Performance of the businesses in the 1st quarter 2019/2020
In a difficult overall market environment in the automotive sector – dominated by continuing weak sales on the world’s biggest market China – the Automotive Technology business area’s order intake improved by 5 percent and sales by 11 percent year-on-year. The increases mainly reflected the start of production at new plants and projects, particularly for steering systems but also for damper systems and camshaft modules. This pleasing growth was partly offset by negative earnings contributions from the two businesses under review – System Engineering and Springs and Stabilizers. At System Engineering capacity adjustment and cost measures have already been initiated. Overall adjusted EBIT at €21 million was up from the prior year (€13 million).
At Industrial Components bearings in particular profited from the good order situation for wind energy. However in the forgings business, where cost-reduction measures have already been introduced, earnings were impacted by lower volumes for truck and construction machinery components. Overall order intake was down by 13 percent and sales by 5 percent. Adjusted EBIT was level with the prior year at €44 million.
Elevator Technology booked orders worth €2.2 billion in the past quarter – a new record high – mainly resulting from new installations and modernization business in the USA. Sales were 6 percent higher year-on-year, with growth above all in North and South America and Asia/Pacific (particularly in China). Adjusted EBIT showed a positive trend in all regions and improved by 12 percent to €228 million. Margin was 0.5 percentage points up at 11.1 percent, not least due to implementation of the performance program.
Plant Technology achieved a 23 percent increase in sales, mainly in chemical plant engineering. Order intake was 15 percent lower year-on-year, reflecting a major mining order in the prior-year period. The chemical and cement plant businesses showed a stable to positive performance. Adjusted EBIT remained negative but at €(18) million was significantly better than in the prior year (€(30) million) due to a slight recovery in chemical and cement plant engineering, proceeds from the sale of a building, and positive effects from the implementation of the transformation program.
Marine Systems maintained its order intake at the prior-year level. Sales were 28 percent higher at €381 million, particularly as a result of sales from the major order for four frigates from North Africa. Operating earnings remained stable at around break-even.
The Materials Services business area felt the effects of the weak market environment and further declining prices. Order intake and sales were down clearly by 9 and 10 percent, respectively. Falling market prices and very weak demand, particularly in warehousing and distribution and in the auto-related service centers in Europe and America, impacted business and led to substantial negative effects. Accordingly adjusted EBIT at €11 million was as expected down sharply from the prior year (€22 million).
The performance of Steel Europe was also characterized by the structurally extremely challenging situation in the steel sector. The overall slowdown in market momentum was clearly noticeable, in particular due to the significant drop in demand from the auto industry. Order intake and sales were down 10 and 13 percent respectively from the prior year. As a result of declining shipments and continuing cost pressure – driven again in part by higher raw material costs (especially iron ore) – adjusted EBIT slipped into negative territory at €(164) million (prior year: €38 million).
thyssenkrupp is progressing as planned with the reduction of administrative costs at Corporate Headquarters and in the regional organization. Adjusted EBIT remained almost stable at €(66) million.
