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2.3 Management report on on the Group Results of of operations of of the the business areas areas Stainless Global achieved two-digit- two-digitgrowth in order intake and sales. Stainless Global (discontinued operation) Stainless Global in figures 2009/2010 2010/2011 Change in % Order intake million € 5,121 6,045 18 Sales million € 5,901 6,739 14 EBIT million € (57) (785) – – EBIT margin % (1.0) (11.6) — Adjusted EBIT million € (57) 15 126 Adjusted EBIT margin % (1.0) 0.2 — Employees (Sept. 30) 11,235 11,490 2 The Stainless Global business area supplies premium-quality stainless steel flat products and highperformance materials such as nickel alloys and titanium. Orders and sales higher At Stainless Global, business was up from the prior year in the first months of 2010/2011. The value of new orders increased by 18% to €6.0 billion due to alloy prices; order volumes were 3% down from the prior year at 2.0 million tons. Whereas volumes decreased slightly in the stainless flat products business, demand for nickel alloys and titanium increased, which also noticeably increased their selling prices. 2.3 million tons of stainless flat products and 37,500 tons of high-performance materials were produced. It should be noted that the prices of high-performance materials are many times higher than those of stainless products. Overall shipments were 6% down from the prior year at 2.0 million tons. Market demand was noticeably weaker in the 2nd half of the year. Despite this, sales increased by 14% to around €6.7 billion due to higher alloy surcharges. Base prices were lower than a year earlier. Stainless Global order intake Stainless Global EBIT in million €, quarter on quarter rate of change in million €, quarter on quarter rate of change Q1 943 Q1 Q2 + 65 % 1,560 Q2 Q3 (16)% 1,317 Q3 Q4 (1)% 1,301 Q4 2009/2010 Q1 + 14 % 1,483 Q1 Q2 + 21 % 1,790 Q2 Q3 (24)% 1,360 Q3 Q4 + 4 % 1,412 Q4 2010/2011 2009/2010 2010/2011 – – ++ (94)% + 40 % + 743 % – – – – 82 (42) (101) 81 5 7 59 0 (851)
Management report on the Group 2.3 Management report on the Group Results of operations of the business areas The new stainless steel mill in in the the USA began operations. 82 | 83 Adjusted EBIT positive Adjusted EBIT improved from €(57) million to €15 million, adjusted EBIT margin from (1.0)% to 0.2%. A favorable market situation at the beginning of the reporting year and the optimization of the product mix led to positive effects, in particular from the nickel alloy business. In addition, we further reduced costs. The EBIT figure includes €98 million in startup costs for the new stainless steel mill in the USA. Impairment charges weigh on EBIT After goodwill impairment of €290 million and a further fair value adjustment of €510 million, EBIT of Stainless Global came to €(785) million, compared with €(57) million in the prior year. EBIT margin decreased from (1.0)% to (11.6)%. The write-down to fair value made necessary by the intention to sell takes into account in particular the valuation discounts applied to stainless steel producers due to the structural problems in the market. The discounts also reflect the current sovereign debt crisis and the high risk aversion of investors. In the current environment, the valuations placed on stainless steel companies are comparatively low and vary over a range. We determined the fair value on the basis of internal calculations and estimates of market participants, and our valuation lies in the middle of the range. Stainless steel mill in the USA At the US site in Calvert the productivity and product quality of the units in phase 1 of the cold rolling mill commissioned last fiscal year improved further. The newly installed phase 2 units in the hot-rolled annealing and pickling line, the second cold rolling mill and the finishing line are now going into operation. In addition, the third cold rolling mill and the remaining parts of the finishing line are currently being installed. Construction work on the 1 million ton per year capacity melt shop is proceeding on schedule; it is due to start operation in December 2012. Until then the location will continue to be supplied with hot band and slabs from the European mills. Nirosta forward strategy To strengthen the competitiveness of the European stainless steel operations, the locations within the Nirosta plant network are being optimized. The relocation of production from Düsseldorf-Benrath to Krefeld is to be completed by the beginning of 2016. The investment volume is €244 million. The implementation of the first phase of the project began at the start of 2011, mainly involving the construction of a new annealing and pickling line and cold rolling mill. Business with external customers The order intake and sales of the business area also include business with customers within the <strong>ThyssenKrupp</strong> Group. The following figures were generated with customers outside the Group; as a result of the separation of the stainless steel operations, the corresponding Group figures are reduced by these amounts: 2009/2010 2010/2011 Change in % Order intake million € 4,609 5,411 17 Sales million € 5,306 6,016 13
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Annual Report 2010/2011 At the cent
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Our mission statement We are Thysse
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Letter to shareholders Dr.-Ing. Hei
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