ThyssenKrupp Q1 Net Profit Up, EBIT Down; Backs FY19 View; Stock Dips

German industrial and technology group thyssenKrupp AG (TYEKF.PK) reported Tuesday significantly higher net profit in its first quarter, while EBIT and EBIT margin was lower. Further, the company, which is preparing separation, confirmed its forecast for the fiscal year 2019 but noted that the economic and political uncertainties are growing. In Germany, thyssenKrupp shares were losing around 2 percent in the morning trading.

For the year 2019, net income is forecast to increase significantly from last year’s 60 million euros. It is expected that the costs of preparing the separation will be significantly outweighed by the earnings improvements.

For adjusted EBIT of the continuing operations, the company aims to achieve above 1 billion euros, compared to 706 million euros reported last year.

Guido Kerkhoff, CEO of thyssenkrupp AG, said, “…the figures also show that we have to keep on pressing forward with our performance programs in all business areas. We are fully focused on doing so and are confident that we will make clear progress this fiscal year towards our growth and margin targets for 2020/2021.”

For the first quarter, net profit rose 69 percent to 136 million euros from 81 million euros in the prior year. Earnings per share were 0.22 euros, up from 0.13 euros last year. In the prior, the US tax reform in particular had a negative one-time impact on net income.

Earnings before interest and tax or EBIT was 296 million euros, down 30 percent from last year’s 426 million euros. EBIT margin fell to 3 percent from 4.5 percent a year ago.

Adjusted EBIT was 333 million euros, down 26 percent from last year. Adjusted EBIT margin was 3.4 percent, down from 4.7 percent a year ago. Adjusted EBIT from continuing operations amounted to 168 million euros, down 37 percent.

Group net sales increased 2 percent to 9.74 billion euros from 9.54 billion euros a year ago. Net sales from continuing operations improved 3 percent to 7.94 billion euros.

Order intake was 10.11 billion euros, up 8 percent from 9.40 billion euros a year ago. On a continuing operations basis, thyssenkrupp received new orders worth 8.1 billion euros, up 6 percent year-on-year.

Regarding the planned separation of the company, thyssenkrupp announced the leadership structures of the two future companies, creating the framework for the concrete organization of thyssenkrupp Industrials and thyssenkrupp Materials.

At each company the number of board directorates will be reduced to three, and central functions will be combined. From 17 corporate and service functions today, there will be just 14 at thyssenkrupp Industrials and just 10 at thyssenkrupp Materials. The current matrix structure will be dissolved. In the future there will be no regional structure besides the business areas at headquarters level.

thyssenkrupp said the final vote on the plans is to take place at the Annual General Meeting in January 2020. The composition of the two management teams is to be decided in spring 2019. Details of the financial structure, brand identity and strategy of the two new companies will be announced in May. Both companies are to commence operations at the start of the next fiscal year on October 1, 2019.

In Germany, thyssenkrupp shares were trading at 14.33 euros, down 2.02 percent.

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