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5. thyssenkrupp AG (Formerly ThyssenKrupp AG) Business Report FY ended Sep. 2019

thyssenkrupp AG (Formerly ThyssenKrupp AG) Business Report FY ended Sep. 2019

*Prior-year figures have been adjusted due to the adoption of IFRS 15

Factors
1) Net Sales

-Sales in the fiscal year ending September 2019 increased by 1.1% year-on-year to EUR 41.996 billion. The Components Technology and Elevator Technology business sectors were both steady, with single-digit growth. Overall sales were almost flat due to negative growth in the Materials Services and the Steel Europe business sectors. Adjusted EBIT declined 44.5% year-on-year due to the slowdown in the global economy and reduced demand, especially in the Chinese automobile market.

2) Components Technology

-Sales in the Components Technology division for the fiscal year ended September 30, 2019 increased by 3.9% to EUR 6.871 billion euros. Division sales increased year on year due to increased orders. Camshafts and steering were strong but were offset by slowdowns in China, Western Europe and the U.S. market. Adjusted EBIT was up 18.3% due to improved profitability in the Components Technology sector, even though it was negatively impacted by lower sales in springs and stabilizers and new project launch costs.

3) Steel Europe (discontinued operation)

-Sales in the fiscal year ended September 2019 for the Steel Europe business area were EUR 9.065 billion, a drop of 4.3% from the previous year. Sales were affected by the sluggish market and shipments decreased due to the drop in the water level of the Rhine River as well as by the introduction of the WLTP (worldwide harmonized light vehicle test procedure). Adjusted EBIT suffered a significant decline in profitability because of an increase in raw material costs due to the impact of exchange rates and logistics costs due to the conditions of the Rhine River.

ｰChassis components development

An integrated control module (vehicle motion control) that integrates information from each actuator in the vehicle is under development. It contributes to vehicle safety during automated driving and driving control optimized for the user. Currently, production has already started and it is installed in existing vehicles.

ｰCollaboration with IBM on autonomous driving

The company is conducting a joint pilot project to send and evaluate data such as speed and acceleration information from autonomous vehicles to IBM's AI “Watson”. The purpose is to provide solutions through machine learning suitable for user-specific driving styles.

ｰ"CarValoo" by thyssenkrupp Garage

This is a service to provide solutions for a sharing mobility society. The service provides vehicle use status to car-sharing service companies, rental car operators, and vehicle leasing companies. Vehicle acceleration and turns are recognized by sensors and sent to the cloud, and driving conditions and damage are measured by algorithms.

R&D Structure

-As of September 30, 2019, the Company has approximately 4,800 employees working in research and development across 90 locations.
 　

Patents

-In the fiscal year ended September 30, 2019, the Company registered around 2,500 new patents and utility models. In total, the Company has 22,100 patents and utility models.
 

Investments

-The Company announced its decision to build a new forging line at its Homburg site in Germany’s Saarland region. The company will invest EUR 80 million in a new facility to produce forged front axles for trucks. This production expansion represents the biggest single investment ever made at thyssenkrupp’s Homburg site. The new investment will create around 70 new jobs. Construction of the world’s most advanced forging line is scheduled to start in early 2020. The roughly 12,000 square meters facility will be built on the existing site, with completion and start of production planned for early 2021. The production of truck front axles will open up a new market and product segment for the company. These chassis components are powertrain-independent and will continue to be needed even when e-mobility starts to make greater inroads into the transportation sector. The centerpiece of the new highly automated and digitized forging line in Homburg will be a 16,000 ton forging press measuring 10 meters in height and weighing 1,700 tons. (From a press release on July 10, 2019)

ｰThe Company opened a new automotive components plant in Sibiu, Romania. The new site in Sibiu will produce dampers for customers including Daimler, Jaguar Land Rover and Porsche. The company built the new damper plant at a cost of a EUR 60 million. thyssenkrupp has been producing dampers in Sibiu since 1996. The new plant is an extension to the existing production site. The company produces both components and complete damper systems for automotive OEMs and aftermarket suppliers and is in the process of industrializing an entirely new generation of dampers for highly automated intelligent chassis systems. thyssenkrupp’s investment has created more than 350 new jobs at the Sibiu location, which now employs around 1,000 people. (From a press release on June 25, 2019)

ｰHungarian Investment Promotion Agency (HIPA) announced that the Company is establishing its newest production plant in Pecs, which will supply European automotive partners with next generation camshafts and e-motor parts. In the framework of the investment, worth over EUR 55 million, a new production line will be introduced relying on Industry 4.0, which will also create some 200 new jobs. The company's new generation camshafts and e-motor components from Pecs and Jaszfenyszaru will largely contribute to the objective to successfully meet the ever more rigid CO2 emission standards for combustion engine cars in the European Union. With the new systems, environmental standards will be attainable even after 2025, despite stricter regulations. (From HIPA press release on June 21, 2019)

ｰThe Company announced it will invest a total of BRL 50 million to produce electric power-assisted steering (EPS) systems in Brazil at a new assembly line in its Sao Jose dos Pinhais plant. The company’s initial investment of BRL 4 million will reach BRL 50 million by the end of 2019, when the line is in full operation producing 400,000 units per year. Production on the line could reach 1 million over the next few years, said Daniel da Rosa, CEO of thyssenkrupp in Brazil. The company currently supplies engine and suspension components in Brazil. (From multiple sources on February 15, 2019)

ｰThe Company recently inaugurated a USD 80 million expansion at its manufacturing site in Huejotzingo, Mexico. Part of the investment was allocated to production lines for steering boxes targeted for Ford, BMW and Daimler. Investment was also allocated to expand the output capacity of the thermal treatment plant, which provides cold-forged products to other Tier 1 automotive suppliers such as GNK, Dana, Nexteer, American XL, Neapco and IFA. thyssenkrupp started operations as a supplier for Volkswagen 20 years ago in the Puebla area, and inaugurated its fourth plant in the area two years ago to supply the rear and front axles for the Q5 model assembled at the Audi plant in San Jose Chiapa. Overall, thyssenkrupp operates seven Mexican manufacturing sites in Mexico, with one in San Luis Potosi, four in Puebla and a twin location in San Miguel de Allende, Guanajuato. (From Mexico-Now article on December 11, 2018)