Dear, ladies and gentlemen, welcome to the webcast of Thyssenkrupp. At our customers’ request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] May I now hand you over to Claus Ehrenbeck, who will lead you through this conference. Please go ahead.

Yes, thank you very much, operator. Hello and welcome for this conference call today on our Q1 numbers. Also on behalf of the entire team, I would like to wish you an interesting call and of course Sid welcomed you in our call today. And we are sorry for the delay, there were some technical issues, so I would like to thank you also for your patience. The documents for this call had already been released this morning at 07:00 am and are available on the IR section on our website. Before I hand over to Klaus Keysberg who will lead you through the presentation, I would like already now ask you for the Q&A session only to ask two questions at a time in order to make sure that all the participants who want to ask questions have the opportunity also to ask their questions. And with that, I would like to hand over to Klaus for the presentation.

Yes, thank you very much. A warm welcome also from my side to today’s conference call on our Q1 figures. Well let us briefly take a look at the highlights of what we have accomplished during the first quarter of our fiscal year 2021. First of all I am very glad to announce that our start into the new fiscal year went better than we anticipated at the time we gave our forecast in November last year. Across all segments, order intake has grown year-on-year with the exception of material services. Demand in particular from our auto related customer groups was developed or has developed extraordinary dynamically across all regions. Consequently, we recorded higher sales at industrial components, automotive technologies in Europe. And we were able to generate a positive EBIT adjusted already in Q1. The turnaround was also supported by the consequent implementation of on-going management initiatives. This is very important to mention addressing the bottom and top line levels that Martina and I introduced to you already in our conference call in November last year. In this context, each segment contributed positively to the group EBIT adjusted of 78 million with MT being the sole exception. Furthermore, we recorded a positive free cash flow before M&A of €32 million with positive business cash flow contributors from all segments, Steel Europe and Marine Systems and year-on-year improvement at all segments expect marine services. This is the first positive number in years and it obviously strengthens our net cash balance of 5.1 billion. Clearly major contributions contributors to this result are our stringent control of cash and networking capital as well as last year's termination of the year end networking capital matters preventing this winback effect we got used to see in the last couple of years, but not this year. Besides we have progressed with our portfolio transformation regarding Steel Europe. We are conducting an in depth value assessment of all major strategic options. You know these options, this is the sale option and the standalone option and potentially also spin-off option and anticipate conclude a landmark decision in March this year. In terms of Multi Tracks, we have terminated our attempts to find a buyer for heavy plates, and thus initiated the closure with individual companies and until the end of this year. Moreover, the due diligence phase for mining has been launched for which we have received an offer from Ethel Smith which he also could read in the media. And last but not least, we have decided to hold the M&A process for our chemical plants business since we witness encouraging development in the hydrogen production, product pipeline and execute a major in engineering contract from Hydro-Québec Canadian confirming our conviction that we are very well positioned for the green hydrogen market that is about to take off now. Based on our better than anticipated performance in Q1, we are raising our fiscal year outlook. And now forecast that EBIT adjusted will improve significantly towards almost breakeven, with all segments improving and all segments delivering a positive contribution except will detract. In addition, we raised our free cash flow before M&A forecast and now expect it to improve more strongly and move towards the negative 1 billion figure. I will touch on this again later. Moving onto the next slide we can see the impact of the aforementioned developments on our key financials. Spurred by a strong recovery in the automotive sector and the segment's continued efforts to restructure while bringing their value leavers into effect we were able to improve our EBIT adjusted yield year by more than 260 million. In particular, our segments automotive technologies, industrial components and Steel Europe advantage of the demand upswing in auto and truck related industries, whereby automotive technology was also able to gain market share, thanks to new products for such applications and the production ramped up. Simultaneously, we further reduced our headcount by more than 5500 FTEs across all segments year-over-year in total, whereby we have reduced within our defined restructuring programs, which we have communicated last year. 560 FTEs in Q1 and that sums up to a total of 4,200 FTEs in our current target of a reduction by 11,000 FTEs. So, repeat it again 4,200 reduction of FTEs within our communicated restructuring programs. And in total 5500 FTEs. One important thing is really that of course, if you consider -- if you compare our previous guidance to the one we gave out now -- we give out now is of course we see backlink from market but if you compare our let's say performance from the Q1 of this fiscal year with the Q1 of the previous fiscal year, you really have to take into account that our measures, our performance measures really, really got into impact. If you see at the sales development, our sales development is 4% below previous sales of the Q1 of the previous fiscal year. And we with this, we weren't in spite of this able to increase our EBIT by $260 million. So this shows that the measures got into place. In line with higher operational earnings and the lack of the Q1 swing back effects, the free cash flow before M&A has risen year-on-year by more than 2.4 billion. In addition to the performance turnaround and type networking capital manage cash flow in Q1 also benefited from earlier customer payments. Furthermore, inventory levels are not yet fully aligned with a faster than anticipated market dynamics retrying further build up in Q2. At the same time, our strong net cash position of $5.1 billion remained nearly unchanged, vis-à-vis Q4 in line with a slightly positive free cash flow. Let's finally take a look at our operational performance in more detail. As evidenced by the figures, quarter-on-quarter all segments improved significantly apart from marine systems. And year-on-year nearly all segments have achieved an EBIT adjusted improvement with effects being the only real exception since materials service was only a few millions lower. Material service did not get benefit from higher materials prices so far, but will do so in Q2. Despite stable shipments in Q1 the business witnesses an unformed unfavorable product mix with lower stainless steel prices and a decline in the aerospace industry. The effect from corresponding sales decline on the bottom line could be strongly mitigated working intensively on achieving further cost reductions and enhancing competitiveness by increasing the efficiency of its distribution network by the closure of logistics sites and branches in Germany, France and the U.K. and streamlining its headquarters with projects. Moving onto industrial components, we see a significant improvement with EBIT adjusted margins, which comes to the level of more than 16% in total, primarily due to the sales growth of bearings. We have a strong demand from renewable energy applications wind turbines was further reinforced by the pre buying from customers in China since government incentives expired at the end of 2020 and further supported by Forged Technologies, where the demand recovery for auto and truck components increased. However, the majority of the improvement came from higher personal productivity, as well as cost control in admin and purchasing and led to a really pleasing margin for EBIT adjusted. Automotive technologies recorded an improvement year-on-year after truck in Q4 fueled by a higher production efficiency also on the back of higher capacity utilization and shorter cycle times a more profitable auto structure and further restructuring effort as well as lower non-conformance costs. Moreover, lower depreciations following the recognition of impairments in last fiscal year, had an effect on our results, but this was a lower one is a very low two digit one in the quarter. That's EBIT, adjusted; margin took a really nice jump to the direction which from our point of view is all time high real time. Likewise, theory of EBIT, adjusted has improved sharply benefiting from 10% higher shipments and enhance product mix with the highest share of auto improved utilization rates and, of course initial effects from the on-going restructuring with the provinces workforce reduction as well also here in this case is lower write-downs due to the incident payment in the last fiscal year. In the case of marine systems, performance initiatives, gaining traction and stabilize margins in the backlog as well as for new orders where measures to improve commercial project executions are taking effect. And finally, at multi tracks, we see a very heterogeneous picture across all companies given the composition of the segments. Year-on-year EBIT adjusted was more negative due to cloud technology and stainless however, quarter-on-quarter, the business strongly reduced its losses on the back of management initiatives or restructuring taking effect. As initially mentioned, we are raising our fiscal year forecast due to the better than anticipated performance in Q1. And let's keep in mind, though, that the visibility for the fiscal year second half year is limited and might be affected by the sustainability of the market trend, particularly the global automotive market, which will also be influenced by the further progression of the Corona virus pandemic, and of course other factors. Against this background, we feel that it is appropriate for them to stay cautious despite the expected structural improvements in our business. Sales are expected to grow in the high single digit percentage range, but remain clearly below the levels before the pandemic. Regarding EBIT adjusted, we forecast a significant improvement towards breakeven level mainly as a result of the improved demand in our materials and automotive components business and, of course, to some extent, extent demand is dependent on the further development of raw materials costs. This improvement will be mainly due to clear structural progress in all businesses, and is predicated on the development of sales. Only Multi Tracks will clearly exhibit a loss, which is expected to be in the low-to-mid three digit million euro range. As a result of earnings improvements in all segments, free cash flow before M&A is expected to improve the move towards a negative one. In this context, we need to consider the investment required to set up performance and value upsets of our business. And if we talk about investment, we also need, we also mean restructuring. So consequently, we will spend a low to mid three digit million amount for restructuring. And in addition CapEx for driving competitive and capturing growth opportunities. To conclude, we believe that the common market trend and the continuous execution of our value must justify rising our full year outlook. Looking forward, our top priority is to enhance progress across the key value drivers. As a part of our portfolio transformation, we will take a landmark decision regarding -- in March 2021. And further pursue the M&A execution for our multi effects business to achieve the streamlined target portfolio. At the same time, we will continue the execution for restructuring and performance initiative initiatives or value levers at all businesses. Moreover, our continuous improvement focuses on achieving returns on par with our best competitors and driving cash generation. And last but not least, take our aims to further build on existing positioning, leading to a green transformation, thereby capturing attractive market opportunities, continuing its hydrogen based climate strategy, and leveraging its leading position in alkaline water electrolysis. Having said this, I thank you for your attention. And of course, I'm ready to take the question. Thank you very much.

Yes, thank you very much Klaus. And with that, we would like to hand over to you operator and before we do so, again, our remark that we would like to kindly ask you to only ask two questions at a time, so that everybody has the opportunity to ask us questions. Thank you. And now, operator, please take over.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And we've received the first question it is from Ingo Schachel of Commerzbank. Please go ahead, your line is now open.

Thanks for taking my questions. And congratulations on your returning to profit and positive cash flow so quickly. My first question would be on your hydrogen business, you've now made the decision or commitments to develop the chemical plant business internally. And I was just wondering whether you've already made the decision, how much capital do you want to deploy in there? How much of R&D and CapEx you want to spend in this business a year going forward? And how do you ensure that the unit has enough flexibility and managerial attention to compete successfully with successful pure plays, which has independent flexible management structures and direct capital market access? Whereas, I think at least for now, your unit is a business unit reporting into a rather complicated business area.

Yes, thank you Ingo Schachel for the question. Of course, as Martina Merz also said on the General Assembly. So we took the decision to develop the business by our own. And this, of course, needs some, some strategically, let's say questions to be answered. And this is something we are in the process and we are going to deliver to you when we, let's say ended up with our strategic process, which will be made but of course, this, these issues you raised are totally the right ones. So where do we find this business in our organization, and it's very clear that we cannot find this business in the organization as it is now. So we will come up of course within let's say, with another approach, and I'm going to introduce it to you at the appropriate time then. And if you talk about financing, yes, this is also a thing which we are looking at and you know that this kind of business at the moment, everybody is talking about partnership partnering and partnering, financing and things like this. We have not come to a decision but we are looking at all possible options. So we've been talking about partnering, this could be strategic partnering, and financial partnering. But it's really too early to give you an answer to the service, we are evaluating on this. But the clear target is that we first of all, look at the standalone, let's say solution to develop this business balance. So having said much, but the short conclusion is, we will come up latest until May with concrete actions on this.

Okay, great, then I'll try to wait until May. And then the second question is probably also one where you will tell us to be patient until March at least. But on the European steel business, I think on the Q4 conference call, you've already asked about potential impairments. And I think at that time, you didn't really send a strong message as to whether you would be willing to incur impairments in context of a potential investment of fear of now with the steel market's heading rebounded very strongly. And I think you reset to the book value at a time when steel markets looks a lot less favorable a few months ago. So at this point, would you be willing to sell us for the let's say, the book value as any important reference point for you in this current strategic review or other words, whether one could say that much of proof steel markets, you will not be willing to pursue a strategic path which causes an impairment loss to Europe?

Well, I mean, this is, of course, a question which goes a bit into the detail regarding the negotiations with a potential buyer, which is called Liberty. And this is very clear. So as always, and very independent from our book value, the best case, the book value is more or less on, let's say, on the market value. This is very clear, but not so much looking at the book value, we always intend if we are talking about divesting a business, we have to have let's say an enterprise value, which is in accordance with the market valuations and not let's say a current, one more one over the cycle. And this is of course, where we are looking at and nothing else to say. You understand that I cannot be more concrete about.

Of course. Thanks very much.

Thank you. The next question is from Zack Wilkins of Exane. Please go ahead. Your line is now open.

Good afternoon. This is Seth Rosenfeld at Exane. I can ask two questions first, on working capital. And then second, going back to some of the cost savings place. On working capital, obviously, very strong performance in fiscal Q1, can you just touch on or provide some scale of expected investment that will be needed going into fiscal Q2, or even over the next 12 months, we can better understand how raw materials are impacting your balance sheet and therefore your working capital please? I’ll stop there.

Yes, working capital, of course. I mean, we saw a good investment capital develop in the first quarter. But this is, if you look at the dynamic of the business, you see that you normally have a seasonal trend. So you know that the Q4 number is now Q4 calendar numbers. So Q1 of our business year, is normally if you look at the sales volumes, this is a weaker one. But in this in this time, you are normally going to restock a bit for the rest of the coming months, which are supposed to be strong. And this is something of course, which went also in this first quarter. But business came out stronger. So to be very honest, I think we have to, let's say restock more to really fulfil the needs of the business in the future more. We saw also some effects on the receivable sides that we got, let's say a few payments, which we did not expect it. So there were some effects on this case, but we think that we have to deal with a slightly higher net working capital level for the rest of the year. So this is something which we are going to expect also looking at the dynamics of the business. This is more or less what we can say to networking capital.

Okay, thank you. It's a separate question, please, on self-help cost savings measures, please. Obviously your Q1 EBIT payment well above where the street initially was based on your prior guidance from late November. I just want to better understand how with only about six weeks left in the quarter, by the time of the guidance results came so much higher than what was basically expected at that time. How much of this was held out measures that were executed quicker than expected? How much this was cyclical, how much this is just your own conservatism and communication. It's nice to see a positive surprise, but we all know that that can swing the other way as well? Thank you.

I mean if I got you, right. You were talking about the full year guidance, because we did not get to the really the first quarter, but I mean, the question nevertheless makes sense. So the guidance, which we brought out in November, of course, was something we already saw the dynamic of the market, which we started at the already at the Q4 of last fiscal year. And, as we also said, is that we were not quite sure whether it is a, let's say, a catch up effect, which we saw in the in Q1. And how much of this catch up effect is going to be transferred in the rest of the fiscal year? And this was the reason why we were cautious at that point of time. And even now, if you take into consideration the Q1 figures. I mean, what we observed there was clearly that high dynamic and high demand. But we clearly can say also, now that some of this came out of catch up effects from the supply chains, and auto suppliers and auto producers and things like this. Now, speaking about the rest of the fiscal year, we still see a high demand, which is very positive, which is good. And this is something which we were not sure whether it's going to happen. I think six weeks ago, this is something we weren't sure about. We see a dynamic that the dynamic normalized a bit, so it's not as dynamic as in Q1. So taking this into account, we have a positive mood. But our visibility is only two months. And if you then take into account potential, let's say variables, or potential risks, and you all know them, this is Corona and lockdowns, this has something to do with semiconductors, we can go into this in more detail. We also have, let's say the raw material price development in an iron ore. And let's say logistic cost increases and things like this. This is something we see as a variable. And since we do not have good visibility more than two months, we are still cautious. You can also count our actual guidance is cautious and yes, it is so but we do not have, let's say, the reason why we should be more optimistic because we don't have the visibility.

That’s clear. Thank you very much.

Thank you. The next question is from Jason Fairclough, of Bank of America. Please go ahead, your line is now open.

Yes, so good afternoon, everybody. Thanks for the call. But first question from me with the elevator sale, I think you participated in the purchase vehicle. And I guess if we think about steel, would you consider a partial exit or possibly even supply vendor finance, if it allows the steel sale to go ahead for a satisfactory evaluation?

Jason, we are not quite sure whether we get the later part of your question, right? Could you please repeat it?

Yes, sure. So bottom line is, you guys don't need the money today, you've got €5 billion of cash on the balance sheet. And so the exit of steel is if you'd like a strategic imperative, rather than a financial one. So would you actually finance the sale of that business? So in other words, would you, essentially, give somebody an IOU for the sale to allow the sale to happen? Or would you consider a possible exit if somebody didn't have the money they needed to buy the asset.

Yes, I see what you mean. So now, this is nothing really want to -- want to go with. So, if we talk about, the options we are talking about is let's say a sale option, which is liberty, nothing else on the table, liberty is on the table, nothing else. And the other one is the standalone, standalone within the group, or potentially, this is something we are checking. Potentially, let's say lead this into the direction of spin-off which all the let’s say all the opportunities which are coming out of this, let's say this kind of business model. And if we talk about the sale of the business, as I said before, we are looking at an enterprise value. And this has to be on a market level and everything else about the mixture of let's say of equity and net debt and pensions and things like this. This has to be decided but it's nothing that we would do a financing for someone who wants to buy the asset, this is nothing we are going to intend to do.

Okay, thank you. So just that second question then if I could. On multitrack, we're talking about €5 billion of turnover roughly, how should we think about the duration of this business? Is it gone in three years?

Well at least this is the plan? Yes. So you know that if you talk about what is in the business? So in the business, of course, at the stainless steel mill in Italy, and we are -- we want to really, let's say progress this process so far that we, if we could really have something tangible through this year. The same applies also to the mining business, as we said before, for instance, the mining business by the head we are quite advanced, because we have a bit here. And the cement business, this is something we already discussed also on other occasions we were also in contacts with potential buyers. But as we also said, we are not doing higher sale. So if we are not happy with the conditions, then we also say, well, we step back from this one single alternative, but of course, we are looking for the exit option here. And meanwhile we are going through develop the business by ourselves. But as you said, three years’ time, yes, this is clearly our plan to get rid of the businesses in three years’ time. Yes, this is the plan.

And sorry, just a cheeky follow up. So if it's done in three years, at the end of one year, is it one third done or half done? How should we think about the path?

You mean, in three years? Whether it’s totally gone or not or one third gone?

Exactly or even on a one year view, yes.

On a one year view. The one year is always very difficult, because it is difficult to say is it one year done or not. So we should have some progress with the major SNCF. But on the three years base, we should this is of course, we should do something I cannot promise you. But this is of course, the key intention that in three years’ time, we want to get rid of this business. Yes, clearly. Definitely, yes.

Thank you very much.

Thank you. The next question is from Bastian Synagowitz of Deutsche Bank. Please go ahead. Your line is now open.

Yes, good afternoon, gentlemen. Also two questions from my side, please. My first one is on the performance in industrial components and auto tech, which was highly impressive. Could you please let us know how far this performance has been really fully underlying I think you've been quoting some of the some catch up effects here. These are generally very volume driven businesses. So would have thought this has mostly been driven by basically the good volume hitting maybe an improved cost base? And then also, how do you reconcile the guidance with deceleration in the second quarter with the fact that from what we can read all of your order books, you actually still see a very, very decent demand here. So the order book doesn't actually indicate a deceleration in the second quarter from the data you're reporting. That is my first question on the business.

Yes, if we talk about automotive technologies, for instance, of course, if you look at the at the sales number of automotive technologies, and compare this in the first quarter against the previous quarter, you only see an increase of 3%. So it's, it is of course, this this turnover of 1.2 billion is the one which is far higher than we anticipated in our original planning, but it's only 3% higher than in the previous year. And what we also see is, of course, that we see really efficiency gains in our plants. So we see let's say less failure costs, we see better overall equipment efficiencies, and of course we see better product ratios and broad portfolio sorry. And this is something which we clearly see an underlying improvement in the efficiency of food [ph] plants. If you talk about the volumes, well, the volumes is very difficult in automotive technologies. As a sample we said in 1920, sales went down 20% and in 2021, it will go up 10%. So this is more or less a sample. So that means that in 2021, we will be still below the pre Corona level. This is at least what we anticipate and what we incorporated in our guidance also. So Q1 was a bit better than pre Corona? What we see is that the dynamic in the Q2 is not bad, but it's not. It's more normalized than in the Q1. So and we also see effects from the semiconductors shortage. And we also see some effects on the logistics. If we talked about up to our customers, and this is what you can also read in the media things are going to catch up in the middle of the year. If it's okay, then we will see higher volumes, but we don't have an evidence of this. And that's the reason why we stick to our cautious let’s say view on this, does it help a bit?

…Sorry, go ahead.

Yes, and the bearings and the Forged technology business. In other bearings business, we saw them also during the last fiscal year, a big increase in volumes and in sales numbers, which is definitely also leading to huge EBIT increase, and this is something which is clearly the case. If you look at the Forged Technologies business it is also the case. You can see this also by if you compare the numbers in Forged Technologies business, we only had not that much sales increase only a few percent 2% of sales increase, but the EBIT increased a lot. And this is why it is so because performance as there were big performance measures which came into effect. And this is something if you compare the numbers of employees of the Q1 fiscal year to the previous one, I think they reduce by roughly 700 to 800 people. And if you go one year further ahead, then it's more than 2500. So this is really effective. What we're seeing here is really, really see that the cost basis is going to be increased a lot. So this is the major driver with Forged Technologies. Bearings and sales for technologies is restructuring. Automotive technologies is again previous quarter, it's more restructuring and efficiency. And also Automotive Technology reduced headcount by more than 850 people against previous year. So this is something which now you can see in the numbers.

That's really, really impressive. I've got a just a very quick follow up on this one just in terms of the margins we've seen. We've had 11%, in automotive, we've had 16%. And I see you never has been reporting these business for a long time over the cycle. And I would say most people probably use peak margins, which are literally a fraction of what you did in Q1 already. And I think you still do to communicate your actual aspirational margin targets and targets for these units. So are these margins directional indication of what you are aiming for in these businesses?

And to be very honest, so this is 16% is, is of course for the whole IC [Ph] business and automotive insurance, we see a 9%. But nevertheless, it doesn't matter 9%, 11% it's good enough. This is of course something if you have to take into account the special product mixing up so by automotive technology it depends very much which in which cars you are now in, in good volumes in this quarter. This is not necessarily this, the 9% which you can really count for the whole year. But it's a good development into this. So I need to talk about the target margins, which we of course know for the business and also as it is set as targets for the businesses. This is something we are going to let's say also distribute to at the appropriate time. But I will not let's say release the margins. Now this is this is very clear. But to be honest, the automotive technology margin is a very good one. So it's an all-time high and we are very happy with this.

Okay, thank you. Then just one more question if I may, just on the Multi-Track businesses and the generally quoted overly limited visibility, which is obvious in the second half of this year. And I guess better plans, particularly for the businesses which are contributing profits, but in Multi-Tracks, I guess this is much more also of a cost cutting game. And I guess from that point of view, maybe there should be more busy within your own control in terms of how you will be improving. So what is your visibility how that business and the current run rate will be improving in the second half of the year, given the packages of matches, which is still implementing.

Yes, I mean, this is because we have so heterogeneous business and there it is difficult to say. So if you look at the stainless steel, we at the moment, the demand is not too bad. But let's say raw material prices, especially nickel is quite high. So this is not good for the EBIT. So we think that it's going to improve during the year. This is something we think that we don't know. But this is always the case. If you talk about stainless steel business, there are also some big factors which are which are not in your own control. If you talk about plant technologies, I think we in the cement business, in the mining business, we are, let's say in the mining business, we are quite advanced in the divestiture process in the cement business. We are have some restructuring projects, we will improve the results during the year. Yes. And then if you talk about the rest of the springs and stabilize the business, you know that we have a restructuring program on-going there. This is the closure of Orca [ph] and the streamlining of I think there to the two German plants here. And this will definitely have an effect in this year. But at the end of the day, this will be difficult business anyway. So this is something where we are why we also say that we expecting here loss in this fiscal year still.

But you do think the run rates will improve from here the NDP is what you say?

Yes, yes. This is what I'm saying? Yes.

Okay. Okay. Thanks so much.

The next question is from [Indiscernible] of Credit Suisse. Your line is now open, please go ahead.

Thank you very much. [Indiscernible] from Credit Suisse. A lot of questions were already answered. But one question I have on the steel guidance. You guide quarter-over-quarter flat, which looks not too ambitious, to be fair, given that your green steel production was actually up 30%, quarter-on-quarter, suggesting that second quarter will be actually very strong with regard to volume. Prices not really pointing to, at least to the lower side yet. So where is the weaker component here? Is it in the long term contract prices, which you potentially negotiated a little too early, just wanted to understand where rather conservative guidance comes from?

Well, the conservative -- is it a conservative guidance. Yes, it is. So it is not so much on the price side, you know that we negotiate prices in long term contracts half a year or one year starting at the first of January. We also have some contracts which are valid in April and some of June and this is the normal case, you know this business. But, and this is something which is not so much let's say gives us not so much fear here about this, this is quite good development. We clearly see what is the raw material price development. So we see iron ore, which is coming up over 150, which went 270. This is something if it stays with 170, 160 it is of course not good for nobody. But this is something of course, we will have let's say not such a nice development it is something you have to digest. So this is this is one case. And the other case is regarding volumes, yes, we are in a good way. And to be also honest, for the whole group, and I'm not saying too much the January started quite good. So this is not the case. But as I said, we only see two months. And we don't see what is going on really in the demand if we talk in April or May. So if you could have the glass bowl and see what is going on in May with the demand then you could come to another conclusion, but we don't see this. Therefore we stay with our cost of guidance here.

Okay, perfect. The second one is, I stay in the materials, business. Materials services, we have seen quite a bit of earnings upgrade at Kloeckner, one of your competitors here. We haven't seen that much of performance in material services yet. Maybe you can shed a little bit of light, why that is the key -- your inventories in your fourth quarter. And hence had to buy steel at comparatively higher prices, which means the inventory that comes later with you? Or why do you think you're lagging here a little bit?

Well, if you if for instance or if you especially look to Kloeckner, you have to bear in mind that most of the roads do the portion of Kloeckner is higher than the ones of material services. So, the stainless steel portion of material services is much higher than from Kloeckner. So, this hedge club name this moment and also their footprint in the U.S. is better than frontier services. This is something which is which is good is in their favor at the moment. We clearly can say that we are expecting let's say the better development also from volumes and prices accordingly in Q2 and following, which for the material services business. And you have to bear in mind that we have an aerospace business in material service which is at the moment let's say as you can imagine not performing as we saw this performance one year ago. This is something which is also you have to bear in mind if you do a comparison of benchmarking.

Okay, perfect that’s fair. Thank you very much.

Thank you. The next question is from Christian Georges from Société Générale. Your line is now open. Please go ahead.

Yes, thank you very much. I’ll be brief. So just to -- your highlighting is, is restructuring costs, a low three digit, million euros amount. And if you look at Multi Tracks EBIT, there's about 17 million difference between your EBIT adjusted and your EBIT. I mean, are these restructuring costs you are highlighting, and it is part of the guidance. And what exactly behind the 70 million in the quarter on other recurring?

But what you are referring to is the difference between EBIT and EBIT adjusted in the Q1. So, this is roughly 17 million this is -- these are restructuring costs, mainly related. This is this is the case, but we will see more restructuring cost during the year. So, I think we got it, three digit number or this is going to come still. So, out of this total number 70. We digested in the Q1, more or less, and the rest is to come. Yes, you are right.

So this is the line, this is the line where the restructuring costs are guiding for this that’s where they would appear mostly for Multi Track, and possibly some for the core businesses.

Yes, so, this restructuring costs are more or less, we see some image tricks, we will see some in steel. And we will see some also in other businesses, because we do restructuring in nearly every business. So, but, yeah, you're right. So, this is…

Okay, thank you. And my second question is on Multi Track. I mean, obviously, you're looking at divesting all these businesses. I mean, can you give us an idea of the book value of all these Multi Tracks, and whether we should take that as an area where we could have a risk of an impact on your equity, if you're forced to sell well below the book value.

You might need to clearly understand that we are not going to distribute the book value now. But if you, for instance, the mining the cement business council, we step back from the divestiture for the moment, because we think that what we saw so far is not, let's say appropriate enough, so we are not doing higher sales on the one hand. On the other hand, willing to divest the businesses, it will be let's say, at the end of the day, we'll have to see what kind of effects do we have? Do we have maybe an effect on equity or maybe an effect of cash? I will not totally, let's say solid audit is not going to happen. But this is something we are not looking for. So we clearly think that we will have we have the time to do not make economic nonsense. Yeah, this is clearly our objection. But on the other hand, we want to be, let's say, we clearly want to have a perspective to get rid of the business in the next two, three years, as we said before. But it's I cannot really say, what will be the effect on equity or cash at this point of time. Sorry for that.

Okay, that's okay. Thank you. And I just need one very small one. On hydrogen, I know you can tell us too much yet. But is the pipeline looking for the next 12 months still relevant, or was the Canadian announcement a one-off are we still a long way from more potential deals intellectuality?

Well, Christian, whenever we talk with our colleagues from the green hydrogen unit, we have the impression that they are really busy, really busy. And they are telling us that their project funnel is expanding. So you've seen the announcement in January for the project in Canada, which is really a nice proof that the market is starting to take off now. And they we are hearing that more of these announcements are planned for the remainder of the year. So there's really something going on in the hydrogen business.

Okay, good to know. Thank you to both.

The next question is from Rochus Brauneiser of Kepler Cheuvreux. Please go ahead. Your line is now open.

Yes, thanks for taking the questions. Let's start first with Steel. I guess you were repeatedly stating about the landmark decision in March on Steel Europe. I guess it would be a sale to, to Liberty, it would be kind of a landmark decision, if you would keep it probably in that sense, it would sound less of a landmark decision to me. What should we take as a conclusion, if you would, to the business ultimate now, would that mean that this is a decision, which will be valid for longer to compare it? Because now you had this strategic decisions back and forth in the business end point? I guess, there needs to be more stability in the kind of direction for the business. And in this context, I'm not really sure whether I understand the point on the potential spin off, because you're now really working hard in harvesting the synergy and, exchange discussions with labor about stepping up, eventually, the restructuring efforts will, why not, harvesting these benefits on your own? And the second question is, can you get a bit more specific on the kind of CapEx range you see for this year? And what are the main tickets in terms of Steel you're seeing for the next two to three years?

[Technical difficulty].Again, so I'm talking about your question about this landmark decision, which is supposed to come in March and you know, what, what kind of options are on the table. This is a potential divestiture to liberty or the standalone within the group or not within the group as a spin-off. And then you consider that it's not if you go, if we want to make it, if it would make the decision to make a standalone decision, to go ahead with a standalone decision within the group, you do not consider this as a landmark decision, which I understand from your point of view. But for us, it is something here because you know that we are, we have two options on the table. And we are looking what is the value creation potential for each of the options. And if we look at, for instance, the divestiture option, of course, we can do it easily. If we look at the standalone option, we will have to have a full potential business plan, which we are working on it and then make our decision whether it's better or worse, in comparison to the options we have under undertaken. Now this is something we are keenly looking at. The spin-off is of course something and we are always quite open in what kinds of things we are looking at and make a feasibility study or something like this. I mean, for us, the most important thing is really the most important thing is what is the option where you can create the most value. And we are very much convinced that our steel asset is the one where we can create assets. And we are very much convinced that also in the standalone case, we can create value, because we really are convinced that our setup of production plants in Europe is more or less unique. And that we have, let's say in our capability to produce that the special grades and our relations to the customer. It is something that is really something. And so this is something. And we are very confident that we are able to do this by on. The other thing is of course you always have to judge what is a potential better solution. That's also the reason why we were talking about potential consolidation. Of course, we see some, let's say, challenges in the European steel market. You know this overcapacity, and you know this transformation to European steel and things like this. Is it more easy to overcome this challenging? Is it is -- are there plans in the world where you can create more value if you talk, for instance about consolidation. And this is the reason why we also look at the spin off. This might be -- but we have not taken a decision really. We were very open to say that we are looking at it to make a feasibility study. But what is the strategic nature behind and the strategic relation is I think it's very open if you have a pure player at steel, I mean this is something and if you look at, for instance, other spin-offs which you saw in history you maybe get another commitment from every kind of stakeholder you see. And this is something we are examined, and we will take into account at the end of the day. And this is the reason why we, from our point of view, it's something like a landmark and if we would, if we would take the decision not to divest to make a standalone one, then you asking is this a decision which will be received for the next 2,3,4,5 years? I cannot say but this is then of course, a decision where we clearly commit on investments and measures on a standalone basis and go ahead basis. And if on the way in three or four years is something going on going to happen on a strategic basis, we will consider. That for the time being, this will be then our way. It helps, I hope, this is something you understand.

And on the CapEx?

Yes, the CapEx for steel or for...

I asked for the CapEx range for the current year and how much would be steel? And what would be the main tickets, big tickets you're seeing on the road for the next two to three years?

I mean, the CapEx for the fiscal year, you know that we are depreciation is roughly 1 billion. And we are planning to do investment. This is not, this is not well decided this, but we have ideas to divest, to invest more than 1.5 billion. So this is something where we clearly have ideas too. And if you look for instance, at the steel business, I mean, these are strategic investments really have to say so this has something to do with let's say, production capacities in wind energy with bearings. Now, this has something to do with let's say, Supply Chain Solutions for material service in the U.S, these are really good, let's say project where we have key projects behind with good rentability which is really pushing us and enabling the businesses. This is investments we have on the table. And of course the steel one, this is something we also said and you know that in steel, we have the normal level of investment of 500 million and within this strategy 2030 we are willing to invest in addition to the nearly 500, 800 in the next six years, which then will be you can allocate this on the years now. So of course this is also will also have an impact also in this year. Okay.

Okay. That's okay, is there any landmark project on the steel road in this 800 million you want to you can highlight or is there a particular one to boost the footprint?

Yes, it's, of course, this is really one that we are totally convinced in this investment. So the first investment is in this book, and it is, let's say the separation of the [Indiscernible] like I don't know the English word for this, but it is the continuous caster. So this is something where you're really increased, let's say, the quality of in the process of, hot metal and then moment of copper strip. And this is you have to do this. And with this, also, it is not only an increase in quality, it is also let's say, a bit of flexibilization of the production footprint, because now having the dismantling of the permanent caster, something is a bit it's the volumes are coming in good, but it's a bit inflexible unit, you can imagine that it is totally integrated here. The other one is, is investment in Bochum, it's [Indiscernible] I don't know the English word for this, but this has something to do, you really need this one's to go into the special grades for electromobility. And you really need this one to go into these grades for high strength steel and crush relevance steel. So, you all you need this this hot strip with a better material, better quality. And then also to make them more processing to on the cost side with this aggregates I just mentioned, to really go for the grid for electromobility and also high strength steel, which we clearly see huge margin and growth potential in this area. This is this are the most important issues here when you talk about the strategy investment program.

Okay, now that's very, very helpful. Thank you very much.

Thank you. The next question is from Ellen Gabrielle of Morgan Stanley. Your line is now open. Please go ahead.

So good afternoon, I have two questions, I may SMS, so the first one is on the steel plate closures. Can you remind us if you anticipate any major rehabilitation costs in terms of cash outflows that are not really reflected in your guidance for restructuring for fiscal 2021? And how much cash burn would you save next year, once you exit place? That’s the first question.

I didn't get the second sorry, can you repeat it again?

Yes, the second part of the question is how much free cash flow? Or how much cash burn would you save next year by just exiting plates? What would be the annual run rate of savings would realize by exiting plate?

I mean, that was the first one out of replace business. It’s everything is digested in the numbers. So this is the first one the second one question is my translation of the question is when will be the free cash flow positive. And let's say it is what you're saying? Or is this? Do we see a free cash flow positive next year? Is this something what you are saying or what….

What is the negative free cash flow that you expect this year from hydroplanes [ph] which will disappear next year?

Okay. So it is, let's say it is, it is lower three digit million numbers. Thank you.

And the second question I have is basically on if you take a step back and just remove Multi Track, from the business, remove Steel Europe from the business, what would be your cash needs for the remain code, basically, for all the remaining businesses that you anticipate to keep, let's say three years down the line, as you have you have you have mentioned. In terms of cash needs, I'm referring more to CapEx to any other cash outflows in terms of taxes, financing costs, and so on. Just to get a sense of what would be the breakeven EBITDA for everything that you plan to keep in three years down the line?

Well, this is one well, difficult question if you talk about investments. So if we would not have Steel Europe opened and Multi Tracks, this would be roughly say 800 million or something like this. So a release of 800 million in cash flow in investments. So this is the first thing I can say. The other thing is, it is too quick to really say…

But other items that could be considered here that needs to be considered in the cash flow bridge or the independence if steel would leave, leave, of course, then quite some of our pension payments would go if you consider that 4 billion of our 8.7 billion of pensions come from steel. And you can also then make a pro rata calculations for our annual payouts. And other items that you need to consider in the cash flow approach, of course, interest, probably the effect would not so be not so much on interest, since interest payouts, in the meantime, are not that high. It's about 200 million in total for the year. And on the tech side, it really depends on the profitability. So that's too early to say currently.

Okay, thank you [Indiscernible]. We work and then come back to you later. So…

We can we can discuss it. Thank you very much.

Thank you. The next question is from Luke Nelson of JPMorgan. Please go ahead. Your line is now open.

Afternoon. Thanks for taking the call. My first question is on normalizing and following up on Bastian’s question a bit earlier. If I just take auto tech as an example, Q1 adjusted EBIT, annualized, well over 400 million. Relative to capital employed in that division implies something about a 20% cost of capital and around 8% to 9%. We can do a similar exercise with components technology, we're earning well above cost of capital. So maybe asking that earlier question slightly differently. Is the capital employed a realistic base to think about what the mid cycle earnings potential for these companies are? Or were input impairments taken to aggressive last year? Or conversely? Are we just in a point in the cycle where these businesses are potentially over any? That's my first question?

It was difficult to understand. So the first question I just checked out on here is whether the impairments were to hire you. We did last year. So we definitely do not think so. And this is, you know that these impairments are done also with a long term view on this. And the long term view we're not, is not, let's say, so much influence on, say, one or two years deep from a grown up. So we really take a long term view on this. And so, no we don't think that the impairment were too high on this. If the, what you're also asking for was the, let's say, normal level of earnings for the automotive business. And I just gave the answer that we will not, let's say, come to, let's say the disclosed disclosure of, let's say envisaged target margins. But the 9% we see in the Q1 is not a one we can sustain on a on a continuous basis here. So this is number we see not on this on this level for the on-going time.

Okay. I suppose second question, then to changing tax – on clamp [Ph] on Steel Europe and the restructuring options. Obviously, [Indiscernible] with regard to the separate sale prices falling over recently, just wondering whether at all, it's been considered in process in the context of the European steel landscape, that can't be changed over the last two to three years, whether a combination of those assets in a standalone entity would make sense, or within political from a regulatory or competitive point of view? And if that's something then considered?

Well, this is this is something this is a good question. And if you ask me personally, and what will be the steel landscape in 10 years? I would say that we do not see so much players. So this is definitely a market for where we are a consolidation might make sense. So but at the end of the day, you have to find concepts where you have, let's say, you have a win win situation for all parties here. And we checked it in the in the last couple of months. And we did not find a solution. That's the reason why we go on this way. And I think we are prepared to do so and we are also prepared in a good way. So we do not fear the competitiveness here. And what will be in five or 10 years, I cannot say to you. So but even if we are taking the land like decision and clearly say that we want to have let's say we stick to the strategy, and we stay to the business plan and stay out into the investment. We never, you never can say definitely that is not going to be the time for consolidation afterwards. This is something which is clear.

Okay, and so just one quick follow up just on the -- of your decision, are there any sort of tax effects or anything on a deconsolidation basis that we should be aware of?

You mean at tax effects if Steel is going to be constantly deconsolidated?

Yes, under any of the different the two scenarios either fail or, any one offer exceptional?

This is something we are this is something we are checking this as part of the feasibility studies. There might be some effects but it's too early to say whether they are major or not. So this is something we this is definitely part of the visibility.

Okay, we'll wait for the March update. Thanks a lot.

Okay.

Thank you. As there are no further questions, I would like to turn back to you.

Yes, thank you very much, operator. And also thank you all outside for joining our conference call today and for the lively discussion. We would now like to conclude the call and as always for any further discussion, questions, information the IR department is always available for you. Thank you very much and we look forward to staying in touch. Bye bye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded You may disconnect.