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Letter to shareholders
To assist our strategic development, we have drawn up a new Group mission statement with the involvement
of many employees around the world. Under the motto “We are ThyssenKrupp”, it sums up our basic
philosophy: customer and employee focus, innovativeness and quality, market leadership and
internationality, community and diversity. We want to live these values more fully in the future.
Steel Americas and Stainless Global: Book values adjusted
One area of concern in 2010/2011 was the ramp-up of the new steel plants at Steel Americas, particularly
in Brazil, which was associated with persistent losses. We also face negative developments which are beyond
our control. For example, high raw material costs are negatively impacting our cost position, as are
exchange-rate influences, specifically the relative strength of the Brazilian real. The slower recovery and
currently renewed weakness of the markets in the USA and Europe are also hampering market entry for
products of Steel Americas. As a consequence of this, we recognized impairment charges of €2.1 billion in
our 2010/2011 financial statements. Irrespective of this, the successful completion of the ramp-up phase,
optimization of production costs and successful entry to the US market represent our biggest opportunity for
value growth in the short term. The strategic rationale remains unchanged, and we expect good returns in
the medium term. For us as a premium supplier of flat-rolled carbon steel, the Americas are markets with
potential, and our plants are an important key and a state-of-the-art base from which to establish ourselves
there sustainably and profitably.
Impairment charges totaling €800 million were also necessary at the previous Stainless Global business
area – now Inoxum – in 2010/2011. €290 million related to goodwill impairment and €510 million to a fair
value adjustment in connection with the carve-out of the entity. The main reasons for the fair value
adjustment were the current valuations applied to stainless steel producers, which include high risk
premiums and high discounts due to the unsolved structural problems on the stainless steel market.
As a result, the Group’s operating (adjusted) EBIT was offset by total impairments of €2.9 billion. Adding in
other net positive special items of €124 million, Group EBIT was negative at €(988) million.
Tasks and outlook for 2011/2012: Challenging
We began implementing the strategic measures immediately after the fundamental decisions were made by
the Executive Board and Supervisory Board in May 2011. It remains our aim to complete the announced
portfolio measures by the end of 2012. The first steps have now been successfully implemented: We have
sold Metal Forming and created the conditions for the carve-out of Stainless Global. Positioning the Group for
the future is one of the Executive Board’s permanent tasks. Portfolio optimization is therefore an ongoing
process.
Our earnings targets for the new fiscal year are subject to risks; the main reason for this are the growing
uncertainties regarding the future of the economy. Just a few months ago there seemed little likelihood that
the sovereign debt crisis and the financial market turbulence would spread to the real economy. Now the
economic forecasts are being revised downwards more sharply and the risk of a slowdown is increasing. In
view of the significant scale of the uncertainties, we cannot at present provide a reliable forecast for the fiscal