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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Morning Note – 22 April 2024

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Morning Note – 24 April 2024

Morning Note – 25 April 2024

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