Thyssen Krupp 4Q16 Earnings Call Notes

thyssenkrupp’s (TYEKF) CEO Heinrich Hiesinger on Q4 2016 Results

Cyclic improvement in Steel Europe, but not an improvement in structural weakness of industry

“We have also initiated a comprehensive transformation program at Steel Europe. We do see clear cyclic silver lining but to be clear, you should not confuse cyclic improvement with structural weaknesses of an industry. The pressure from imports from raw materials, especially in coking coal, from excess capacities and from current and especially threatening cost decrease related to the European trading scheme, remains high. Despite the strong position versus most peers and great efforts and achievement from leadership team and our employees, Steel Europe has earned its cost of capital in the last fiscal year.”

Guido Kerkhoff

There’s clearly overcapacity worldwide in

Yes. With that let me come to your question regarding steel. I mean, once again, what we’ve seen underlying in this industry is an overcapacity here in Europe and worldwide, and that was forming our belief that a consolidation move overall can help to overcome this issue. Now, steel market is always cyclical. So, you might have always couple of months that look better and a couple of months that look worse, as we have largely experienced last year where the first half was very bad. That doesn’t mean that overall the necessity of consolidation as we’ve lined out is clearly out there and we still see it, and that’s why we continue to go down that route.