Improving Q2 21/22 results, even if the context will become less supportive

The Q2 21/22 was pretty strong, obviously supported by steel prices. The impact on the group’s guidance was significant, even if sector margins remain relatively weak. The context will become less supportive, but the group still has opportunities to increase its efficiency. We will upgrade our forecasts for the current year, with a minor impact on the valuation.

A rather (expected) sound start to FY21/22

The start of FY21/22 is rather sound, mainly due to solid prices and despite higher input costs. Overall, the group’s profitability remains modest, before restructuring measures are fully felt. The quite significantly negative FCF is not an issue (WC build up). We will only marginally adjust our numbers after this release.

Welcome to thyssenkrupp nucera

thyssenkrupp is considering the IPO of its electrolysis business The proceeds would be used to finance growth, with thyssenkrupp keeping its majority A preliminary valuation of the business would stand at €5.5-6bn, quite in line with our own estimates

FY21 Capital Markets Day: mid-term targets

The mid-term targets of the group look rather ambitious at first sight. The group’s statements were rather general, as is often the case in CMDs. Another specific CMD will be held on 13 January on the UCE segment. We will not change our numbers at this stage.

FY 21/22 results: some hopes for the coming fiscal year

The results came in at the upper range of guidance. The improvement is rather strong in fiscal Q4 as expected and seen across the board. The outlook is rather supportive, in particular if free cash flow is to break even (at last). The group confirms that an IPO is the preferred solution for the electrolyser business. This set of results confirms our positive view and target price. The next step/trigger is the CMD on 2 December.

Q3 20/21: more time needed

The Q3 numbers are improving as expected and ended up slightly higher than consensus for sales and EBIT The improvement in EBIT was mainly attributable to Steel Europe, Materials Services and Multi-Track Free cash flow was also marginally above expectations, with also the Mining and Infrastructure businesses being currently sold The guidance was somewhat upgraded (not a big wonder though) No big changes to be expected to our forecasts. The numbers were marginally better but the recovery stor

Q1 20/21: not bad

Q1 20/21 came in above expectations A better performance was witnessed across the board in the many group segments Free cash flow was still negative, albeit improving The group raises its guidance for F20/21 for the second time in a row We will fine-tune our numbers and valuation after the release

Q1 20/21: a clear improvement

Q1 20/21 showed clear signs of improvement proftability-wise Almost all segments were profitable at EBIT level The cash generation was also satisfying, with net free cash flow positive again Management raised its FY20/21 guidance We will revise our numbers and valuation upwards

Elevator to be sold for €17.2bn

The Supervisory Board has decided to accept the offer of Advent, Cinven, and the RAG foundation (Germany’s holding company for the former hard coal mines). In addition, tk’s pension fund will inject €1.25bn into Elevator.

‘Preliminary’ decision on Elevator expected in late February

Thyssenkrupp continued to regard Elevator as a continuing operation in Q1 of its current fiscal year. Simultaneously, it has adjusted last year’s Q1 numbers as Steel Europe was then regarded as a discontinued operation. Based on the revised numbers for last year, revenue was down and operating and net earnings turned around from a small profit to a loss.

Shareholders' funds €1.75bn but €12.7bn of net debt plus pension provisions

The above numbers suggest that thyssenkrupp stands with its back to the wall. The group’s earnings were lower than we had anticipated, but equity has fallen by clearly more than we had pencilled in. This is the result of other comprehensive income that amounted to a loss of €842m (loss of €51m in the previous year). Consequently, no dividend will be paid.

Supervisory Board Chairwoman becomes CEO

After the turmoil at the helm in mid-2018, Thyssenkrupp’s top is in new shambles. Last year, the CEO stepped down and, subsequently, the Chairman of the Supervisory Board left as well. As the company was unable to attract a new CEO from the outside, the then CFO was promoted to the CEO position.

The company’s problem: lack of leadership

The company’s apparent new strategy of selling Elevator will prolong its fight for survival, but it cannot be in the interest of the foundation as it needs regular and stable dividend income. However, this requirement cannot be fulfilled by ThyssenKrupp’s remaining activities. Therefore, the fighting between different interested parties is likely to continue.

Let’s get back to where we were before

Management’s strategy of merging its Steel Europe with Tata’s European operations and splitting the remains into two separately listed companies is called off. The new strategy is now to sell Elevator in an IPO.

ThyssenKrupp and Tata to release further merger details

EU cartel authorities had asked the companies to release their response to the EU requests by 20 March but the companies had asked for a grace period of another eight business days. They are expected to publish their response today. It remains to be seen whether the EU’s requests have been too demanding or whether the two companies are willing to fulfill them and will then start the integration of ThyssenKrupp’s and Tata’s European carbon steel operations. According to the German partner, this

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Chariot Limited (AIM: CHAR): Imminent partner in Morocco

• The US$2.7 mm cash position at the end of June is in line with our expectations. • Although inflation across the industry and rig availability had complicated and delayed the finalization of a farm-in agreement for Anchois in Morocco, negotiations on partnering are in the final stages. A partner could be announced very soon. • Progress has been made across the portfolio. Onshore Morocco, permitting is under way with drilling now expected to start in early 2024 with up to four wells. Prospects

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Interim Results

Diversified reported strong interim results, with production that was marginally below our estimate more than outweighed by tight cost control to deliver EBITDA ahead of our forecast; we broadly retain our FY23 estimates.

Pantheon Resources - Positive Outlook for Pantheon Resources

We believe that the outlook for Pantheon Resources is significantly improving.

Touchstone Exploration+ (TXP, House Stock at 68p) - Cascadura production update

Central Asia Metals: H1 2023 Interim Results

Central Asia Metals (CAML LN) results in H1 2023 follow a record prior comparable period, with the swing between the two primarily due to commodity price performance. H1 2023 net revenue of US$93.6m was down 18% YoY, EBITDA of US$48.9m was down 35% YoY. COGS was up 9.8% YoY given global inflationary pressures. Other charges on the P&L were minimal particularly now CAML is debt free. Owing to the timing of tax charges and some unfavourable working capital movements which we expect to be resolved

Touchstone Exploration+ (TXP, House Stock at 62p) - Cash generation and scale in Trinidad to the fore

Bushveld Minerals: H1 results; progress at Vanchem post period end

Bushveld Minerals (“BMN”) has released its results for H1 2023 having already released production of 1,784t at a weighted average cash cost of US$26.6/kgV, with H1 sales of 2,096tV through destocking during the period. Revenue for the period was US$78.4m, with adj EBITDA of US$10.3m and attributable NPAT of -US$14m. The company finished H1 with US$3.7m of cash and US$90.7m of debt. We expect H2 production of 1,992tV, split between 925tV from Vanchem and 1,067tV from Vametco, bringing full year p

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Interim results

Bushveld delivered as robust a financial performance as could reasonably be expected in H1 2023 given the operational challenges faced. We are encouraged by the reported progress made at both Vametco and Vanchem since, and vanadium price aside (current prices are soft, and pose a downside risk if they do not recover in-line with our assumptions) we think Bushveld is broadly on course to meet our full-year estimates. But given its stressed balance sheet, concluding the refinancing of its c.US$45m

Chariot - Anchois Partnering in Final Stages

The partnering process at Anchois is now close to a conclusion, with farm-out negotiations in their final stages. The FEED phase of the Anchois gas development was completed in March, with Chariot continuing to make progress across all the Anchois technical and commercial workstreams. Post period, Chariot added the synergistic, low-cost, low-risk Loukos Onshore licence. Loukos Onshore contains several near-term drilling opportunities, which, if successful could lead to fast-tracked gas productio

Value anomaly despite resilient trading

CMD - still plenty of growth potential