thyssenkrupp Equity Story Steel Europe February 2018

Transcription

1 thyssenkrupp Equity Story Steel Europe February 2018

2 thyssenkrupp a diversified industrial group Sales 41.5 bn 1 ; EBIT adj. 1.7 bn 1 continuing operations Components Technology (CT) 7.6 bn 377 mn Elevator Technology (ET) 7.7 bn 922 mn Industrial Solutions (IS) 5.5 bn 111 mn Materials Services (MX) 13.7 bn 312 mn Steel Europe (SE) 8.9 bn 547 mn 1. Financial figures FY 16/17 2 February 2018 I thyssenkrupp Equity Story l Steel Europe

3 thyssenkrupp Steel Europe (one of) the biggest, most efficient & flexible, integrated steel assets of the Western world located at the heart of the German industrial center of gravity 3 February 2018 I thyssenkrupp Equity Story l Steel Europe

4 Steel Europe with major contribution to group s performance improvements [ mn] adj. EBIT BCF ø /12 12/13 13/14 14/15 15/16 16/17 17/18E 11/12 12/13 13/14 14/15 15/16 16/17 17/18E Change mgmt People success New leadership teams in Europe Performance orientation Customers & markets Structured performance programs with sustainable EBIT effects More efficient and customer-driven organization established in 2017 Restructuring of steel business with stringent divestments Exit of Steel Americas completed Since Strategic Way Forward EBIT adj. more than doubled and Ø-BCF of 300 mn 4 February 2018 I thyssenkrupp Equity Story l Steel Europe

5 Steel Europe progressively improving EBIT adj. profile [ mn] 547 mn 492 mn mn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014/ / / /18 Despite seasonal weakness in Q1, SE with best start since group transformation FY 11/12 5 February 2018 I thyssenkrupp Equity Story l Steel Europe

6 Business Area Steel Europe Business Units with diverse client structure Business Unit AUTOMOTIVE Business Unit PACKAGING STEEL Business Unit INDUSTRY Business Unit PRECISION STEEL Business Unit HEAVY PLATE Business Unit ELECTRICAL STEEL AUTOMOBILE/TRUCKS MECHANICAL/PLANT ENGINEERING SPECIAL VEHICLES APPLIANCES CONSTRUCTION ENERGY PACKAGING 6 February 2018 I thyssenkrupp Equity Story l Steel Europe

7 Worldwide customer support by global supply concept Activities in all relevant automotive steel markets GLOBAL SUPPLY CONCEPT Outstanding logistic setup for shipments by rail, truck & vessel Well established supply chain to USA, Mexico, China, Russia, South Africa Global supply concept includes cooperations, joint ventures, service center etc. Global footprint with focus on technical differentiation thyssenkrupp Steel Europe thyssenkrupp Steel NA thyssenkrupp Steel Japan TAGAL Lagermex Strong footprint in all areas differentiated regional sales strategies 7 February 2018 I thyssenkrupp Equity Story l Steel Europe

8 Steel Basic material for e-mobility Using electrical steel along the process chain energy Energy GENERATION Energy DISTRIBUTION Energy CONSUMPTION Non-grain-oriented electrical steel for generators (NGO) Grain-oriented electrical steel for transformers (GO) Non-grain-oriented electrical steel for engines, e.g. drive and auxiliary engines in electric vehicles (NGO) 8 February 2018 I thyssenkrupp Equity Story l Steel Europe

9 Full service for the automotive industry Competences to enlarge our clients success Rising, increasingly complex demands for cost and weight reduction Progress takes place in details Optimizing details offers key competitive advantages Training & workshops Hot forming Optimized material concepts Working together on tailored solutions 7 coordinated packages combine our expertise For optimum choice of material, weight and cost advantages and constructive knowledge transfer Stiffness sensitivity analysis CAE methods Engineering support Processing support 9 February 2018 I thyssenkrupp Equity Story l Steel Europe

10 Material solutions from tk SE Options for both cold and hot forming customers HOT FORMING Very high strengths with maximum geometry freedom Strengths from 500 MPa 1,900 MPa Tailored Tempering technology development by tk SE Extended hot forming through composite tribond 1 COLD FORMING Expansion of dual-phase steel portfolio In Z and ZM: strengths from 500 MPa 1,200 MPa Combination: high strength, good cold formability, very good joining properties Full spectrum: strengths with variants for individual priorities (R m & A 80 ) 2 3 ZM Coating for better processing and higher corrosion protection Less downtime for cleaning through reduced abrasion in part manufacture Significantly improved corrosion protection with same coating thickness Eco-friendly thanks to 30% less zinc usage with same corrosion protection 10 February 2018 I thyssenkrupp Equity Story l Steel Europe

11 Cold and hot forming: two approaches, one goal Customer advantages from lightweight design of structural and crash-relevant parts Scenario COLD forming DP-K 440Y780T DP-K 590Y980T DP-K 700Y980T DP-K 780Y1180T tribond 1200 tribond 1400 MBW 1500 Scenario HOT forming -9% -11% Scenario WEIGHT SAVING Scenario WEIGHT SAVING Reference Cold Reference More design freedom for crash-relevant parts through cold and hot forming Hot 11 February 2018 I thyssenkrupp Equity Story l Steel Europe

12 New materials offer more options for developing crash-relevant parts Trade-off energy absorption and deformation resistance is becoming less important MPS Multi Phase Steels Energy absorption Deformation resistance Part complexity Cold forming AHSS 3 rd generation Energy absorption Deformation resistance Part complexity + New processes & technologies Composites for hot forming Energy absorption Hot forming Manganeseboron Energy absorption Front crash: Focus on energy absorption Side crash: Focus on deformation resistance Deformation resistance Part complexity Deformation resistance Part complexity An increasing number of structural parts can now be realized either in hot or cold forming Sources: Hot Forming in the Automotive Industry, 2013 Materials in car body engineering, 2015 InCar plus 12 February 2018 I thyssenkrupp Equity Story l Steel Europe

13 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 13 February 2018 I thyssenkrupp Equity Story l Steel Europe

14 500 mn improvement of Steel Europe s cost base targeted includes improving cost efficiency in areas such as Personnel Maintenance & repair Logistics Sales 500 mn Administration Closure of cut-to-length lines at Heavy Plate 14 February 2018 I thyssenkrupp Equity Story l Steel Europe

15 priority is the customer Regional portfolio 1 Business intel In depth customer understanding Detailed market / competitor info Customer portfolio 1 7% 3% 3% 2% Mix optimization & Strategic sales mgmt 13% 3% 4% 5% 28% 29% % 56% Customer service models Pricing & channel mgmt % 22% 25% Germany Rest of Europe North America Asia Middle East & Africa South America Automotive Steel & related processing Trading Packaging Engineering Energy & utilities Others To increase differentiation and profitability 1. Sales figures FY 2016/17 15 February 2018 I thyssenkrupp Equity Story l Steel Europe

16 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 FY 17/18 16 February 2018 I thyssenkrupp Equity Story l Steel Europe

17 Steel Europe strong position reinforced by consequent implementation of and complementary optimization customer-driven 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 17 February 2018 I thyssenkrupp Equity Story l Steel Europe

18 Memorandum of understanding (MoU) for joint venture of European steel activities with Tata Steel signed 18 February 2018 I thyssenkrupp Equity Story l Steel Europe 1. Pending shareholder approval

19 JV structure and industrial logic Clear and strong new #2 with technology leadership in European flat steel Tata Steel Limited (50%) thyssenkrupp Tata Steel based in Amsterdam region (NL) thyssenkrupp AG (50%) tk Steel Europe Tata Steel UK Tata Steel NL incl. tk MillServices 33% stake by BSPS 2 / PPF Significant economies of scale and specialization driven by improved utilization of most competitive aggregates 3 fully integrated BOF production sites with efficient in- and outbound logistics Clear focus on premium flat carbon steel for most demanding automotive and industrial goods industry Bundling and focusing R&D efforts to leverage existing technology leadership Complementarity in regional footprint, customer groups and product portfolio Common DNA with commitment to capture synergies and generate value for shareholders 19 February 2018 I thyssenkrupp Equity Story l Steel Europe

20 Consolidation in progress thyssenkrupp Tata Steel as best scale option Addressing fundamental challenges in European steel industry Flat steel shipments 2016 [mn t p.a.] Last 4 quarters 1 (indicative figures) ArcelorMittal Europe thyssenkrupp Tata Steel Ilva 21.3 tkse 11.5 Shipments [mn t] >21 TSE 9.8 Voestalpine 8.6 Sales [ bn] > Salzgitter Flachstahl EBITDA [ mn ] SSAB, inkl. Rautaruukki 866 >1, US Steel, Kosice Dillinger Hütte 1. Indicative figures as published by shareholder companies until June February 2018 I thyssenkrupp Equity Story l Steel Europe

21 Step-change in joint competitiveness driven by sustainable cost synergies Structured ramp-up in a 2-phases approach after closing mn p.a. + Assessment & optimization of upstream production network (liquid phase, hot rolling mills) Integration of sales & admin Optimization of procurement & logistics R&D bundling Improved steel processing (downstream) Cost synergies Phase 1 Reduction of about 2,000 FTEs in administration and up to 2,000 FTEs in production jointly shared between JV partners Phase 2 21 February 2018 I thyssenkrupp Equity Story l Steel Europe

22 Market environment of European steel industry remains challenging Steel demand: Subdued dynamic flat steel demand, limited growth perspectives & substitution pressure Steel supply: Structural overcapacities & import pressure drive underutilization along the entire value chain Prices/Spread: Volatile markets & high cost transparency towards costumers force steel producer to focus on cost efficiencies Regulation: Potential regulatory risks, e.g. EU Emissions Trading Scheme & German Renewable Energy Act 22 February 2018 I thyssenkrupp Equity Story l Steel Europe

23 Stringent restructuring process of both partners and prepared for JV MoU on Joint Venture with Tata Steel Europe in September 2017 Sale of UK heavy plate mills (Glasgow) Sale of UK long products business (Scunthope) Sale of UK pipe mills (Hartlepool) Sale of UK specility steel business (Rotherham) Sale of Calvert plant to AM/NS Sale of CSA to Ternium Start SWF Sale of Inoxum to Outokumpu Sale of VDM to Lindsay Goldberg Vogel (LGV) thyssenkrupp Tata Steel Joint venture with Tata Steel Europe will be a major milestone 23 February 2018 I thyssenkrupp Equity Story l Steel Europe

24 Next steps Major milestone on our Strategic Way Forward Tata Steel Europe best partner for thyssenkrupp 50/50 joint venture creates strong new #2 flat steel producer in Europe Signing expected for early 2018 Joint venture provides strong perspective for employees Customers benefit from a broader setup and strong market position in Europe Joint venture results in major cost synergies beyond current business plan 24 February 2018 I thyssenkrupp Equity Story l Steel Europe

25 Volume KPI s of Materials Businesses 2011/ / / / / / /18 FY FY FY FY FY Q1 Q2 Q3 Q4 FY Q1 MX Total shipments kt 10,868 10,669 13,615 13,421 12,605 2,713 2,799 2,718 2,773 11,003 2,705 Warehousing shipments 1 kt 5,470 5,300 5,592 5,532 5,518 1,294 1,510 1,426 1,436 5,666 1,339 Shipments AST 2 kt Crude Steel kt 11,860 11,646 12,249 12,392 12,021 2,903 2,938 3,209 3,010 12,060 3,076 Steel Europe AG kt 8,408 8,487 8,936 9,276 9,336 2,531 2,210 2,418 2,282 9,440 2,373 SE HKM kt 3,452 3,160 3,313 3,116 2, , Shipments kt 12,009 11,519 11,393 11,725 11,174 2,724 3,010 2,877 2,823 11,433 2,722 Cold-rolled kt 7,906 7,437 7,137 7,182 7,048 1,732 1,892 1,800 1,745 7,169 1,669 Hot-rolled kt 4,103 4,082 4,256 4,543 4, ,117 1,078 1,078 4,265 1,054 Average Steel revenues per ton USD/EUR Aver USD/EUR Clos ) Excl. AST/VDM shipments 2) Included at MX since March 14 3) Indexed: Q1 2004/2005 = 100 4) Exit in September February 2018 I thyssenkrupp Equity Story l Steel Europe

26 SE Steel Europe [ mn] 2016/ /18 Q1 Q2 Q3 Q4 FY Q1 MoU for JV with Tata on Sep. 20 th ; signing expected early 2018 Order intake 2,078 2,442 2,171 2,277 8,969 2,071 Sales 1,908 2,371 2,337 2,299 8,915 2,171 EBITDA EBITDA adjusted EBIT EBIT adjusted EBIT adj. margin (%) tk Value Added 43 Ø Capital Employed 4,948 5,113 5,248 5,286 5,286 5,448 BCF (404) (232) (469) CF from divestm. (4) (0) (1) 10 4 (1) CF for investm. (121) (119) (184) (141) (566) (88) Employees 27,437 27,400 27,384 27,646 27,646 27,478 Current trading conditions EU carbon flat steel market up slightly year-on-year and expected to remain strong in CY 2018, despite imports remained high (slight decline since 2 nd half CY 2017 ex China, up ex other 3 rd countries particularly India, Turkey) market environment remains extremely challenging (global overcapacities, increasing export risks and continued highly volatile raw material prices) Sales Q1: significantly up yoy, mainly driven by Ø selling prices significantly increased in all products and all end user sectors; shipments of 2.7 m t stable yoy (but due to seasonal weakness lower shipments qoq) EBIT adj. significantly up yoy: mainly due to higher selling prices and supported by performance-cost measures; qoq EBIT adj. decrease mainly driven by lower shipments 26 February 2018 I thyssenkrupp Equity Story l Steel Europe

27 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. 27 February 2018 I thyssenkrupp Equity Story l Steel Europe