Dear, ladies and gentlemen, welcome to the webcast of thyssenkrupp AG. At our customers’ request, this conference will be recorded. 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 everybody. This is Claus Ehrenbeck speaking. Also on behalf of the entire team, I would like to welcome you to our conference call today. It’s on our Q2 numbers and the outlook for the year. Here in the call are our CFO, Martina Merz, and also Klaus Keysberg. Our CEO, Martina Merz and our CFO, Klaus Keysberg. It’s a pleasure that we have Martina today with us in the call. All the documents for this call are available on our website. And Martina, and Klaus will guide through the slides that you can find there. And we start with Klaus, then followed by Martina and then there will be a Q&A session. And with that, I would like to hand over to Klaus Keysberg.

Thank you very much. A warm welcome also from my side to today’s conference call on our Q2 figures. Let us briefly take a look at some key financial highlights reflecting our strong operational progress and effective turnaround initiation. Overall, our performance has improved year-over-year and also quarter-on-quarter due to a continued upswing of the markets, particularly in the material and automotive businesses and of course the positive relentless focus on performance. The operational developments also reflect the progress of our group transformation. Nonetheless, we are by far not yet where we would like to be and we’ll have to take several more steps to bring TKA to a really sustainable performance. Current markets developments are reflected in the order intake where we have been able to record a 10% increase year-over-year, as well as quarter-on-quarter and in our sales, which have grown 17% quarter-on-quarter as a result of the strong demand recovery. Simultaneously, we have been able to generate a positive EBIT adjusted of €298 million in the first half year, a significant improvement vis-à-vis the loss of minus €465 million we recorded during the same period of time in the previous fiscal year which has already taken a hit from the pandemic. In this context, the rise in demand has led to an improved capacity utilization and together with a more favorable product mix and the structural improvements from our restructuring and performance measures gave a strong push. And last but not least, the free cash flow before M& has improved substantially by more than €2 billion from a minus €2.77 billion during H1 of last year to a minus €718 million in this year so far. But let us now jointly take a look on performance in Q2 more specifically. In terms of EBIT adjusted all segments has contributed positively apart from market trends and virtually all segments have recorded major improvement year-on-year. With a mixed and IT overall top contributors resulting in a positive EBIT it adjusted of €220 million. In terms of free cash flow, before M&A, the higher EBIT adjustment was offset mainly by a net working capital growth of €700 million as well a CapEx above depreciation in an amount of $144 mainly due to seasonal investments in downstream network with further improvement. The net working capital increase was due to the stronger than anticipated demand, but also, notice because of higher prices exemplified by a catch-up effect from Q1 which we already anticipated in February. Based on the better than anticipated results in Q2 and therefore H1, we are raising our full year EBIT adjusted forecast to a positive mid-single-digit million range and expect all segments to contribute positively with multi tracks being the sole exception. Besides, we would like to confirm our free cash flow before M&A guidance of improving year-on-year towards a negative €1 billion, mainly effected by temporary high standing and net working capital and CapEx, D&A and of course also due of restructuring expenses. It should be noted that this would mark a major improvement for the minus €5.5 billion of the previous year. Of course, we saw some extraordinary effects when we strip down €3 billion because of normalization of net working capital. But moving on to the next slide now, let me briefly highlight some major developments and performance levers throughout Q2 by segments. At Material Services, we were able to benefit from the continued uplift in the materials businesses in the form of substantial price increase which also had positive effects on the margin. The execution of further optimization of our network, for example via the closure of five logistics sites in Q2, as well as 9% decrease in the number of employees. We achieved productivity gains of 7% in the first half year. At Industrial Components, once again, we recorded a strong margin of 15.5%, positively affected by Forged Technology’s ongoing demand recovery. In addition, we have maintained further cost and efficiency measures in the form of lower personnel and purchasing costs. Moreover, at Forged Technologies, costs were further reduced by measures focusing on lowering the cost of purchasing direct production material and administrative expenses. And furthermore bearings benefited from stable high demand and economies of scale in the production of their key components for wind turbines. Looking at automotive technologies, the 6.4% margin was supported by a continued market recovery while receiving first headwinds from supply chain constraints particularly for semiconductors and higher freight costs due to limited capacities. At the same time, the result has been pushed by an increased production efficiency and favorable order structures. In addition, there were cost savings from the ongoing restructuring focusing on lowering personnel and material costs particularly at the Automotive Body Solutions and that segment results. In case of Steel Europe, the favorable pricing environment is now starting to be reflected in our customer contracts wherever revenues per ton has started climbing higher. Higher selling prices and more favorable product mix were partially offset by higher raw material cost [Indiscernible] Furthermore, shipments have increased significantly quarter-on-quarter by 10% and further efficiency gains has been achieved by an improved utilization, as well as restructuring programs with a reduction of more than 600 FTE year-on-year. Moving to Marine Systems performance program measures focusing on procurement and project execution are yielding the desired effects and last but not least, Multi Tracks has considerably reduced its losses, in particular expenses stabilizes automotive engineering, mining and heavy plates. Stainless has been negatively impacted by market-related development from price that caused that. Overall, the operational improvements that we realized with a total of 640 restructuring and cost control measures to further reduce losses mainly via FTE reduction of 1400 FTEs. On the next slide, we would like to briefly summarize what have accomplished regarding our priorities since we introduced our group of companies concept to you one year ago. We have stringently continued our performance of first initiatives and have achieved a significant operational turnaround as I described to you earlier. Simultaneously, by the previous sale of our elevator business, our balance sheet has been strengthened substantially as reflected in our equity ratio of 29% and the net cash position of €4.2 billion giving us room to maneuver and to do what is necessary in order to improve our businesses and drive TKA through a sustainable performance. Therefore at the same time, we have initiated our largest ever restructuring program with the reduction of target of more than 12,000 FTEs until fiscal year 2020 – 23 from our previous defined programs of which price following 450 have already been reduced. Any further reductions from the segments on top of performance we have achieved an overall reduction of 7,000 FTEs so far. In this context, we are expecting provisions in the amount of roughly €1 billion, therefore €400 million in the current fiscal year in addition to the €600 million in the last fiscal year reflecting – this is while we mentioned this was reflecting that our targets of substantial pick up like clear glass. As part of our portfolio transformation, we have embarked on a group of companies approached entailing full entrepreneurial freedom, accountability of leadership teams to support a true performance culture. In this context, I would like to specifically highlight the steel Strategy 20/30 where the management continues the performance push aiming at returning the business to a best-in-class position, and vivid performance set up all to create optionality and its prerequisites for standalone readiness. Looking at our portfolio restructuring, we see some progress and Multi Tracks, which comprises those business where we believe that going forward, we are not the best on. A potential signing of our mining business is getting closer. Over and above, we have received the merits expressions of interest for the sale of ASD Infrastructure while the closure of heavy plate will be conducted until the end of the year 2021 so the current €6 billion. And likewise, we have recently concluded the carbon components business unit will be discontinued. With regards to the green transformation trends in our industries in addition to working towards our own climate neutrality targets, we are intending to see the opportunities by leveraging our strong USP and enabling our clients in areas such as e-mobility, renewable energy and green hydrogen production. the letter currently being probably the most promising if we consider our technology position and market projection. As a further confirmation of our USP and alkaline water electrolysis, we have already been nominated three times to address the industrial scale projects and more is about to come. In order to enable a more efficient development as well as readiness for strategic optionality, we are currently in the process of carving the electrolysis business out from our chemical plant operations. The next slide, depicts and summarizes where we stand with the restructuring of our businesses. As part of our plan and tailwinds, a reduction of more than 12,0000 FTEs, we estimate that 60% of our current target will be achieved until the end of this fiscal year. I mentioned earlier already that when taking into consideration FTE reductions from the segment beyond the previously planned programs we have already achieved a reduction of 7,000 FTEs. In this context, we already had €300 million additional provision in the first half reflecting a majority that we plan for the entire year. The cash out for restructuring exceeded €100 million in the first half and expected to be a low to [Indiscernible] amount in the fiscal year or in the full fiscal year. Looking forward to the next two years, the corresponding expenses will be considerably lower while some of the planned cash out is yet to occur. Taking a look at the cumulative sustainable savings resulting from the restructuring, we expect a low mid-three-digit million range until the end of this fiscal year which is set to increase to a high-three-digit million amount until 2023. To conclude, we believe that with the anticipated structure improvements from the continuous execution of our value levers and expected market tailwinds mainly for our materials and auto-related business raising our full year EBIT adjusted outlook again is stratified. And therefore, we now expect to achieve a positive mid-three-digit million EBIT adjusted with positive contributions from all the segments except Multi Tracks whose performance is to improve significantly, we saw the substantial negative EBT adjusted in the low mid-three-digits million range. At the same time, it should be noted that the uncertainty is still for this regarding, for example COVID-19 related issues, such as lockdowns, or supply chain constraints, particularly for semiconductors for the second half of the fiscal year. In terms of free cash flow, before M&A, we would like to confirm our previous guidance to towards negative €1 billion use levels to minus €5.5 billion in the previous fiscal year. This includes the business cash flow of Multi Tracks, which we expect to be a negative mid-three-digit million figure. In this context, we consider some net working capital book ups due to the strong demand and the likely high raw material cost. Also the pay out for restructuring in a low to mid-three-digit million range, I referred to earlier has to be taken into account. Another influencing factor is the variability of cash profile at the project businesses largely determined by upfront payments for larger orders and milestone payments and because of the project execution which can’t be forecasted with an absolute degree of certainty at this point. And furthermore, we are enhancing our production resulting in an investment significantly above depreciation. As mentioned earlier, this applies in particular to steel where planned investments will strengthen our competitive advantage and shifts the product mix towards higher margin products. Having said that, I would now give over to Martina.

Thank you, Klaus. Thank you very much, ladies and gentlemen. Thank you very much for participating in today’s call. The share price development this morning show that we will not really have an interesting discussion. So, I am looking forward today. But as Klaus said, and the figures show, the transformation of thyssenkrupp is making progress. Although, we have not yet put the corona pandemic fully behind us. However, it’s also clear that we have not yet reached our goals. Additional efforts will be needed to close the gap as our best competitor achieved positive cash flow and strengthen the foundation for growth. For this reason, improving our performance is and remains our most relative task and we are continuing to work hard on future and further cash flow improvements in all our businesses. By doing so, we reach a point in our transformation process that will be on evolve the focus of our efforts from transform to perform, to perform to sustainability. For our transformation all relevant decisions have been taken and we know what to do. Going forward, we will challenge ourselves to focus. Performing for dual sustainability, on the one hand greener, but back all progressing sustainably in terms of business performance. With respect our journey, we do have a mutual understanding with our supervisory board regarding our priorities. So, we can calmly, successfully work on our tasks. What that mean in the first place is of course, speed, speed and again speed. And I do ask you for your understanding that you will not hear much from us in the upcoming months. We simply are busy working our focus clearly is on doing rather than talking. The path is defined, but in order to shed some light on what we are specifically working on, let me share with some thoughts on our businesses and to respective priorities. We know the lever for sustainable performance we have to find them together with the businesses and are systematically monitoring their implementation. I won’t go into detail, but here are just a few of our key topics, material services. At material services, it is about thorough implementation of the Materials as a Service strategy. With advancing digitalization and the expanded use of artificial intelligence, the aim is to offer enhanced supply chain management and integrate ourselves more deeply into our customers’ value chain. We are on a really good path here. At the same time, we are continuing to optimize our network. We are closing sites and investing in new logistics center as recently in [Indiscernible] Industrial Components. Touch very briefly for bearings, it is primarily a question of growing in the wind. We have already made initial investments. This is a promising market and we are well-positioned. Forged Technologies has systematically restructured. The aim here is to develop the business model to further reduce dependence on internal combustion engine, while still exploiting at opportunities in the market for the next year. We are already making good progress with steering markets for products. Automotive Technology. Automotive Technology in total is very well positioned and already has a good footprint in e-mobility. All the relevant players are among our customers including the new car manufacturers from China. Overall, we are examining how we can expand our very good position also by further improving our system competencies. And her, too we are reducing our dependence on combustion engines, which is already very small things to our strong product portfolio in steering systems. Steel Europe, as far as steel is concerned, we are continuing to examine whether and how we can make steel an independent business. We are convinced that a pure steel company with an independent structure has better opportunities to develop in a sustainable way. However, such standalone solution is structured through a number of conditions. The adjustments to the 20/30 steel strategies are important steps in this respect. Today, I can say that steel has a robust business case. However, to tackle the green transformation we urgently need planning with regard to political support regarding the regulatory framework, infrastructure and financing. We are working on this, but a decision on how to make steel a standalone business simply takes time. Marine Systems. Marine Systems is about to receive the largest order ever. Submarines for Norway and Germany. You have read about this already in the news. Contracts get signed but we have – sorry, but we expect the order intake in the next month. We expect the investments are currently being made in order to be well positioned for building these stocks. It’s now key for Marine Systems to capture the value of this sealed order book. Performance measures are defined and the colleagues are improving steadily. At the same time we will continue to remain open for consolidation opportunities. Here, we are now in a far more comfortable situation with such an order intake to report. Multi Tracks. The sales processes s at Multi Tracks are progressing according to plan. At Mining Technology, ASP and infrastructure, we are in advance negotiations and talks with interested parties and the closure of heavy plate mill be completed by the end of fiscal year. March 18 was already the last working on the roll. It is now key to drive the M&A processes, bring them to a favorable finish and at the same time, continue the ongoing restructuring measures. And yet, I know that you expect me to say something about hydrogen. The last – the latest order for our engineering and supply contract with CS Industries for water electrolysis plant for the production of clean ammonia, yet to our impressive list of references. This again concerns, we are technologically well-positioned to offer customers commercially and technically mature solutions for the production of green hydrogen. This area is one of the world’s fastest growing market. We are therefore currently examining intensively the best possible way forward. Ladies and gentlemen, to sum up briefly, TKA’s future is based on the development of its businesses. The figures show that we have taken further steps on the right path, but this path is far from over. We have a clear picture of our next steps and will systematically work on our priorities. For this reason, there will be no groundbreaking decisions in the short-term. Accordingly, we as Executive Board will provide the supervisory thought on May 19th an update on the current situation and we will continue on our transformation path step-by-step dauntless and determined. So, much of my outlook and I am looking forward to your questions and Klaus to by the way.

Of course. Claus Ehrenbeck Many thanks to both of you and with that, we can now hand over to the operator and operator, could you please take over for the Q&A session?

Yes I will. [Operator Instructions] And the first question is from Ingo Schachel, Commerzbank. Your line is now open.

Yes. Thanks for taking my question and the first one would be on Steel Europe and the profitability in this segment. And I think you spoke a lot about the restructuring efforts and the progress about the strategy 20/30. Nevertheless, I think, if we compare to the EBITDA per ton of margin improvements compared to the previous quarters, think your rate of improvement falls quite a bit short of what competitors have shown. I was just wondering that do you see any specific operational issues, things in dealing with the supply chain bottlenecks or so where you feel that maybe you are not entirely happy with your performance in the quarter whether your view, the performance can only be extended to other factors such as contract mix and some different classes?

Yes, maybe I can take this question Tina. Yes, if you look at the performance of Steel Europe, of course, you have to look at several things here. First of all, we always said that in the past, we – regarding the performance, behind the performance of our competitors or the benchmarks, you know that we initiated this heavy restructuring program and we have a very good view and we have a very good long-term view on the performance perspective of this business is we have a long-term investment plan and we have measures, far reaching measures. But we have to admit these measures are not fully implemented at the moment. So that’s the reason why we of course still in the moment a bit behind our competitors. This is the one thing. But by the way, everything is on track on plan. So, you know that, you also saw the numbers that making the people redundant it takes a bit of time. So we started. We already have more than 600 people may present on that so far, but not 3000 plus 3700, plus 750. So, this is the first explanation to this. And the other maybe even more important is contract structure of the steel. You know that our dependency on automotive is quite high and therefore also, our structure of contract is with not being so much in, let’s say in spot market business, but more in electric contract business. It’s clear that we – that it takes, let’s say more time to convert the high spot markets into our contracts than maybe other competitors have which do have other contract structures. So, if price is up, this takes a bit more time. If prices go down, it should also take a bit more time when we lose our related lot into this. Is this helping?

Yes. Yes. That’s helpful and of course, thanks especially in context of these strategic partners has been conserving in the past I think to track the profit trajectory of this segment in particular. And my second question would be on Multi Tracks and also hearing that sort of you are progressing well on the mining side and of course seems to be a good time to sell it. So, I hope – hopefully, you are focused more, okay. And maybe on ASP and the interest you spoke about. Can you specify a bit more just very broadly whether it’s just European competitors or global interest or more strategic or financial investors if you are currently seeing at this time?

Well, if you come to mining, your question was – what’s – well, it’s a favorable business or it should be a favorable or not so and you have an understanding that we are not commenting on the conditions at this point of time. So, let’s see what the outcome will be. So, but we are quite – looking quite optimistic into this scenario. Regarding ASP, we have some interest expressions to ASP, yes, again, negotiations with it. But it’s also, you have to understand that we are not commenting on who it is. But this is not only one. These are more.

Okay. Great. Thanks. And I appreciate that you are not trying to overcome us at this point. I think that’s a good approach obviously. Then maybe just a quick one on cash flow. Can you tell us whether there is big marine down payment included for this year in your full year cash flow guidance? Or would that come on top?

Our cash flow guidance, you mean, a down payment for marine?

Yes.

There is one down payment included. So, that is something which is not surprising. So this is what we have already considered into – always into our projections.

Okay. Thanks very much.

Maybe one thing on steel.

Yes.

If you look at the full year outlook, you know that we will have a – let’s say shutdown of blast furnace 1. It is not a shutdown.

Realigning.

Realigning of – a planned realigning of our blast furnace 1, which is technically necessary and therefore it’s a long plan to do this and it’s also not an option to do it in another point of time. It is specifically a plan to do this starting from July, also because of the upcoming also holiday months for our customers, our car producers. So, this is something you have to bear in mind.

Okay. That’s very helpful Thank you.

The next question is from Seth Rosenfeld, Exane BNP. Your line is now open.

Good afternoon. Thank you for taking our questions. A couple questions with regards to the outlook for automotive demand, please. Could you give us a bit more color on how the ongoing semiconductor shortage impacting demand both in steel auto components. I mean, what scale of disruption is currently baked into your forecast for second half of the year? And then, to follow-up on the earlier questions for your steel business working margin progression. In a normal cycle, lower sales to your auto customers repeat as margin dilutive, but several of your peers have commented that in fact the semi shortage is actually aiding their margins at present give how hot the spot market was that we are allocating auto to distributors is helpful. Are you seeing that in your business as we look ahead to coming quarters?

Yes, maybe to the first question, regarding auto components and the automotive demand. I think it’s clear we saw really uplift of the demand in our first fiscal year quarter which is of course last – the fourth quarter and we also saw some effects in the – let’s say, fulfilling again to the supply chain. And we saw, but what we saw would be as safety measures if we look also in the medium that some OEMs are really tracking down and then this is of course has to do with the shortage of the semiconductors and logistics problems. And therefore, we said we still see from automotive a quite good demand, but as I said before, the OEMs could sell more than they are able to produce and therefore we see that we estimate that in the second half year, the automotive demand – not the automotive demand, but the supply to automotive will be lower than in the first half year. But we do not see, let’s say a problem with the overall demand. It’s more a logistic problem, which we hope it will be, let’s say, better after the summer holidays or, let’s say in the direction of the end of fiscal year something like this. This was the first one. The second was I recall right, whether we can anticipate from the spot market and, yes, as I said before, we have some issues with – not some issues, we have some positive on the spot markets business, but since most of our business is with the contract-related higher margin business. It’s not that we are so much, let’s say have so much focus out of this. So, but we are quite happy. Nevertheless, we are quite happy with the situation, because our shares in high margins business is increasing in this contract business. Hope you understand.

You are benefiting in material services really from?

Yes, of course, yes. Of course, yes, I thought it will depend upon steel but in material service we are depending on this very much, of course. You know that the shortage – if this was the question, the shortage in material, we, as you say, saw also in the Q2 numbers. Our sales number with material service was not higher than previous year. This was just because of the shortage in material. But, of course, this has one good effect, because spot prices went up and of course, this is good for the EBIT for materials.

Thank you. Just to clarify the last question I guess was trying to get at was, I understand your contract exposure. It’s quite significant. Therefore, more laagered than your peers. But if your second guidance is for lower sales to auto OEMs, does that not imply actually a better exposure to the spot market temporarily in terms of your mix, should that not be positive for your margin realization as a result?

You mean, for the steel business?

Yes, exactly for steel.

For the steel business, yes, you know that, it’s still that of course, if you have, let’s say, a revamp of one blast furnace, we do have limited capacity. There is also one thing. And then, we have to take into account in which direction to I send my material now. And we will do this likely. So we will of course go for – for the automotive volumes, but also then for the industry volumes if the demand is there. So, will see what the outcome will be. So, yes, the margins should be better at the end of our fiscal year, very clear. But also take into account, I don’t want to be pessimist at this point of time, but you also the iron ore development at the moment. So, this is something of course which is not helping, but, yes, you have to take into account.

Okay. Thank you very much.

The next question from Bastian Synagowitz, Deutsche Bank. Your line is now open. Mr. Synagowitz, at the moment, we can’t hear you.

Can you hear me now?

Yes.

Perfect. Thank you. So, my first question is on auto tech and industrial components. We are, like last quarter you are basically guiding. That guiding down essentially and I guess, the situation around CMEs as well, flex for auto probably, but your order intake, in none of the businesses so far indicates a major slowdown. So, is this we have to assume that your guidance on these businesses at this point is really more preemptive cautiousness or so it’s just being very conservative for, are you seeing like an natural indication that we are up for like a major deceleration in those businesses, because overall, you indicated still at least for industrial components in particular for these quarters.

If you – as I said before, if you look at automotive technology business, you think that we will have quite a good half year, but not with the dynamic of the first year. This is clearly, what that would mean. This does mean that overall, it could see that our sales numbers in the second half year is lower than the first half year. This is something – this is a pure effective of the logistics problem in the semiconductor for us. Not a real demand. So it’s – and this is something where we have the question mark on. So, if this is going to happen, then we will be with our guidance. If the numbers – if the volumes are better, then of course, we have also room for improvement on this. If you look at the IC business or the industrial components business, when I got you right, you also said that, we might have a – let’s say, lower performance in the second half, yes. And you also have to take into account bearings business, we clearly see, if you look at bearings for wind energy in China, this was a booming quarter, the first quarter was also subsidized by Chinese government and this dynamic is definitely not going to be – this high dynamic in the second half of the year, but still a good dynamic. So we are happy with this. But this is something which is happening.

Okay. Perfect. Thanks for clarifying. My second question then is a follow-up on Ingo’s question and your contract exposure in steel in particular. So, I am wondering how far you are convinced that the current contract structure in steel is really the best way to run the business in an environment where raw material price volatility have become very high and where we are seeing steel prices obviously in an unprecedented rally. So, I am wondering whether you are maybe not running the risk of missing out on the cycles in general on the price side, why you then make a squeeze on raw materials on the other side. And whether it wouldn’t make sense to better split your contract exposure over the years, this is very much skew into January at the moment, basically not just depend on where the steel cycle is at the point in time when you negotiate contracts in January?

In fact, what you are saying is exactly the case because you know that we have, let’s say big amounts of contracts where we have this contract. But we have, let’s say different situations. So, much contracts would start this 1st of January, goes three months or six months, some goes to 12 months, And then, we have – also have, let’s say the next phase, where we have negotiations for orders which are starting at 1st of April for three months. And it’s going on and it’s going on. So, we have, let’s say, every quarter, we are able to negotiate something in the order structure here. And then, overall, this is okay, this is fair. Every quarter we are able to really alter and negotiate with some customers the new raw material situation. So, if we are now talking about increasing raw material prices, then you are asking the question, is the raw materials priced or if prices go down then, maybe, we should have – then we have other questions, you know what I mean.

Yes. No, I can imagine of course. Then you all be benefiting always. Just thinking that your overall contract exposure is still very much generally heavy in terms of – point in time of when you negotiate and then obviously it makes it pretty dependent on the sentiment in the cycle at that point in time. But…

But it’s more balanced than you think. It’s not so much than we have.

Okay. Understood. Thank you.

The next question is from Carsten Riek, Credit Suisse. Your line is now open.

Thank you very much. My first question also on industrial components, because I think, back you mentioned already. Last quarter you hindered on the normalization but here we are again close to €100 million in EBIT. Is that the new normal? Or is it finally more normalizing and why is that the case? That’s the first one. And the second one, on stainless steel. I haven’t found any numbers in the report. Given that the biggest unit in the Multi Track, would it be possible to at least give us some shipment numbers, EBIT and sales, to make it a bit more transparent how this unit develop in order to make a adjustment, but it’s actually improving or not?

Maybe start with stainless. So, there is a sense that we have not, let’s say, distributed this number so far, I can tell you. And at the stainless business as you might see in other stainless businesses, we – since the beginning of the year we are ramping up in volumes. This is clear, let’s say, in the first quarter we had of course the nickel development and – was looking in favor with to serve the industry, but now, we are let’s say, seeing increasing volumes and better auto price conditions. So, maybe just to give you an idea of what the business is going on. The other was regarding the IC business, whether the €100 million is a new normal? Hopefully. Sorry for this simple answer. And I mean, we really think that the businesses which are, let’s say, combined in the industrial components, I mean, business, they will be very strong business also in the future. So, it’s – you don’t expect from me now to give you the number for quarter-to-quarter, but this will be strong business. I mean, this is, at the moment, clear, wind energy is supporting and also other things. But if you also look at the cost structure of Forged Technologies and the order structure and also the order structure from bearings business, how much of this is really related to wind energy and if you then look at the future profitability for wind energy is also what maybe the government is now going to be deciding in the next couple of days then we really see mix growth potential in this business - in the bearings business.

And on the forge, it’s something on the forge side, I think the bigger part of the business in combustion engine is still, it’s a flux. And our market share in that business is, I would cautiously say, significantly higher than 50%. And truck business itself going at this moment, trucks is currently a very good business. High growth rate and that will remain stable for a relatively long time now. So it’s so forged is combustion engine but in the right part of combustion engines.

Okay.

Okay. In transformation business also, this is.

Yes.

One quick word on multi structure. Would you be disappointed that multi structure – Multi Tracks, would you be disappointed Multi Tracks would be still in the same shape and form at the end of this fiscal year, as it is right now?

First, I would say, no, no. I tried with a provocation, because our counts is what price you can - what value you can crystallize from the businesses you are in. And I have to say our positioning in most of these parts is in a way promising that we might benefit from the current improvements of – let me say, of with the view that the corona pandemic is coming to an end. So we see positive signals on the order intake side. Yes, there is – I am relatively sure is that one of the business, this will not be part of the Multi Tracks anymore by the end of the fiscal year. So, Klaus mentioned it. So we are, let me say, our discussions on the mining business, let me say, progressed very well. And - excuse me? So, let me say, it’s still in the structure. So, this is why I said before the question, it’s not an issue, but what counts is, how far the project developed in order to make us believe that Multi Tracks will at the end contribute to the value creation of the overall company. For me, what comes very much is, we have a roadmap to value creation for thyssenkrupp. And this roadmap to value creation is through us kind of qualify this. So, in this creation of value of cost, we have rectifying the full potential plan for ourselves and we’ve created a program to capture this full potential. And all of us count is to execute on this plan. And so far, I have to admit we have not deviated. So, we have not deviated significantly from this plan. Our problem was corona, but not the significant deviation to our whole execution plan. So, not louder than I we have to a kind of approach to everything and we call it the regain trust approach. We are not overpromising and underdelivering. That’s very important to us. We really have all the year confident in thyssenkrupp. It will take time to really develop solid confidence into the capabilities of this company. But we are very cautious to make promises we can possibly not live up to. So, this is why – I do might find us from time to time a bit conservative. But to us, it’s very – we really want to still understand our value creation plan. And that we here and there reprioritze a bit in terms of timing. Of course, I think that light in that nature of a business environment which is volatile. But we are not deviated from the activity and from the execution plan.

Okay. Thank you very much for the explanation.

The next question is from Ellen Gabrielle, Morgan Stanley. Your line is now open.

Yes. Thank you for taking my questions. The first one is, Martina, you mentioned of – you spoke of being conservative in the way you look at things. Your EBIT guidance for the full year is implying the quarterly process of almost €100 million for the next two quarters, which is half of what you achieved during Q2. You clearly referred that auto disruption is to be blamed for part of this forecast, but what do you think about the projected improvement in Steel Europe. Is it not going to be announced to offset the risks in autos for the next few quarters? So what are the different moving parts that we should be thinking about?

No, even Claus has discussed, stated, just describing Martina is the CFO. But I will not go into the explanation of figures. Because that has a significant risk that Claus afterwards tell me that I am running around in his count and which is definitely not my show. Not to be very – especially on the steel side, you know what? What counts to us is the realignment of thyssenkrupp means, we really totally we believe , that the best thing we can do is to develop a standalone pure play out of our steel community. What counts for that is of course to implement for steel, a plan that they achieve competitive EBITDA per ton and competitive performance and not only for one year, not only for half a year, there must – this must be an outlook, because steel is a business we have where it takes years to impose the, let me say, to impose the performance bottom up. These are always how you react on market ups and downs. But the fundamental performance is driven mainly by your equipment and by your operation capabilities in your plants. And our plant is a rather big one. So, in order, you have heard that we decided last year when we sold the elevator business that two months after that we provided the capital in a significant amount to the steel business to develop its business. And also to implement the investment it takes a year. So, that means, to us, it was clear from the beginning that the steel business will need some time in order to improve its fundamental performance. Last, our goal is and was, that we find a future for steel where they can really contribute to the market and to our investors and shareholders what is adequate to the number two in Europe in this business. And that’s I think, I do not want to execute for – I do not ask you for patience or I just try to explain challenge us for speed, challenge us for – but please understand that we are not overpromising and underdelivering. That’s the last thing we want to do.

Thank you. And as a follow-up to this question, really having steel as a standalone can mean, different things to different people. Can you elaborate a bit more on what – how do you define having it as a standalone? And have you set any – hard deadline by in which you need to make a definitive decision on how you move forward with steel?

In our current requisites, of course, I know Klaus as working for your garden. So…

Please go ahead.

No, because, as loud is we funded for the steel business. So, we based on our financial situation of course. It is to provide curative support to discuss about a standalone business, a potential spin and IPO of the steel business. So, of course, we have developed milestones - a first milestone, a very important milestone will be the upcoming supervisory board where we try to make sure that our plan to try to make this happen and to try to make it possible means the feasibility study for a full standalone of steel, which then possibly next step, so it means a spin and then following possibly an IPO that this will be – that this should be then supported by the entire Board, but the final decision and the final the size of the feasibly study, we expect them to be away with this only possibly second quarter calendar year 2022, Klaus, go ahead.

We do our own, let’s say milestones and things like this, but we do not have – if we have it, let’s say an ambitious timetable. But we are not talking about this ambitious timetable. And so we have all, there are so much formulas to do. If you talk about a potential spin or IPO and there are so much things to do which we are, at the moment, starting to do. So we have different projects to look at it. But of course, we have to do our own home works and with this own home works we think we are very good on the way. But there are also some other issues which have to come to terms and then, therefore, we will, let’s say, look at this very, very closely. We have this project and we will inform to if you if there is something new. But this is not going to happen for the next couple of months.

Just one additional explanation. I think this is valid for everything. What of course is important to us is to provide to you and to our team in the company kind of fact-based optimism. You know, it’s not just about optimism. It’s fact-based optimism. And on this – based on this approach, of course, to us and that the alignment throughout the different leadership levels in the company starting with the supervisory board, our unions, to us, and to me, it’s a kind of leadership to make sure that you have at the beginning an alignment of the key contributors then you can create momentum and the speed of change in the transformation. This is why we are at this point in time, we are exactly in this realignment activity, but we are quite confident not realignment – on this alignment activity, but we are quite confident that the start of transformation of thyssenkrupp will be supported by our supervisory board.

Thank you.

The next question is from Christian Georges, Société Générale. Your line is now open.

Thank you very much. Can I just clarify something on the steel side, but this realigning of the BS 1? To your number, is that you would build up inventories ahead of the quarter and ahead of the closure in July? And so, when we look at your cots in the division excluding raw materials, will it’s seeing an increase over Q1 and that would be consistent with the higher level of production into Q3. I mean, is it’s something you’ve been doing or you will not build up any inventories before the realigning?

We are doing the normal things. And of course, we try to do what you are saying and the demand is high, but of course this is also something we normally do if you will have something like this, you try to make plans also in let’s say purchasing not only raw materials but also – things like this. This is something we normally do in this circumstances and this is something which is ongoing to prepare this phase of realigning this last couple of months.

Okay. So does that specifically you are gauging for Q3 EBIT in Steel Europe higher than Q2?

Most probably, yes.

Okay. It makes sense. And other question, you don’t see it on your distribution you are gauging for a flat performance Q3 versus Q2. So, I mean, this is a great – obviously, performance you’ve achieved, €126 million in Q2. Is it something which was just one time, type or do you see the builders actually can generate this kind of profitability given the right conditions as we are having now?

Your question was, whether we expect an – let’s say, number also in the Q3? Yes, so this is something.

Yes, obviously, distribution. Is it something this is a recurrence?

No, if you look at the business model of this business, of course you have to take into account that, you know that in this kind of market view it’s where the prices are going up realizing so-called windfall gates. So this is a matter of when you purchase a material – when you, let’s say, sell the materials. And this kind of market we are in, of course, this is supporting. And you know that we are working very much on performance here than up to the altitude of this effect is of course a big one and you can see this also on the [Indiscernible] So we think we will have a good Q3 and also quite a good Q4, but by development this is going into another we will also see this in the development of the margins. This is something you have to bear in mind since the market conditions are favorable for this business.

Thank you. Value of inventories. Okay. And on your hydrogen, as I think you are playing, you are losing at – carving out hydrogen from the rest of this year flow and technology. I mean, does it mean that you would be considering a variety of option with it literally and do you with the outlook for mining within that and the rest of chemicals?

For hydrogen business lines - for hydrogen business we are considering and you have heard about it probably already. We are considering a partial value crystallization. And we have already mandated a bank and we know that, let me say, we don’t know but we expect the bank and disposes to deliver results in the summer. So, based on that and in order to allow our – allow this partial value crystallization, is that also not good enough to us. If we do that, then of course, we wouldn’t – we would then talk about only the hydrogen business unit. And the plan remains the [Indiscernible] would then still be a part of thyssenkrupp until we would start a next process to sell it off. But we are actually assessing. We have already carved it out from the – as a business unit from the plant, from the chemical plant technology, with a segment. But yes, we are investigating now there is partial value crystallization.

Does it certainly or expectation of straight sale to somebody else or?

That’s not yet decided. That’s part of the process investigate how to. But, at this point in time we are considering only a partial one, not a full one.

Okay. And for the rest of chemical, because you or it’s remaining advanced on divestment. But the rest of the chemical business has got some great operation as well. I mean, are you closer to divesting that? Or is it on hold for the time being?

For the time being, I think you know that market is developing quite favorable, because there is still besides hydrogen, there is still ammonia, being, so because we can of course provide full ammonia plant and we have a good reputation for doing so and that’s the next degree. So, we are enjoying for the time being, let me say, lots of discussions with customers for potential reports has to come. So, we are actually in this area, we are observing a bit, what the market development before we would take a final decision.

Okay. Sounds as you go. Thank you very much.

The next question from Christian Obst, Baader Bank. Your line is now open.

Yes, thank you very much and all the best there. First question, first question is on CO2 cost. What you currently have to buy and can you give us any idea about the impact on cost you expect for the next two to three years? That would be the first question. Is that okay? Go on with this. Next one is on auto. More taking than little longer term view as there was a long chase of ramping up new plants, restructuring and so forth, can you give us an idea of where we stand currently in terms of utilization and the rank of what these plant are these classed fully went up now and fully operational? And going forward, in auto, do you still looking for cooperation or partnerships at least for some parts of the automotive technology? And the last one is on industrial, especially in bearings. Of course, there will be a strong demand for the years to come. So, how do you plan your capacity for the next three to five years let’s say? So, forget about the short-term incentives from the Chinese. But the longer term view in bearings, how much do you intend to invest and what is your capacity planning there? Thank you. And what is the current bottlenecks there?

So, I am going to start with the question to auto. Yes, I think you hit the nail on its head. I think with the line, the progression regarding the utilization of our auto plants, thyssenkrupp has invested a huge amount in order to develop a global footprint, which is absolutely must have in an automotive business. But from the sort of time being, we believe we have now finalized the build up phase for global footprint, now we grow into the given plants. So there is still capacity. So we expect the auto business to invest, let me say, below previous year. That’s the first thing. But I think, also important for the profitability improvement of our auto business mainly in the steering community, you know that they enjoyed really significant growth in the early years and at that time, this is now something we tried correct going forward. They developed a significant product complexity. Product complexity is something very expensive. In order to develop, let me say, very competitive office you need to have a very simple product architecture with lower complexity. With such a change, you have to - a second positive impact on your investments in the future because, you can reuse what you have already implemented for previous orders. So, you actually expect I think the investments to be lower than in previous years. And your question regarding alliances, that I think - that is something the auto industry has always done on the level that we call it – or you know, sometime a customer wants somebody to cooperate with somebody else in the system. So, a commodity, A is combined with commodity B into a system so the two companies providing these parts for example, they are being asked by the customer to join forces for a certain order. So, to develop alliances is a totally normal process in the automotive industry and of course, developing bigger alliances now for system businesses is I think always something to be questioned. I would never say we don’t do that, because there are sometimes of course we discuss with somebody but we are not discussing about giving up the business. It’s just the cautions about joining forces, alliances, there are not yet several discussions beyond that. But joining alliances is a key success factor in the automotive industry I think going forward.

Maybe I have a direct question on that. So, but, you unlock, you are talking about a system approval which I understand. But you are not investing by yourselves to really to enlarge your system approach. You are looking –but you are looking for cooperation partnership alliances to get the system approach, but do not heavily investing into that?

We are – right, not heavily, we are not, let me say, thinking about an acquisition or something. And I am not thinking about it. But I can give you a small example of what we are doing from time to time for example [Indiscernible] and steering are both of an active vehicle system. So from time to time, we invest ourselves a bit in the system capabilities when it comes to a point that a customer requires or interested in two or more parts out of our portfolio. Then we are investing in engineering.

That’s it. Thank you.

Okay. Thank you.

The next…

I think, Christian Obst, some further things maybe I can give that’d be great. So bearings, you got more capacity and then actually we are investing in increasing the capacity. Also we did this at the beginning of the year and we have some other projects which we got coming up. So, this is something where we are definitely going to increase capacity. The other one, emission rights with steel. So, you know that, so far we have the three locations of emission rights together with some planning we did we were covered, let’s say it this way. Looking into the future, it’s a bit difficult. So, we know that emission rights will be, we don’t know. There, this is a likelihood that the emission rights will go down and then we will come into a lets’ say, a situation where we have a shortfall and then where we have an aim for that, let’s say that we are to a certain percentage not covered. But this is not a problem of thyssenkrupp. This is a, let’s say, a structural problem of the steel industry and the – steel industries. So, nothing more to say.

Okay. Thank you very much.

Your next question is from Rochus Brauneiser, Kepler Cheuvreux. Your line is now open.

Yes. Thank you very much for taking the question. And apologies if the question has been already asked because I am late to the call. And on this comments you made on the hydrogen partially value crystallization. Martina, can you give us a bit of a sense as to whether this is referring to kind of an opportunistic approach where you try to get the highest possible price for that stake? Or is it more about getting the right partner for the business, which would relate in the long-term? And that’s the first question. The second question is, how should we think about the earnings impact in the first quarter from the [Indiscernible] in terms of underutilization and shipment loss? And thirdly on the steel spin off. Can you help me to understand your current thinking about the ability to offload that in pensions. Is there a kind of a mechanism that all the pensions which are currently associated to steel would ultimately go into a spin off vehicle or much is the flexibility you have above or below this steel pensions in order to find the right set up for this separate entity?

So, I am going to start with the question regarding hydrogen. This partial value creation, the main objective -

Hello.

Mrs. Merz, at the moment, we can’t hear you any longer. One moment please. I will get back to the speakers shortly. The speakers are back online.

Q - Rochus Brauneiser: No problem.

Most of the things you might have heard what Martina said.

No. I think, it just cut off right from the beginning.

From the beginning. So, then I repeat briefly. What I said was this partial value crystallization could lead into several, let me say, into several solutions, like, the subsidiary, IT or of a spec. But the main objective behind it is to fund further growth in this business. So, we would want to dedicate the potential funds into growth and that can of course mean also to find partners in order to grow. For example, the operations, it might make sense to – we have to work together with somebody. But as I said, the main objective for ourselves – for us is to potentially fund further growth.

And there were some other questions regarding steel, the first one was regarding the capacity shortage business of the revamping of the blast furnaces. Yes, there will be a – just a technical, a phenomenal one of up to a low-three-digit tons number. So, and the other question was regarding the pension liabilities, there is some kind of flexibility, yes it is. So, normally it goes with the business. So, we had this and – but there is some kind of flexibility, but really to say, nothing is – at this point of time decided or something like this. So, we have the pension liability which is dedicated to the steel business. So this is €4 billion.

Okay. And the impact of the underutilization and potential shipments, mostly in the first quarter?

Well, too early to say. Too early to say. That is really difficult to make a new number on this. There will be an impact, but very, very – very difficult to say.

And can you – so the question is..

When we know, we will get it. of course since it’s…

You said, you will – obviously, you might have still some inventory. So in this market it’s probably difficult situation or what - is there a bit of a stop for the realign or just sell in the market and realize the higher price level? So, how to think about?

The revamping of the realignment is technically – it is not possible to do it on another point of time. It’s technically – these are must. This is not an option to postpone it or to make it in another time point. And yes, and therefore we do this and this is, as I said before, we do this by intention in summer because we see most of our customers shut down their production facilities and which is the reason why we talk to them there.

Okay. Makes sense. Thank you very much.

Okay.

Thank you.

And I think, with that, with those question and answers, we have to the end of our today’s session and therefore, I would like to thank you very much on behalf of the entire team for your participation, for your questions. And as always, after the call, our investor relations team is available for you to discuss any further questions you might have. We look forward to staying in touch with you and we wish you a nice rest of the day and bye bye with that.

Thank you. Bye bye.

Bye bye.

Bye.

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