thyssenkrupp equity story materials services · 2 | november 2017 | thyssenkrupp equity story |...

thyssenkrupp Equity Story

Materials Services

November 2017

2 | November 2017 | thyssenkrupp Equity Story | Materials Services

thyssenkrupp – a diversified industrial group Sales €41.4 bn1; EBIT adj. €1.7 bn1

Components Technology (CT)

Materials Services (MX)

1. Financial figures FY 16/17

Steel Europe (SE)

€8.9 bn €547 mn

€13.7 bn €312 mn

Elevator Technology (ET)

€7.7 bn €922 mn

€7.6 bn €377 mn

Industrial Solutions (IS)

€5.5 bn €111 mn

Continuing operations


Sales driven customer service organization Sales €13.7 bn

• Materials distribution (just-in-time)

• Processing

• Inventory/Warehouse Management

• Supply Chain Management

• Materials

• Raw materials

Stainless steel AST since March 1, 2014

Warehousing Services 68% of sales

Trading 19% of sales

Production 13% of sales


Growth opportunities in materials distribution and value added services – from processing via logistics concepts up to SCM solutions

177157

3.3%

2022 2017 • Opportunities for selective high quality growth • Support customers in focusing on core activities

• Higher customer retention, long-term relationship

Primary target market [€ bn] Value added services roll-out across industries

CAGR


Well diversified across customer groups with footprint in developed countries w/o BA MX w/o Special Materials / Raw Materials / Technical Services1

Sales by customer groups Well-known customers around the world (extract)

Europe #2 | Germany #1 | Eastern Europe #3 | North America #4 Leading positions in fragmented markets

Local Dealers

21%

Others

12%

Energy 4%

Construction

7%

Aerospace

6% 16%

Mechanical engineering 16%

Vehicle manufacturing

18%

Metal-working industry

€10.3 bn

1. FY 16/17


One-stop shop for wide range of products and value added services1

Sales by product groups

1. FY 16/17 | 2. mainly Technical Services

Only 10% sourced from SE

4% Others2

5%

17% 4%

Pipes and Tubes

Raw Materials

9% NF Metals

Stainless Steel

36%

Carbon Steel

Plastics

€13.7 bn AST

25%


13/14 14/15 15/16 16/17 17/18E

Sales

Warehousing, Services Trading Production (AST/VDM1)

13,660

9,440 2,502 1,718

14,254

9,102 2,565 2,587

11,886

8,483 1,870 1,534

13,665

9,350 2,580 1,735

Robust demand

Stable trading conditions

EBIT adj. 212 206 128 312 Ongoing sales and performance initiatives vs. foreseeably lower windfall gains

EBIT adj. margin [%] 1.6 1.4 1.1 2.3

BCF 92 313 467 (43)

Upside powered by program as part of

Strong profitability and cash provider even in challenging trading conditions [€ mn]

1. AST/VDM included at MX since March 2014; Sale of VDM (closing July 31, 2015) and RIP (closing Dec. 4, 2014) | 2. FY 13/14: BCF exclusive rail cartel compensation payments

X


~5% vs. PY

Consequent implementation of measures leads to significant increase in productivity

~12% DIO reduction²

Higher productivity of NWC Higher productivity per FTE

Productivity increase1

1. BU Mat Distr. w/o trading ((volumes ex stock + tolling) / FTE) | 2. Days Inventory Outstanding on average FY 15/16: 67; FY 16/17: 59


Strategic Way Forward @ Materials Services Upside from continuing strong management initiatives and improving trading conditions

Per

form

an

ce

Gro

wth

+

Target 17/18E 15/16

1.1%

14/15

1.4%

13/14

1.6%

16/17

2.3%

• New structures

• Logistics footprint

• More value added services (processing, SCM)

• Digital transformation

• Performance concept AST

• Sales initiatives & marketing (organic growth)

• Opportunities by selective smaller investments

EBIT adj. margin

>3%

Ø CCR

≥1

X

Performance before Growth


Just-in-time deliveries

Efficient

Warehousing and logistics system

Central Regional

Local

Logistics and IT excellence: Largest ERP system worldwide provides basis for efficient processes One SAP template for MX with 8,000 users


Steadily increasing footprint in Eastern Europe

Poland

Romania

Czechia

Hungary

Croatia (Sales) Bulgaria

Serbia

Slovakia

Turkey 2014 1998 2001 2003 2004 2005 2006 2007 2008 2009 2012

Hungary Poland Czech

Republic Russia (closed ´14)

Ukraine (closed ´09) Bulgaria

Romania Slovakia Serbia Croatia Lithuania Turkey

Turkey


Further standardization of stock selection

Strengthening both logistics and sales skills

Germany – Driving efficiencies in warehousing activities

Sharper processing and services offerings

“Next generation” IT systems

Fully levering data analytics in replenishment

• Lower costs

• Faster response, fulfillment

• Streamlining processes

• Higher customer satisfaction


Value Added Services

Processing


Value Added Services Customized

Logistic concepts

Inventory management. Warehouse management. Supply chain management.


From materials distribution to SCM for attractive industries Example Aerospace: Within nine years sales nearly, EBIT adj. more than tripled

Customers (extract)

100

200

300

400

09/10 10/11 07/08 08/09 11/12 12/13 14/15 13/14 15/16

Index

Sales

EBIT adj. ~€650 mn

sig. above MX margin target

16/17


10 years B2C shop experience

Digital expansion of multichannel materials distribution and services1 Examples

B2B

Business via digital channels

>€1.3 bn

B2C Sales via

B2C shops

€31 mn

110,000 products

1. FY 16/17


The digital transformation of MX extends across the entire value chain


Pricing schemes tailored to customers providing margin upside for MX

New

Minimum prices for smaller customers without potential

Pricing Excellence “Pricing science” Statistical models for optimization of sales prices

System support (SAP)

Systematic price differentiation based on importance of customers and consistent pricing policy


1. Industrial Internet of Things

Further backend digitalization to increase efficiency toii: One platform to connect machines of different makes and generations

“toii” is an IIoT1 platform that enables machine integration and connects e.g.:

• Bandsaws and bending machines

• Cranes and forklifts • Slitting and

cut to length lines • Milling machines and

laser systems


AST turnaround driven by effective management initiatives

2014 2008

- 2013

14/15 15/16 17/18E

Strike Massive windfall losses

€ mn ~(600)

Initiatives

Optimize production

footprint and capacity

New sales organization, new markets

Compre-hensive cost optimization

New management

AST

FY 16/17: Employees 2,383

Sales €1.7 bn Production stainless flat 860tt

EBIT adjusted

16/17


Committed to realize the value upside from tk`s Strategic Way Forward

• Strong materials markets expertise and footprint

• Scalability

• Stable and growing core markets

• Focus on value added services

• Powerful IT & logistics systems

• Digital transformation

• Restructuring track record also proven at AST

X

Consistent powerful cash provider

EBIT adj. margin

>3%

Ø CCR

≥1


Disclaimer thyssenkrupp AG

“The information set forth and included in this presentation is not provided in connection with an offer or solicitation for the purchase or

sale of a security and is intended for informational purposes only.

This presentation contains forward-looking statements that are subject to risks and uncertainties. Statements contained herein that are

not statements of historical fact may be deemed to be forward-looking information. When we use words such as “plan,” “believe,”

“expect,” “anticipate,” “intend,” “estimate,” “may” or similar expressions, we are making forward-looking statements. You should not rely

on forward-looking statements because they are subject to a number of assumptions concerning future events, and are subject to a

number of uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from

those indicated. These factors include, but are not limited to, the following:

(i) market risks: principally economic price and volume developments,

(ii) dependence on performance of major customers and industries,

(iii) our level of debt, management of interest rate risk and hedging against commodity price risks;

(iv) costs associated with, and regulation relating to, our pension liabilities and healthcare measures,

(v) environmental protection and remediation of real estate and associated with rising standards for real estate environmental protection,

(vi) volatility of steel prices and dependence on the automotive industry,

(vii) availability of raw materials;

(viii) inflation, interest rate levels and fluctuations in exchange rates;

(ix) general economic, political and business conditions and existing and future governmental regulation; and

(x) the effects of competition.

Please note that we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new

information, future events or otherwise.”

thyssenkrupp equity story materials services · 2 | november 2017 | thyssenkrupp equity story |...

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