thyssenkrupp AG

Yes, thank you very much, operator. Yes.

Hello everybody and welcome also on the behalf of the entire team here. The call is on our Q3 numbers for the fiscal year.

We released all the documents for this call this morning at 7:00 AM. So you can find all the documents on the IR section of our website.

Before we start the presentation and the Q&A session, I would like to ask you that you only ask two questions at a time or per person. We want to make sure and this would be very kind of you that many people have a chance to ask the questions after the presentation and with that I would like to hand over to Klaus Keysberg for the presentation.

Yes. Thank you very much.

A warm welcome from my side to today's conference call on our Q3 figures and before we have a look at the financial let me start with a short update for you on the transformation process and what we accomplished in the past months. By far the biggest step and an important milestone in the transformation of the company initiated last year was of course the closing of the elevator sale on July 31 to a bidding consortium led by Advent International and Cinven.

With the closing we will see in our Q4 numbers a conversion of net debt to a net cash position for the first time since the financial crisis as well as a significant equity uplift by more than €14 billion and the proceeds provide us tailwind for the transformation that lies ahead which is clear. And I can assure you we continue to focus all our energies on substantially improving the performances of our business which is absolutely key.

Therefore, on May 19 we presented the main cornerstones of our portfolio assessment. The core being the transformation into a high performance group of companies with entrepreneurial independent businesses that will close the gap to their benchmark, lean management structures and a clearly structured portfolio.

We divided our businesses into more or less three categories. On the one hand those whose potential will develop on its own including material services and industrial components and also eventually together with part of automotive technologies and then we have the dual track companies, the steel and marine where we have the clears and the loan strategy and we also consider and are investigating potential consolidations and co-operations.

And on the other hand those for which we will primarily pursue development path outside the group summoned in the multi-track segments including all amongst other plant technologies, the stainless steel plant AST in Italy, springs and stabilizers as well as heavy plate. To put it into quantitative terms multi-tracks consists of businesses with the total sales of [€6 billion] [indiscernible] in a significant cash burn.

On top of that we are making visible progress in restructuring our businesses. At the beginning of the week we announced adjustments in our cement unit including the reduction of 400 FTEs worldwide therefore approximately 150 FTEs in German site -- nevertheless all of our business will have to accelerate their initiatives going forward and potentially also I have to say is adapt the efforts with regards to the economic development we see so far.

And with highest priority on a stable cash flow this is of course one of our highest goals here consequently with the release of the fiscal year figures in November. We will then present financial targets and value levers for the special for the businesses itself.

Moreover, to enhance transparency and normalize our networking capital towards ongoing continuous management we will reduce our balance sheet date driven fluctuations in the networking capital including the use of factoring substantially. Coming to the financials for the third quarter unsurprisingly the pandemic had a clear impact on the top line especially pronounced in absolute terms at our materials as well as on our car and truck component businesses due to a drop in demand especially in NAFTA and Europe as OEM customers temporarily shut down their productions while plant technologies was also lower due to a high comparable base.

Nevertheless, at plant technology we see a rising interest for our water electrolysis plant designed for efficient large-scale production for hydrogen. On top of that we signed a strategic partnership with the U.S.

industrial gas company, air products and chemicals and agreed on a cooperation with the German grid operator E.ON stating that our water electrolysis technology qualifies as a primary control reserve in the power grid and laying another foundation for potential participation in large scale green hydrogen projects. Looking at the bottom line EBITDA adjusted and free cash flow before M&A were driven by significant sales decline and resulting under utilization.

Looking ahead we are quite optimistic that we will see an earnings stabilization in the fourth quarter of course depending on the speed of production restart by our customers. EBITDA adjusted that most businesses is expected to be stable or slightly up quarter-on-quarter resulting in an overall fourth quarter loss in the mid to high three digit million range.

However, with the first month of our quarter already behind us we see indications for an ongoing demand recovery and also a positive trend regarding order intake also from the automotive side giving us reasons to be cautiously confident. Overall for the full year a loss in the range of €1.7 billion to €1.9 billion is likely for our continuing operations.

We still being a strong driver with a likely loss contribution up to a good €1 billion. The aforementioned multi-tracks that we will report as of next year will also account for roughly €0.5 billion in EBIT negative adjusted in this fiscal year.

Free cash flow before M&A for the continuing operation is now expected to be €5 billion to €6 billion negative including a €2.5 billion due to the absence of proceeds from factoring and networking capital matters that usually occur mainly in the fourth quarter but also during the year. This means that we are guiding an operative cash flow between €2.5 billion and €3.5 billion.

By terminating our disproportionate measures towards the better and the more continuous management we provide an element for the cash flow turnaround going forward. Looking at our operational performance in more detail, EBIT adjusted that automotive technologies came in significant lower year-on-year negative mainly due -- of course to the corona induced drop in demand with production and plant shutdowns in Europe and NAFTA and on the positive side of course we saw a lot of countermeasures especially springs and stabilize or as an example if spring stabilizes they improve year-on-year on the back of extensive turnaround measures.

Moreover in April, we approved an extensive restructuring plan for the German springs and stabilizer sites under the plan around 419 jobs will be impacted by closure of oil plant streamlining of the [hydro] side. Industrial components delivered a positive earnings contribution yet significantly lower year-on-year, significantly higher earnings and bearings due to sales growth in the high-margin wind energy segment couldn't compensate for the negative earnings effects from the decline in sales that forged technologies also due to cyclically lower demand for components for heavy duty engines and construction machinery.

Due to the pandemic related lower utilization with ongoing construction site costs that couldn't be charged to customers plant technologies was lower year-on-year thus remaining negative. The overall negative result was partly cushioned by a robust service business and we have to say the successful and stringent G&A cost reductions that are bearing fruits now.

Marine system came in positive and up year-on-year as measures for performance improvement are taking effect. Nevertheless earnings continue to be held back by low margins on project bill.

At material services plastics was the only segment being up year-on-year as the transparent plastic sheets are used as a protective measures against coronavirus. In challenging training conditions all other market segments came in lower due to volume and price developments.

AST came in lower year-on-year and negative overall driven by declining prices and volumes and a temporary plant closure in April. Significantly lower shipments and unfavorable product mix due to lower demand from OEMs as well as costs of lower capacity utilization led to significant deterioration in earnings at our steel Europe.

That could not be offset by stringent cost measures and lower raw material costs we saw. Last but not least cost at the corporate headquarters were lower year-on-year continued reduction of administrative costs in the corporate functions in regions and also positive one timer we saw here.

As already indicated earlier our balance sheet will see a strong push in Q4 from the sale of the elevator specifically a €15.4 billion effect on net financial position thus a conversion from a net debt to a sizable net cash position which now is more than ever important. Net of these proceeds are an additional €1.25 billion that will be reinvested or we will have a minority stake in their business, in that elevator business.

Furthermore, we will experience a significant uplift in our book value of equity of more than €40 billion while approximately [€4.4] billion of elevated pension provisions will also be deconsolidated. So overall our balance sheet ratios will clearly improve.

However, as the economic situation remains uncertain we will retain the greatest possible flexibility in the precise allocation of funds. Nevertheless, we have taken first decisions.

We will repay financial liabilities in line with the maturity profile. As a first step we will redeem a €750 million credit note which is due in November and we will repay it in September.

Moreover, part of the proceeds will be used to terminate our year end and networking capital measures and reduce our factoring volume in total by €2.4 billion. In the past as most of you are aware our cash flow profile during the year did not always clearly reflect the operational development as it was blurred by our disproportionate networking capital measures.

We are committing to more transparency and much more predictability and also require and enable our business to really step up structural and continuous networking capital management. This is essential lever to turn around our cash flow and networking capital optimization will be of highest importance in the coming quarters and here we clearly see upside.

On the one hand, this release of the networking capital measures year end will of course, let's say, will of course increase our networking capital but on the one hand long term we will decrease it again with long-term measures to come back to normal measures. And without the huge backswing usually occurring in the first quarter we have a clear clean start in the new fiscal year with the transaction we will also ended an undrawn €1 billion credit line under the KfW special program that was concluded in May to secure liquidity in the coronavirus prices until the closing of the elevator transaction.

Again to notice, we had the line but the line was not drawn. Since coronavirus have been eased around the globe and businesses able to restart we see a cautious resumption of production in the key industrial nations such as the USA, UK, Germany and the Eurozone as a whole since May and in China since March but with infection rates in many key regions remaining high the continued risk of further waves of infection in the course of the year persists.

Hence, with the potential of continued disruptions in the economy forecasts for the global economic growth and the impact on our businesses particularly materials and components for cars and trucks are still subject to major uncertainties. Thus in the third quarter we expect a loss in the mid to high three digit million range with almost all businesses stable or with slight quarter-on-quarter improvement with a possible exception of [steel].

For the full year a loss between €1.7 billion as said before and €1.9 billion for the continued operation is likely with the year-on-year decline in earnings influenced heavily by the likely high loss and steel group of up to good €1 billion and also as a result of current structural disadvantages at steel Europe in the steel industry in general. Free cash flow before M&A of the continuing operations will be determined by €2.5 billion from the determination of year end and networking capital measures and reduction factoring as well.

As said before, we are guiding a negative €5 billion to €6 billion. Operative we are guiding a negative €2.5 billion to €3.5 billion and of course the operating performance with Steel Europe accounting for up €1.4 billion net of networking capital measures already considered in the €2.5 and the business summed under multi-tracks accounting for €1 billion.

So all in all from steel and from multi trucks €2.4 billion are roughly coming, are making up for the guided free cash flow of €2.5 billion to €3.5 billion in the fiscal year. As already said in the beginning we are cautiously confident on the back of our July figures indicating an ongoing demand recovery particularly from the OEMs and actually regarding EBIT, actually I see the fiscal year coming in more at the better end of the range we are guiding.

Nevertheless, in the current environment mitigating the economic impact of the pandemic throughout stringent cost control and preserving our liquidity remains our top priority. Therefore we extended our counter measures now summing up to expect the cash savings of up to €1.5 billion in the current fiscal year.

Before we jump to the Q&A let's wrap up and see what lies ahead. The elevator sale will significantly strengthen our balance sheet in Q4 providing us a sizeable safe discussion and tailwind from restructuring and developing our business and more portfolio action and unlocking of value likely to come.

Realizing the best owner concept for plant technology is also progressing. As we have said last time corona had some implications that's why we expect revised offers in late summer.

Alongside we will leverage our leading technology position in chlorine alkaline electrolysis for green water electrolyzes for hydrogen. At Steel Europe exploring all options for industry, consolidation and securing financing the carbon neutral steel production transformation are top priorities.

This is flanked by our restructuring initiatives especially with strategy 2030 securing and pushing fundamental value and of course restructuring and enhancing performance is not limited to steer route but applies to the entire organization as I said before. Although pandemic uncertainties will prevail we will tackle them with stringent cost and cash control.

Performance remains our key priority. We will underpin our cash generation and value creation ambition with financial targets and value levers which will be presented together with our fiscal year to you when we release these numbers in November.

Until then please stay safe and with that I'm ready to take your questions.

Yes. Thank you very much Klaus and yes with that we would like to hand over to the operator for the Q&A session.

Yes. Thank you.

On the topic of networking capital and free cash flow you've obviously done this big reset now and then everything is quite cleaner at the end of the fiscal year and you were talking about structural network capital release potential in the next years. Can you already tell us a bit how much potential you see when you do your benchmarkings or whatever you do to determine how much upside you see from a networking capital perspective and also tell us what timing you regard as realistic because also your predecessor spoke about networking capital focus quite a lot.

So at this point I think most of us wouldn't think that there is let's say a quick measure that you can take that your predecessors haven't done where you can suddenly release lots of networking capital structurally in 2021. So any perspective on magnitude and timing would be of interest?

Yes, thank you for the question. But of course this is a difficult question because this is something actually you know that we are in the process of doing the planning and we in some businesses already initiated these networking capital initiatives and this is something and you are right this is something which we do not see so much effects in the next month or quarters.

This is something which is if you will be fair it will take one or two years to come to an effect there but you have to please please understand that I will not give you an amount of at this point of time.

Okay. Sure.

Talking about things that are in progress I think when it comes to Steel Europe, you were making comments on the press conference call this morning saying that you might sell it below book value but not as a fire sale. I think you've done the impairment test now for the future results.

You've done your DCF and it yielded a let's say positive value there. Just wondering how you would define fires here in that context given that you seem to be of the view that the business has a certain value according to your DCF?

Would you say that you wouldn't sell at the discount of more than 50% to book value or what's roughly that I mentioned we would we should think about that you're willing to take as a hit from a book value perspective?

Interesting is your interpretation because when I was talking about fire sales I was talking about the multi-tracks competition and more or less it also depends to see [indiscernible]. Now I can give you let's say a really percentage with 50% of the book value of 50% of the book value is really at the lower end.

So this is something I would still consider as a fires sales. So but at the end of the day what I meant to do not fire sales is that we will especially at the multi-tracks companies where we with Steel Europe we have a standalone strategy and as you know we are looking for consolidation corporation whether it makes sense and whether we have the potential to create value, if we do not see a good alternative to this then we are not, it's not necessarily to be done.

The multi-tracks companies we clearly said that we want to divest these companies at least most of the companies some companies we will may keep with some corporations but here of course it's also what I said this morning we will take our time. We will take our time and see what the market is bringing.

So we are not going and saying we have to divest these companies in the next six months. This is not what we are planning for.

So we will carefully look at it and at the end of the day if we think that the right time is to go into the dimension you can also have a look on it whether it's now we can have it look on the cash position of the potential deal and also on the equity position on the potential deal and my focus would be on the cash position of this potential deal as I said this morning.

Okay. Great.

Thanks for clarifying.

Good afternoon. Thank you for taking our questions today.

You touched on earlier in your prepared remarks the outlook for hydrogen technology workstations recently signed a quite exciting new deal with Air Products. Can you please give us a little bit more color on how that strategic agreement will develop going forward with regards to expected order intake and when you consider the excitement focus on hydrogen today does that at all change your plans for plant technology being in the multi-track category today?

I will start there please.

Maybe I can start this regarding these plant technologies. Plant technologies as a whole is of course part of the multi-tracks business and that plant technologies consist of chemical plant and mining and cement and we see really potential in this hydrogen business here which is clearly and therefore it's not wrong to have it in the multi-tracks businesses because we clearly are looking where we can, where are we able to develop this business.

We have more coming from the technology side if we talk about this hydrogen technology but of course we need partner to have other competencies to really scale it up and this is why it's not wrong to have it in the multi-tracks business and it's really a question which comes over the time what we are doing with this. So we are really looking at several options and the best options of course is that we can develop the business.

On the one hand we as a sole owner or maybe in a cooperation with others or maybe also with other shareholders to this.

And regarding the cooperation with Air Products the situation is that we will be the supplier of the electrolysis technology that Air Products will use to produce a hydrogen and make business out of it. We have not yet brought into the public domain how large the potential business here can be for us because we are still in some negotiations here with our partner and will do so once the negotiations are finished.

And besides this Air Products project we also have an interesting cooperation with E.ON and the really interesting thing here is that E.ON testified that our technology is suitable for integration into power grids. This is something where competing technologies or let's say were suppliers of competing technologies always had their argument that they said our electrolysis is not ready for grid integration and now we see it in fact is and we have the statement of a renowned grid operator here.

So this shows really that we are well-positioned here with our technology for this upcoming market for production technology for green hydrogen.

Great. Thank you very much.

And if I can shift trac to the second question on the outlook for Steel Europe please, you guide to shipments up at least 10% Q-over-Q, can you please comment on the expected product mix and how that might change sequentially and obviously we're still looking at quite severe raw materials cost pressure but would you expect perhaps an improvement to mix to help offset that to support margins going into your fiscal Q4.

You mean in our Q4?

Yes exactly.

Well, it's difficult to predict but what we see is really an uplift in order intake and also coming from auto. This is something we see and therefore of course we are let's say confident at the moment that the margins are lifting up a bit.

We see raw materials costs not so much let's say developing in the fourth quarter and maybe it's difficult to predict. So if you ask this we are coming up a bit and we are coming also other bit with auto and therefore this will help a bit in this quarter and our fourth quarter.

We predict that it may more help in the first quarter of the next fiscal year. Yes.

This is something we are just looking at and but the great question of course will be we all see and then this is something you can also read in the newspaper auto is coming up again. Yes.

But we also know that there are initiatives from the government and also from the OEMs itself which will take place actually now and they will end at the end of the calendar year and the big question is also what is happening next year with the demand. This is something which is driving us at the moment in the considerations to the planning.

You understand.

Thank you. Just your comments on government measures.

Are you referring to short-time work measures and the potential --

I mean this, let's say incentives for buying cars indirectly to reduce the tax so-called [indiscernible] this is something we see here and this is which was initiated in June or July to increase demand for all products but also for cars and most OEMs did additional measures for their own programs and they also let's say do this for a certain period of time. So mostly to the end of this calendar.

So we see the demand in the car which we also see in our automotive technology business and also our steel business where we see a slight lift up and this is okay but it's also questionable how reliable is this increase in demand if you talk about quarters or months if you talk about also the next calendar year.

It's very clear. Thank you very much.

Thank you, very much. Two questions from my side.

The first one again on the networking capital adjustment. First one, has it been your own decision to smooth and networking capital adjustments including the factoring.

You mentioned some of the positive moves, what I'm actually interested in is what is the factoring volume we are talking about, is it €1.5 billion to €2 billion per year and what were the discounts plus fee in the factoring. That would be the first question.

Yes, okay. So, I think not a normal one but the factoring volume which was done at the year-end and the previous year was roughly €2.2 billion, €2.1 billion, €2.2 billion.

We are now reducing it to €0.5 billion, something like this, €0.5 billion seasonally. It's something we are doing.

And you are asking whether we did this by our own. Will yes, who else should do this but it was our end to do this.

And the other firm is so we bring -- we brought that this volume by €1.5 billion. The rest is other year-end measures as you can imagine.

So, we simply consider this as a normal level of year-end measures but to do more than €2 billion factoring in this case. And this is something which we clearly see as more normalization and also more predictability and also more focus on normal things you do and that will be capital optimization.

And a very quick follow-up on this one. And what were the discounts you're selling your receivables, was it sizeable or was it not sizeable.

I'm just trying to get a feeling what could actually get as a benefit.

Well sorry, can you repeat the question, I didn’t catch your question, sorry.

I will expect, when you usually have a fee to the banks and you also sell your receivables at a discount. So, just can we get a magnitude what the discounts less fees were in that kind of tax free deals, so that we actually can get a feeling how we can now think yourself.

Yes. The factoring was if we compare it to normal I think finance cost, it was not is more expensive.

So, factoring or financing is more or less it was here. If you do factoring or you have more net financial debt, it is more loss.

So, talking about finance cost, it's not an issue. Not an issue if you do normal factoring.

Perfect. The second question I have its more on the automotive.

If you look at the Springs Stabilizer system engineering during the third quarter. We have third quarter look like they had some kind of burnings resilience during the COVID-19 crisis.

While the rest of the automotive business has been more negatively impacted. What was actually the driver for the more stable performance of Springs Stabilizer system engineering?

Was it flexibilization of fixed cost in this? So, could you quantify those costs?

And on the other automotive business that you identified more underperformers during the crisis and automotive or will that actually recover again. Thank you.

Yes. If you look at this stabilizer business and also part of the system engineering, we just it's let's say we did a lot of programs here and also a lot of restructuring already started and also initiated.

And therefore our let's say development in this business against previous year. It's not good but it's better than previous year let's say this way.

And this is where you can see measures not taken impact. This is a positive one.

And this is the reason for the development you mentioned, I guess is what you meant.

Yes.

Regarding the other business from automotive technologies, no we did not really identify more underperformance clearly not what we all foresee is dependency on the demand and this is clear this industry. But as I said again, we do not see other businesses in the Automotive Technology business is underperformer, yes in this business.

Okay, perfect. Thank you, very much.

Yes.

Yes, good afternoon. I've got a couple of questions.

My first one is another one on working capital. And I know it'll be a tough one to ask.

So, I would ask it anyway. So, we can probably split the working capital dynamics into three different buckets.

Firstly, we've got the window addressing part, which you know reverse. And secondly, we do have the cyclicality which is driven by the materials businesses.

And then thirdly, the dynamics around pre-payments and so on and the capital good stop of units. If we now look at the materials businesses, how would you expect that to move next year and the current scenario of course we have iron ore prices pretty high already.

Should we see some cyclical rebuild in working capital next year or you will you have that largely done already by the fourth quarter of this year? And then also on capital good, is it fair here to assume that the working capital will likely be positive or potentially quite positive next year given the likely order and taken some of the businesses like Marines.

Any color on that would be greater, that is my first question.

Yes. So yes, difficult question of course.

And you know that we clearly see that first of all its everything is difficult to predict at the moment and what we at the moment we see, we see an uplift in the next fiscal year in the materials businesses. For material service and also for steel business of course.

And probably add to the recovered fiscal year. So, we will be far away from the pre-corona level but we see an uplift.

That's of course something where we see that the net working capital volume. I think we should see an increase in inventories on the one hand but also an increase in liabilities.

And therefore, at the net effect, I do not see a too much more networking capital position. This is something I see for the materials businesses.

And I think I would say the same is valid for the capital good business.

Okay, thank you.

Orders in the pipeline that Bastian refer to in the Marine business and to maybe also in Plant Tech, that there could be some additional tailwind for the working capital situation from those pre-payments on these orders.

Okay. So, that's actually not been baked into the earlier comments.

Then, okay that's very helpful. And then my next question is on balance sheet.

Are there any significant balance sheet legacies which you may have to review by the end of the year in terms of impairment tests given the environment we are in and also given that you obviously now have a bit more balance sheet any way.

Yes. I mean, this is something which is clear.

If you look at the planning which we are doing now and we are approving the planning for most likely in September or November. And then we'll have a look at it and together with the auditor.

And at the end of the day we would come to result. So, I can really not make a forecast on our estimation of weather and how much impairment needs we do have.

So, sorry to say this but I cannot be more concrete to this, at this point.

Okay. That is that's here.

Then maybe just moving over to the implications of the Elevator deal, you'll obviously now have injected €1.2 billion from the proceeds into stake in the Elevator business. Do you plan to contribute that to CTA but you rather aim to keep it as it is and what would be the timeline for taking such a decision?

Yes. And this is overall and you know that our net financial debt position increased by a €15.4 billion.

So, you always get the question about what is now what are you doing with the money now. So, and as I said before, we said before we clearly see us in a very unpredictable environment and corona is not over.

And there might be a second way, there might be some other issues. And so, our biggest priority is still having bigger flexibility and liquidity.

Therefore, we do not take a decision like this. So, the decision is what we take is that we bring back year-end measures, this fiscal year.

And we also will repay financial liabilities according maturity line. This is also clear.

On the other hand, this decision to bring this minority stake is €1.25 in the CTA or even more in the CTA. This is the decision, we do not have to take now and we will.

Not do the decision now because simply it's not helping us. And first, we do this decision if we have really a clearer view maybe in the middle of next year or the beginning of next year when we see what is corona bringing out.

Whether corona has and end or something like it. Then we will take the decision.

We simply do not have the necessity to do this now. As a target, I can tell you as a target, we will do something with the pensions.

But I cannot do say more at the moment. Is it okay?

Yes, sure. Absolutely, no that's at least clarifying it.

Then my very last question I'll promise, is just on your operational performance and also cost cutting. So, you already mentioned that you will have to speed up cost cutting a little bit given what you've done so far on the permanent cost improvements obviously as the last we've dropped the pre-corona.

And we're in now in a different scenario. So, are you aiming to maybe make some of those temporary cost savings more permanent for 6000 to 7000 FTE reductions which we are you are aiming for in your best case scenario?

I think and you know what we actually are doing is that we of course this is clear everybody do this, we are determined to be margin or target margin for the businesses. And the businesses and we are in content is about its what has to be reached.

And we are now with every single business in the process what has to be done to get to this to the margin and what is the timeline to get to this to be margin. And of course corona is not helping in, so we have to adjust a bit and in some businesses we have a new normal, so we have potentially do more.

And at the end of the day, I can tell you I will not release a number now because it makes more sense. You have to release the number of FTEs.

It makes a sense, you have to put your attention always to the respective business here. This is important, and it's that important.

I can promise you we are aiming very much for that to be margin and we do what is necessary to get to that to be margin for every single businesses. And the question is, is the 6000 people enough.

We are looking at it and at the end of the day it might not be enough or most likely is not enough but this is I will not deliver another number today. So, this is something we will see again at the end of this calendar year.

So, in other words you basically going to cut as long as you get away one every year.

Yes.

Okay, that's very good.

And some businesses there is cutting but in some businesses it's also developing. And in some business to margin is also to go in the right product and in the right regions.

So, it's a bit of mixture but I can tell you in very much of the businesses we have will absolutely need to also cut.

Okay, thanks very much.

Thank you. Regarding Automotive Technologies, it's clearly a difficult quarter and when we look at the year-on-year comparison per intake down 38%.

You mentioned on improvements since quarter end. So, I was wondering if you could quantify those somewhat for us, so that authorize a sequential improvement what you're seeing since fiscal Q3 or where you're seeing that year-on-year trending in July and August.

And well as I -- first of all, you are hardly to understand, the line is not good I would say. If I have heard you, like you wanted to have a more let's say detailed picture where we see an uplift in Automotive Technologies is it's of course we see it's a slightly uplift from a really low level regarding our order intake and our let's say deliveries to the auto industry.

So, we see it picking up auto volumes. This is something we see here.

And this is but we are still on a low level. So, this is not something which is where we really see that we are on a pre-corona level at the moment.

No, we are far away from this. So, this is something at the moment it seems to be that our Q4 calendar.

So, Q3 or Q4 fiscal year. Q3 calendar year will be increasing a bit and most likely more better effect will come in the last quarter of the calendar year.

So, this is something we are predicting at the moment.

Okay, thank you. And my second question is on this current technology.

You mentioned revised indicative bids expected by the way, summer. Can you just remind us on the overall timeframe when perhaps firm bids or final decision could be announced?

Yes. Of course, we bid enough it out of 10 here and actually we are waiting let's say the revised bids.

So, this will be during autumn and I think this at the beginning of the next fiscal year we might have a clearer picture. But I cannot be more precise because you know M&A process are often difficult to predict.

But we in this fiscal year, we are definitely expecting the revised processes and then we will see.

Okay, thank you very much.

Yes hi, good afternoon. I hope you can hear me well.

First question is on a remark you made in your statements today. Here you said that there's still Europe results, are they kind of result of structural disadvantages.

So, I'd like to understand what you really mean by saying that, what is the kind of disadvantage of still Europe being the number or related second largest player in Europe. And what does that mean for the optionality in the kind of consolidation solution?

Yes. First of all, if we talk about structural disadvantages.

This is something which is not slowly valid first in Europe. This is something which is valid for the whole European steel industry.

And that this is at the moment we see if you look at the safeguard measures, here we do not see let's say really supporting measure, this safeguard measures. So, the safeguard measures are they are not working.

So, imports are coming in with the portion which is higher than ever before. And with prices and you all know that in China the steel industry is doing quite well.

And well China's steel industry it has an influence on the raw material prices. And the structure of disadvantage is of course if the raw material prices are high and the demand in Europe is low.

Then you have difficulties to really get the raw material prices into your sales prices. And this is the structural disadvantage we all the European competitors at the moment see.

So, therefore they have the huge effort to really work more on the safeguard measures. And this is something which is not easy the process but this is something we all European steel producers are working on this very hard.

That is that has something to do with consolidation. Well, consolidation makes sense if you are able with the consolidation to improve your cost position to be more competitive.

And this is something if you do this, you can of course take this seems better. Maybe better, if we have a good concept in the consolidation.

This is the ratio behind the structure with disadvantages.

Okay, thanks for clarification on this. And I know it's early but do you have any timeline envisaged until you want to have a better picture what can be done or what cannot be done in the European arena?

Yes, this is really difficult because I have a wish of course. The wish is that during one year we have a clearer picture.

And the aim is to have even earlier but you never know. So, this is the only thing I can say.

And I terms of the performance which hasn’t been that great in the last quarters and also relative to your peers. And would you consider to step up this 2030's right to prepare the unit for any solution.

Because maybe you can in this context help us how much of the cost savings of the first 2000 employees are coming by next year or the year after. Just to see where how quickly you're stepping up in your structured cost there.

Yes. So, the first question here it's let's say the competitive position of steel Europe against the competitors, yes you're right.

If you look at the released numbers here, if you look at least and points at the EBITDA per ton. Well, we are in the Q3 and also in the let's say previous quarters and years -- not years but quarters, we are behind our competitors.

And the reason is it's quite obvious because we missed to do restructuring and in the last two years or three years. This is something where let's say people are I was talking about this Tata joint venture and missed to do the restructuring.

This is something we have to do now. We have a concept with the peer and with this concept we are very confident that we can really close the gap.

And when do the effects come, we are starting now. They will, let's say went up next years and there will be full year than in the second year in ’21, ‘22 this is something where the effects will come up.

The question is whether there will be an uplift of this 23 to 20 strategy that we have an agreement with the co-determination to do this strategy 2030. This has something to do with the layout for 3,000 people and the investment and if we consider this as necessary we would of course first talk to the works council and the co-determination to do this before I would release something here at this place here but I would never, let's say this is impossible.

Okay. May I ask another small follow-up question?

I think you refer to your stance on this elevator stake in the elevator vehicle maybe I got that wrong. I thought in the very beginning that the purpose on taking a minority stake is that this is being done through the CTA or through the pension fund.

Is this now more that you leave it open whether doesn’t wants to maintain that stake directly or is this still just this technical transition until you have taken the formal decision on the pension funding itself?

It's more the second one. Yes.

So if we will do this decision to bring something in the CTA we will also bring this minority stake in the CTA.

Okay. That makes absolute sense and very, very final one on your remarks on the working capital.

I understood that of the €2.5 billion of structural changes in the working capital management €1.5 is the factoring and about a billion is on this year-end window dressing. Shall I, is the right view to look at this that there will be still some volatility and some swings in the working capital but not the €1 billion to €1.5 billion going forward or shall we not think about any major working capital bids and releases and bills around Q4 and Q1 going forward?

It's the one you mentioned. It’s not in that amplitude as before.

So this is the conclusion you did in the first sentence is the right one.

Okay.

So, also I mean, I’ve released the number in our year end statements is that we do this factoring volume in €2.1 billion and we reduce this to €600 million. We still do something yes and at the end of the day we do also something within let's say lower amount maybe in regard of payment or something like this but this is really not our strategy, our scenario to do this in this amount.

This is something we want to get rid of. We want to be more predictable and we want to concentrate really on constantly bringing down our networking capital.

This is to have a constantly view on this and not only with the year end driven quarter entry.

Okay. Makes absolute sense.

Thank you very much.

Hi, thanks for taking my questions. First is just to follow up on balance sheet matter itself just given the free cash flow guidance the uncertain macro economic outlook which you touched on and post elevators losing the cash -- the balance sheet starts to read lever again.

My question is how comfortable you as a midterm outlook on the balance sheet in that environment and as things stand, can you fund the strategic turnaround of the business without any asset sales? That's my first question.

If I got you right, the line is not good. The question is whether we can fund our turnaround without divesting any kind of business here to do something.

Yes, clearly yes we are able to do so. Of course we will divest businesses as we said before but this is more strategic ratio behind.

Yes, we act and this is something I have to explain, we are clearly on the transition path. Of course we now have the elevator money but what our utmost goal is to bring the businesses to performance and to reliable free cash flow, independently how much money is on the bank or something like this the businesses has to be let's say in the position to have the capability to refinance the business here.

This is something which is absolutely clear and this is we are clearly on ways and this is also a big issue to come to the to be margin and I can tell you not all businesses but most of the business do have a clear picture how to come to the [to be] margin, we have to enable them. This is something we do and we will do.

This is something we do different from the past because in the past there were not enough funds to enable all of the businesses we had. This is the reason why we concentrate on some business where we see huge potential and we will have the funds to enable these businesses to get to the [to be] margin.

Is it restructuring on the one hand this is something which we have to do in most every business but also enable business to grow in parts where we see better opportunities to grow and also better opportunities to grow into to better margins and things like that.

Okay. Thank you.

That's very clear. And second question is on short time work.

Is it possible to give a sense to what extent you'd like short-term work? I know you mentioned it specifically in the slides Steel Europe but just trying to get a sense of to what extent that will be an additional benefit in Q4 or neutral or a headwind in terms of profitability?

So actually we do short time, we do 20,000 people at the moment in Germany without elevation and 7,000 people in the rest of the world which are short-term equivalents or something like this and this is something we do also expect which will stay on also for the Q4 but these numbers will go down because we see a bit uplift in our, let's say, in our production or how you call it in our business yes. Is this helpful.

Yes. I suppose, I suppose just to dig into that a bit more in terms of fixed costs absorption, if I look on for a per ton basis, will it still be sort of a neutral effect basically will the fixed cost still just sort of run in line with the shipments that you guided?

We think that what a difficult question. So the effects on the short time work for this fiscal year we see, we started in Germany in May or something like this and we see September coming in with the €400 million - €450 million something like this.

Okay. Great.

Thank you. [Call Ended Abruptly]