thyssenkrupp Equity Story Steel Europe November 2017

Transcription

1 thyssenkrupp Equity Story Steel Europe November 2017

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 November 2017 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 November 2017 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 November 2017 I thyssenkrupp Equity Story l Steel Europe

5 Steel Europe significant margin expansion in H2 16/17 [ mn] 547 mn 492 mn mn Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014/ / /17 Progressively improving EBIT adj. profile Q3 16/17 best result since FY 11/12 5 November 2017 I thyssenkrupp Equity Story l Steel Europe

6 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 6 November 2017 I thyssenkrupp Equity Story l Steel Europe

7 500 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 7 November 2017 I thyssenkrupp Equity Story l Steel Europe

8 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 8 November 2017 I thyssenkrupp Equity Story l Steel Europe

9 The next level of corrosion protection for inner parts and outer panels with zinc-magnesium Flange corrosion after testing according to DIN EN ISO B (10 cycles) ZM EcoProtect & ZM PrimeProtect Hot dip galvanizing November 2017 I thyssenkrupp Equity Story l Steel Europe

10 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 10 November 2017 I thyssenkrupp Equity Story l Steel Europe

11 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 11 November 2017 I thyssenkrupp Equity Story l Steel Europe

12 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 12 November 2017 I thyssenkrupp Equity Story l Steel Europe

13 Memorandum of understanding (MoU) for joint venture of European steel activities with Tata Steel signed 13 November 2017 I thyssenkrupp Equity Story l Steel Europe 1. Pending shareholder approval

14 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 14 November 2017 I thyssenkrupp Equity Story l Steel Europe

15 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 November 2017 I thyssenkrupp Equity Story l Steel Europe

16 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 16 November 2017 I thyssenkrupp Equity Story l Steel Europe

17 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 17 November 2017 I thyssenkrupp Equity Story l Steel Europe

18 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 18 November 2017 I thyssenkrupp Equity Story l Steel Europe

19 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 19 November 2017 I thyssenkrupp Equity Story l Steel Europe

20 Volume KPI s of Materials Businesses 2011/ / / / / /17 FY FY FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY MX Total shipments kt 10,868 10,669 13,615 13,421 3,105 3,250 3,275 2,975 12,605 2,713 2,799 2,718 2,773 11,003 Warehousing shipments 1 kt 5,470 5,300 5,592 5,532 1,276 1,449 1,463 1,330 5,518 1,294 1,510 1,426 1,436 5,666 Shipments AST 2 kt Crude Steel kt 11,860 11,646 12,249 12,392 2,883 2,971 3,116 3,053 12,021 2,903 2,938 3,209 3,010 12,060 Steel Europe AG kt 8,408 8,487 8,936 9,276 2,214 2,364 2,355 2,404 9,336 2,531 2,210 2,418 2,282 9,440 SE AM 4 HKM kt 3,452 3,160 3,313 3, , ,620 Shipments kt 12,009 11,519 11,393 11,725 2,359 2,839 3,087 2,889 11,174 2,724 3,010 2,877 2,823 11,433 Cold-rolled kt 7,906 7,437 7,137 7,182 1,515 1,819 1,929 1,785 7,048 1,732 1,892 1,800 1,745 7,169 Hot-rolled kt 4,103 4,082 4,256 4, ,019 1,157 1,104 4, ,117 1,078 1,078 4,265 Average Steel revenues per ton Slab production CSA kt 3,369 3,550 4,110 4,005 1, ,064 1,166 4,295 1,029 1,040 1, ,009 Shipments AM kt 3,401 3,457 4,194 3,849 1,061 1,130 1,049 1,145 4,385 1, , ,908 USD/EUR Aver USD/EUR Clos BRL/USD Aver BRL/USD Clos Excl. AST/VDM shipments 2. Included at MX since March Indexed: Q1 2004/2005 = Exit completed in September November 2017 I thyssenkrupp Equity Story l Steel Europe

21 SE Steel Europe [ mn] 2015/ /17 MoU for JV with Tata on Sep. 20 th ; signing expected early 2018 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Order intake 1,846 2,183 2,265 1,852 8,146 2,078 2,442 2,171 2,277 8,969 Sales 1,723 1,925 2,015 1,969 7,633 1,908 2,371 2,337 2,299 8,915 EBITDA EBITDA adjusted EBIT EBIT adjusted EBIT adj. margin (%) tk Value Added (110) 43 Ø Capital Employed 5,088 5,102 5,067 5,012 5,012 4,948 5,113 5,248 5,286 5,286 BCF (231) (404) (232) CF from divestm. (2) (4) (0) (1) 10 4 CF for investm. (86) (89) (105) (120) (400) (121) (119) (184) (141) (566) Employees 27,493 27,368 27,201 27,559 27,559 27,437 27,400 27,384 27,646 27,646 Current trading conditions EU carbon flat steel market up slightly year-on-year in first six months of CY 2017 with further pressure from imports: lower volumes from China and Russia but significantly higher imports from other third countries, particularly India and Turkey; market env t remains extremely challenging (global overcapacities, increasing export risks, and continued highly volatile raw material prices) Sales in Q4 up yoy: Slightly lower shipments more than compensated by significantly higher prices EBIT adj. in Q4 significantly up yoy: Strong price environment led to strong earnings improvement; margin compressed qoq due to slightly higher raw material prices as well as less economies of scale due to lower shipments 21 November 2017 I thyssenkrupp Equity Story l Steel Europe

22 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. 22 November 2017 I thyssenkrupp Equity Story l Steel Europe