OREANDA-NEWS. August 21, 2013. In the first 9 months of the 2012/2013 fiscal year (October 1, 2012 – June 30, 2013) ThyssenKrupp achieved order intake from continuing operations of EUR 28.3 billion, down 8% year-on-year.

There were once more significant gains at Elevator Technology and Industrial Solutions. At Components Technology new orders were down year-on-year in the first 9 months due to lower demand and disposals, but in the 3rd quarter were higher again quarter-on-quarter. Low volumes and prices weighed on business at Steel Europe and Materials Services. The order backlog from continuing operations at the end of the period was 11% higher year-on-year at around EUR 24 billion and secures a high level of capacity utilization and planning certainty in project business. Sales from continuing operations in the first 9 months 2012/2013 decreased year-on-year by 9% to EUR 27.4 billion.

Adjusted EBIT from continuing operations came to EUR 802 million in the first 9 months of the current fiscal year, compared with EUR 1,117 million in the prior-year period. The 3rd quarter contributed EUR 332 million to this, significantly higher than the EUR 241 million of the previous quarter and fully in line with the full-year forecast. All business areas made strong positive contributions to adjusted EBIT both over the first 9 months and in the 3rd quarter. With the exception of Industrial Solutions all business areas improved their earnings quarter-on-quarter. The share of the capital goods operations in the first 9 months was EUR 1,149 million, significantly higher than the EUR 261 million contributed by the materials operations. Earnings net of taxes amounted to EUR (262) million, of which EUR (298) million attributable to the shareholders of ThyssenKrupp AG.

Free cash flow, i.e. the sum of operating cash flows and cash flows from investing activities, in the continuing operations improved by around EUR 1.4 billion to EUR 1,126 million in the first 9 months. Even without the cash inflows from divestments, free cash flow increased by around EUR 1.1 billion to a positive value of EUR 97 million.

The 3rd quarter contributed EUR 375 million to this, a further quarter-on-quarter improvement. Free cash flow for the full Group improved by around EUR 2.1 billion to EUR 510 million. As a result, ThyssenKrupp also made progress with reducing its net financial debt. While remaining virtually unchanged quarter-on-quarter, net financial debt decreased year-on-year by around EUR 0.5 billion to EUR 5,326 million (June 30, 2012: EUR 5,800 million) and was therefore also lower than at September 30, 2012 (EUR 5,800 million).

Dr. Heinrich Hiesinger, Executive Board Chairman of ThyssenKrupp AG: "Operating income and free cash flow show a clearly positive trend. The strong gains in order intake in our capital goods businesses – with new records at Elevator Technology – prove that we are succeeding with the implementation of the Strategic Way Forward. The measures under the corporate program "impact 2015" and the processes we have initiated to change our corporate culture will further improve our performance."

ThyssenKrupp is engaged in very advanced negotiations with a leading bidder on the sale of the two Steel Americas plants. The negotiations include shareholder partner Vale, the Brazilian development bank BNDES and Brazilian government agencies. The aim remains to sign a deal promptly. In addition, the Group is also in talks with other interested parties.

Dr. Heinrich Hiesinger, Executive Board Chairman of ThyssenKrupp AG: "The sale process for Steel Americas is taking longer than originally expected. That's understandable because the bidders expect a full ramp-up of blast furnace 2 in Brazil. This has been hampered by process instabilities from May this year. In addition, the negotiations are highly complex and are further complicated by the contract structures chosen years ago. We too would have liked to reach a deal more quickly; but the interests of the company and diligence are our top priorities. For this reason we will not make our decisions dependent on reporting deadlines."

In connection with the disposal process for Steel Americas, an impairment loss of EUR 683 million on property, plant and equipment was recognized at March 31, 2013. This book loss was the main reason for the net loss of EUR (1,205) million for the full Group in the first 9 months (net loss attributable to shareholders of ThyssenKrupp AG: EUR (983) million), for the decline in the equity ratio to 8.0% and for the temporary increase in the gearing ratio (net debt to equity) to 185.7%. Taking into account the current status of negotiations there was no need for any further adjustment at June 30, 2013. With cash, cash equivalents and committed undrawn credit lines totaling EUR 7.2 billion at June 30, 2013 and with its balanced maturity structure, ThyssenKrupp is solidly financed. The cash inflow from the sale of Steel Americas will significantly reduce our temporarily increased gearing again.

Focus on compliance

Against the background of repeated compliance violations and the suspicion of price fixing by ThyssenKrupp Steel Europe raised by the Federal Cartel Office at the end of February 2013, the Executive Board of ThyssenKrupp AG decided to intensify the Group's compliance efforts still further, also with support from external law firms. As well as establishing an ombudsman, the Group carried out an amnesty program from April 15 to June 15, 2013. ThyssenKrupp promised employees who disclosed compliance matters voluntarily and fully that it would not assert/enforce damage claims against them and that it would not terminate their employment. The amnesty program led to more than twenty leads. However, no serious or structural compliance infringements were identified.

The relevant information received under the amnesty program related mainly to individual misconduct in dealings with customers and suppliers in Germany and abroad. This conduct was stopped following internal measures. The amnesty program produced no leads regarding the ongoing investigations by the Federal Cartel Office into possible price fixing in the delivery of certain steel products to the German automotive industry and its suppliers. Acting on an anonymous tip, the Federal Cartel Office searched the business premises of ThyssenKrupp Steel Europe AG among others at the end of February this year. The official investigations by the Federal Cartel Office and the internal investigation initiated on this are ongoing. Significant risks for the Group’s asset, financial and earnings situation cannot be ruled out at present.

ThyssenKrupp has agreed with Deutsche Schutzvereinigung fur Wertpapierbesitz e.V. and the shareholder Christian Strenger, whose motions for a special audit were rejected by the Annual General Meeting in January 2013, to carry out a voluntary special audit. In particular the auditors will examine the structure of the internal control system for its appropriateness in preventing compliance infringements in the future, and the process of investment control for future large investment projects. ThyssenKrupp will make the audit report available to all shareholders at the Annual General Meeting in January 2014.

The full interim report is available in German and English for downloading and as an interactive online version at  http://www.thyssenkrupp.com.