ThyssenKrupp’s (TK) Steel Europe business saw sales drop 8% year-on-year, to €9.6 billion during its latest fiscal year to end-September. This was largely because of a drop in production owing to operational issues in the third quarter, plus lengthy disruptions to production and shipping following storm Ela in Germany in June: the latter “had a major impact,” the company tells Kallanish (see Kallanish 18 June).
 
Other factors included corporate disposals and falling steel prices. Steel Europe shipments were largely unchanged year-on-year and increased on a comparable basis by 1%. Adjusted ebit (earnings before interest and tax) grew by €73 million to €216m. TK notes that the improvement stemmed from its 'best-in-class reloaded' efficiency programme, and lower raw material costs.

The Steel Americas division outperformed expectations as order intake increased by 8% to €2.2bn, and sales grew by 10%. These figures only include the contributions of TK Steel USA, until it was sold on 26 February 2014. On a like-for-like basis order intake increased by 20% and sales by 18%, the company stresses in its latest financials.

“With slab production of 4.1m tons, the Brazilian steel mill [CSA] was 16% up on the prior year and is operating at over 80% capacity. Adjusted ebit improved; shrinking the division’s loss from €495m in the prior-year to just €60m. The loss is smaller, not just because of “higher and more efficient capacity utilisation but also cost reductions and positive price effects on the North American flat steel market,” explains TK.

The group says that by way of celebration, it will issue a dividend of 11 euro cents/share, something that is largely a gesture as it marks the group’s return to profit. As a whole, the group has reported its first annual net profit in three years. TK achieved net earnings of €195m in the 2013/14 year, compared to a loss of around €1.6bn, in the previous year. The group has worked to cut debt by €1.6m to €3.5bn, down from a peak of €6.5bn in 2012. This includes selling its US rolling and coating plant in Calvert, Alabama to a consortium of ArcelorMittal and Nippon Steel & Sumitomo Metal Corp (see Kallanish 9 July).

“Despite the growing uncertainty over the economic climate and limited visibility in the materials businesses, the [management] is confident about the prospects for TK in the 2014/2015 fiscal year: On a comparable basis, group sales are expected to grow year-on-year by a single-digit percentage rate,” TK adds.

Following his arrival at TK in 2011 from a non-steel background at Siemens, it is little wonder that ceo Heinrich Hiesinger has been asked to stay on at the helm of the industrial group until 2020, in order to keep up the momentum of his reforms.