering Monetarization of change orders Sourcing strategy, e.g. low cost country sourcing Cluster management and modularization Processes excellence along EPC value chain Change and claim management Mid- to long-term Return to EBIT adj. margin of 6-7% Sales 8 bn +/- market dynamics Grow top line Sales funnel management to secure must win-projects Service push to grow top line and margin 9 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

49 Network of Excellence leveraging synergies, reducing cost of engineering Headquarters of Regional Clusters Workshare offices Local offices Combining competencies Engineering, Procurement, Construction Project and Supply Management Automation & Controls Commissioning Advantages Higher utilization & significantly reduced cost Enabling higher quality standard Ensuring best skills for our clients Entering into Industry December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

50 Strong project funnel 1 of > 20 bn across all businesses Targeting conversion rate of ~25% Orders already signed in Q1 Sigus, Algeria, Cement Plant Yimin, China, Bucket wheel excavator, spreader, conveyor belt MSF, Australia, Sugar plant mn mn > 500 mn Ivanovo, Russia, PET polymer plant complemented by additional high volume of small-size orders and service business from leveraging installed base of over 6,000 plants worldwide 1. Including projects above volume of 15 mn 11 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

51 Shifting our business mix for more stable earnings and better profitability Current distribution: Sales 15/16: 5.7 bn Target distribution: Long-term sales target: 8 bn Service EPC Service EPC 1/3 1/3 Products & Systems 1/3 Products & Systems Dedicated local sales and service teams Consolidation of engineering & construction capacity in a global network of excellence to bring our best people to our clients Expand into smaller projects and products & systems 12 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

52 Expansion of existing product portfolio and development of new technologies Selected projects Barracuda Cutting Excavation Redox Flow Battery Carbon2Chem Highest throughputs significantly reducing operational cost Easy to integrate Lower cost Aggressive sales program under way Storage of renewable energy for grid stability Large scale energy storage solution Solving the No. 1 challenge of our utility clients Market potential for renewable energy storage of up to ~ 50 bn 1 Converting CO 2 into chemicals/fuels Essential contribution to climate protection and energy transition Creating a new network of steel and chemical production powered by renewable energy 1. BCG study 13 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

53 Committed to realize the value upside from tk s Strategic Way Forward Good market fundamentals Engineering excellence, technology leadership and global reach Capital light business Historically, steady and solid cash contributor Short-term (starting 16/17) Clean up the house and first restructuring impact Turnaround in order intake and cash flow Accelerate service growth Mid- to long-term Return to EBIT adj. margin of 6-7% Sales 8 bn +/- market dynamics 14 December 9 th, 2016 Capital Market Day 2016 Meet Management Industrial Solutions

54 Capital Market Day 2016 Meet Management

55 Capital Market Day Meet Management Materials Services Essen, December 9 th, 2016 Joachim Limberg (CEO) Klaus Keysberg (CFO)

56 thyssenkrupp a diversified industrial group Sales 39.6 bn; EBIT adj. 1.5 bn Components Technology (CT) 6.8 bn 335 mn Elevator Technology (ET) 7.5 bn 860 mn Industrial Solutions (IS) 5.7 bn 355 mn Materials Services (MX) 11.9 bn 128 mn Steel Europe (SE) 7.6 bn 315 mn Steel Americas (AM) 1.5 bn (33) mn Financial figures FY 15/16 2 December 9 th, 2016 Capital Market Day Meet Management Materials Services

57 Sales driven customer service organization Sales 11.9 bn Warehousing Services 71% of sales Trading 16% of sales Production 13% of sales Materials distribution (just-in-time) Processing Inventory/Warehouse Management Supply Chain Management Materials Raw materials Stainless steel AST since March 1, December 9 th, 2016 Capital Market Day Meet Management Materials Services

58 Growth opportunities in materials distribution and value added services from processing via logistics concepts up to SCM solutions Primary target market [ bn] Value added services roll-out across industries CAGR % Opportunities for selective high quality growth Support customers in focusing on core activities Higher customer retention, long-term relationship 4 December 9 th, 2016 Capital Market Day Meet Management Materials Services

59 Well diversified across customer groups with footprint in developed countries w/o Raw Materials, Technical Services and AST 1 Sales by customer groups Well-known customers around the world (extract) Mechanical Engineering 13% Automotive 17% 25% Metalworking industry 9.0 bn Others 10% Local Dealer 14% Leading positions in fragmented markets 5% Aerospace 10% 5% Construction Energy Europe #2 Germany #1 Eastern Europe #3 North America #4 1. FY 15/16 5 December 9 th, 2016 Capital Market Day Meet Management Materials Services

60 One-stop shop for wide range of products and value added services 1 Sales by product groups Only 10% sourced from SE Pipes and Tubes 5% Carbon Steel 33% 26% Stainless Steel 11.9 bn AST Others 2 4% Raw Materials 8% 5% Plastics 19% NF Metals 1. FY 15/16 2. mainly Technical Services 6 December 9 th, 2016 Capital Market Day Meet Management Materials Services

61 Strong profitability and cash provider even in challenging trading conditions [ mn] 13/14 14/15 15/16 16/17E Sales Warehousing, Services Trading Production (AST/VDM 1 ) 13,660 8,808 2,502 1,718 14,254 9,068 2,565 2,587 11,886 8,460 1,870 1,534 Robust demand Stable trading conditions EBIT adj EBIT adj. margin [%] Ongoing sales and performance initiatives BCF sig. +ve Upside powered by program X as part of 1. AST/VDM included at MX since March 2014; Sale of VDM (closing July 31, 2015) and RIP (closing Dec. 4, 2014) 2. FY 13/14: BCF exclusive rail cartel compensation payments 7 December 9 th, 2016 Capital Market Day Meet Management Materials Services

62 Stringent, timely and flexible cost adjustments Streamlining structures Corp. GmbH Inc. N.V. S.L. s.r.l. AG Ltd. SA SARL Legal entity reduction 1 Headcount 2 reduction by Contingency measures in 15/16 NWC reduction by >50% 5% 18% 1. By more than 200 divests, closings, transfers and mergers within last 12 years; Sep 2016 = 108; overall target 2018 = Contingency relevant staff, incl. part-time employees 8 December 9 th, 2016 Capital Market Day Meet Management Materials Services

63 Growth Performance Strategic Way Materials Services Upside from continuing strong management initiatives and improving trading conditions New structures Logistics footprint EBIT adj. margin >3% More value added services (processing, SCM) Digital transformation Performance concept AST + 1.6% Prices 1.4% 1.1% Performance before Growth Ø CCR 1 Sales initiatives & marketing (organic growth) Opportunities by selective smaller investments 13/14 14/15 15/16 16/17E Target X 9 December 9 th, 2016 Capital Market Day Meet Management Materials Services

64 Logistics and IT excellence: Largest ERP system worldwide provides basis for efficient processes One SAP template for MX with 8,000 users Just-in-time deliveries Efficient Warehousing and logistics system Central Regional Local 10 December 9 th, 2016 Capital Market Day Meet Management Materials Services

65 US Driving logistics network and customer service by mega-hub strategy Portland Chicago Northwood Wallingford Santa Fe Springs Atlanta Mega hubs Materials NA Branches Materials NA Strengthening competitiveness and performance of Materials Services North America Faster customer supply with broader range of products Higher efficiencies in NWC and cost Latest mega-hub opening: Atlanta, spring 2016 Additional structural network optimization in progress 11 December 9 th, 2016 Capital Market Day Meet Management Materials Services

66 Germany Driving efficiencies in warehousing activities Further standardization of stock selection Sharper processing and services offerings Next generation IT systems Fully levering data analytics in replenishment Strengthening both logistics and sales skills Lower costs Faster response, fulfillment Streamlining processes Higher customer satisfaction 12 December 9 th, 2016 Capital Market Day Meet Management Materials Services

67 13 December 9 th, 2016 Capital Market Day Meet Management Materials Services Value Added Services Processing

68 Inventory management. Warehouse management. Supply chain management. Value Added Services Customized Logistic concepts 14 December 9 th, 2016 Capital Market Day Meet Management Materials Services

69 From materials distribution to SCM for attractive industries Example Aerospace: Within nine years sales nearly, EBIT adj. more than tripled Index 400 sig. above MX margin target EBIT adj. 300 ~ 650 mn 200 Sales /08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Customers (extract) 15 December 9 th, 2016 Capital Market Day Meet Management Materials Services

70 Digital expansion of multichannel materials distribution and services 1 Examples B2C Sales via B2C shops 27 mn B2B Business via digital channels > 1 bn 65,000 products 10 years B2C shop experience 1. FY 15/16 16 December 9 th, 2016 Capital Market Day Meet Management Materials Services

71 The digital transformation of MX extends across the entire value chain Supplier Materials Services Customers Efficient and automated purchasing processes Advanced EDI Digital connection of demand and supply Lean logistics and warehousing Manufacturing automation (internet of things) Digital and automated sales processes Online portals, e-shops (B2B, B2C) Advanced EDI Intelligent replenishment Data analytics / big data (examples) Dynamic pricing, demand aggregation 17 December 9 th, 2016 Capital Market Day Meet Management Materials Services

72 Pricing schemes tailored to customers providing margin upside for MX Pricing Excellence Minimum prices for smaller customers without potential Systematic price differentiation based on importance of customers and consistent pricing policy New Pricing science Statistical models for optimization of sales prices System support (SAP) 18 December 9 th, 2016 Capital Market Day Meet Management Materials Services

73 AST turnaround driven by effective management initiatives EBIT adjusted Initiatives /15 15/16 16/17E Comprehensive cost optimization New management Strike Massive windfall losses Optimize production footprint and capacity New sales organization, new markets AST FY 15/16: Employees 2,360 Sales 1.5 bn mn ~(600) Production stainless flat 850tt 19 December 9 th, 2016 Capital Market Day Meet Management Materials Services

74 Committed to realize the value upside from tk`s Strategic Way Forward Strong materials markets expertise and footprint Scalability Stable and growing core markets Focus on value added services Powerful IT & logistics systems Digital transformation Restructuring track record also proven at AST Consistent powerful cash provider X EBIT adj. margin >3% Ø CCR 1 20 December 9 th, 2016 Capital Market Day Meet Management Materials Services

75 Capital Market Day 2016 Meet Management

76 Capital Market Day 2016 Meet Management Steel Europe & Steel Americas Essen, December 9 th, 2016 Andreas J. Goss (CEO) Premal A. Desai (CFO)

77 thyssenkrupp a diversified industrial group Sales 39.6 bn; EBIT adj. 1.5 bn Components Technology (CT) 6.8 bn 335 mn Elevator Technology (ET) 7.5 bn 860 mn Industrial Solutions (IS) 5.7 bn 355 mn Materials Services (MX) 11.9 bn 128 mn Steel Europe (SE) 7.6 bn 315 mn Steel Americas (AM) 1.5 bn (33) mn Financial figures FY 15/16 2 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

78 Steel BAs with major contribution to group s performance improvements [ mn] pro forma EBIT adj (352) pro forma Business Cash Flow (253) (763) + > 1 bn 11/12 12/13 13/14 14/15 (1,078) + > 1.5 bn 15/16 11/12 12/13 13/14 14/15 15/16 Change mgmt People success Performance orientation Customers & markets New leadership teams in Europe and Brazil Structured performance programs with >> 1 bn of sustainable EBIT effects FY 12/13-15/16 More efficient and customer-driven organization Divestment Tailored Blanks, Construction and Steel USA 100% ownership and approval operating license tk CSA EBIT adj improved by > 1 bn since FY 11/12 BCF improved by > 1.5 bn since FY 11/12 Steel Americas with +ve BCF 3 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

79 Steel Americas US assets divested, 100% ownership tk CSA, operating license approved US assets divested Sale to MT/NSSMY Price: $1.55 bn plus LT slab supply contract for tk CSA 2 mt/yr until Sep [HRC MidWest minus] 100% ownership tk CSA Purchase of all shares previously held by Vale (26.87%) complexity and risk reduction, increased room for maneuver for further development of CSA CSA operational license Mid-term solution outside of tk portfolio feasible Current focus on operating improvements in Brazil slab production tk CSA [mn t/yr] tk CSA Brazil 09/10 11/12 13/14 15/16 stabilization & continuous ramp-up efficiency improvements building further long-term customer relationships complementing 40% load from LT slab supply contract with ArcelorMittal 4 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

80 Steel Americas bleeding is stopped; positive cashflow in FY 15/ EBITDA adj mn /17e BCF mn 69 +ve 16/17e Important external factors for competitiveness and profitability -38 BRL / USD seaborne raw mat. spread vs HRC US ,146 11/12 13/14 15/16 11/12 13/14 15/16 Source: MEPS, UNCTAD, Platts, TEX report, CRU, own calculations Further -side from program ultimate performance as part of impact 5 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

81 Steel Europe reliable and much improved earnings and cash provider 673 EBIT adj mn 492 BCF mn Tough decisions taken and executed Performance program BiC Reloaded with strong cost focus: Closure / optimization of: Neuwied (rolling/galvanizing) Galmed, Spain (galvanizing) Duisburg (organic coating) Dortmund (galvanizing) Restructuring and turnaround Electrical Steel Reduction of >2,000 FTEs, including reduced weekly working hours Divest Tailored Blanks, Construction 11/12 13/14 15/16 11/12 13/14 15/16 Major leadership team changes New board Further upside powered by transformation program 41 of 60 direct reports with new position 6 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

82 Steel Europe outlook 16/17: aggressive short-term initiatives initiated to address challenges from current major raw material cost inflation Short-term initiatives Targets 16/17 Pricing with customers NWC projects EBIT adj yoy BCF sig +ve Contingency efficiency program 7 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

83 Steel Europe contingency program targeting 200 mn in FY 16/17 Targeted efficiency gains by cost categories Raw materials Procurement Materials/ production efficiency Quality Energy efficiency M&R Logistics SG&A/IT Relentless and aggressive focus on efficiencies across all cost categories Efficiency methods and systems firmly established part of our performance culture Major contribution to Group s impact target Total 200 mn Religious about efficiency not sufficient but essential 8 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

84 Strategic Way Steel Europe Customer-driven and value-oriented transformation Customers & markets Sales excellence Brand value proposition Innovation Change management Governance & compliance Culture & organization Digitization Performance orientation Supply chain excellence Quality performance Production & capex strategy Operational & cost excellence People success Health & safety HR development Benchmark profitability tkva 0 CCR 1 9 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

85 Steadily increasing and more focused R&D expenditures Market and customer driven R&D Selected innovation highlights R&D, mn 95 >100 Hybrid materials composites Surface / corrosion protection ZM EcoProtect & ZM PrimeProtect 66 3-layer steel sandwich material Zinc-magnesium coating Light-weight and design 11/12 13/14 15/16 midterm Steel wheels reinforcing differentiation and driving economic weight reduction 10 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

86 priority is the customer Customer proximity 1 ~ 2 / 3 of shipments within 500 km to increase differentiation and profitability Business intel In depth customer understanding Detailed market / competitor info Product mix 2 Cold strip Medium- Wide strip Mix optimization & Strategic sales mgmt Customer service models Pricing & channel mgmt 6% Coated 9% 40% Electrical Steel 15% Hot Strip 6% 8% 16% Tinplate Heavy Plate Customer portfolio 2 Auto Mech. Enginrg 5% Others 29% 8% 14% Packaging Processing 23% 21% Trade 1. Steel Europe AG FY 15/16 2. by sales FY 15/16 11 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

87 New market-driven & value-oriented business set-up Legal Entity Benefits 6 cost center with high transparency and aggressive focus on cost 1 major p&l 6.4 bn sales 2,500 cost accounts plus a few smaller subsidiaries market-driven and value (chain) oriented mgmt structures 7 profit center, market- and customer-driven 13 p&l s with significantly increased steering and leadership impact Additional boost from ERP system upgrade at start of next FY 12 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

88 Steel Europe strong position reinforced by consequent implementation of and complementary optimization aggressive customerdriven and value-oriented transformation Optimization standalone optimization of existing network Position of strength consequent realization of all performance potentials highly efficient and flexible steel asset in Europe premium flat products for attractive customer industries reliable earnings and cashflow provider restructuring + or Optimization with partner optimization of joint network and pain-sharing increasing utilization of most competitive sites unique synergies not accessible by competition Benchmark profitability tkva 0 CCR 1 to realize the value upside from tk s Strategic Way Forward 13 December 9 th, 2016 Capital Market Day 2016 Meet Management Steel

89 Disclaimer thyssenkrupp AG The information set forth and included in this presentation is not provided in connection with an offer or solicitation for the purchase or sale of a security and is intended for informational purposes only. This presentation contains forward-looking statements that are subject to risks and uncertainties. Statements contained herein that are not statements of historical fact may be deemed to be forward-looking information. When we use words such as plan, believe, expect, anticipate, intend, estimate, may or similar expressions, we are making forward-looking statements. You should not rely on forward-looking statements because they are subject to a number of assumptions concerning future events, and are subject to a number of uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from those indicated. These factors include, but are not limited to, the following: (i) market risks: principally economic price and volume developments, (ii) dependence on performance of major customers and industries, (iii) our level of debt, management of interest rate risk and hedging against commodity price risks; (iv) costs associated with, and regulation relating to, our pension liabilities and healthcare measures, (v) environmental protection and remediation of real estate and associated with rising standards for real estate environmental protection, (vi) volatility of steel prices and dependence on the automotive industry, (vii) availability of raw materials; (viii) inflation, interest rate levels and fluctuations in exchange rates; (ix) general economic, political and business conditions and existing and future governmental regulation; and (x) the effects of competition. Please note that we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. 15 December 9 th, 2016 Capital Market Day 2016 Meet Management