thyssenkrupp AG

Hello, everyone. This is Andreas Trosch from Investor Relations.

Also on behalf of my entire team, I wish you a very warm welcome to our conference call on the 9 months results '24-'25 of thyssenkrupp. With me in the room are: our CEO, Miguel Lopez; and our CFO, Axel Hamann, plus my colleagues from the Investor Relations team.

I have some housekeeping before I hand over to the CEO and CFO for their presentations. All the documents for this call are available in the IR section on the website.

The call will be recorded, and a replay will be available shortly after the call. After the presentation, there will be the usual Q&A session for analysts.

[Operator Instructions] And with that, I would like to hand over to our CEO, Miguel Lopez.

Thank you, Andreas, and good morning, everyone. Welcome to our Q3 Conference Call, the first time today with our new CFO, Axel Hamann, who will introduce himself in a couple of minutes.

Let's dive straight into the management summary for quarter 3, '24-'25. As usual, first, I will provide you with an overview of our latest achievements with regard to our strategic initiatives in the third quarter, followed by Axel, who will present to you the financials in detail.

Let's start with the first item, portfolio. You all know that we are working on shaping the future of thyssenkrupp as a strategic holding company with independently managed business segments.

The future independence of our current segments will increase their entrepreneurial flexibility, strengthen their investment plans and earnings responsibility and improve transparency for investors. Ultimately, our goal is to unlock and crystallize value for our shareholders.

A key milestone of that transformation, the spin-off of Marine Systems is progressing exactly as planned, and we are fully on track for the listing in calendar year 2025. I will give you more details in a minute.

Regarding Steel Europe, I'm pleased to share that we have reached consensus this July on the collective restructuring agreement. This is a major step in preparing the segment for future resilience.

And at Automotive Technology, we will realign the segment into 4 business units to sharpen our capital market readiness and accelerate growth. And now on to performance.

Despite ongoing market headwinds, Q3 delivered solid results with notable quarter-on-quarter improvements. We had to adjust our top line guidance to reflect the tougher environment, as you can see in our lowered sales assumptions.

As a consequence, we specified our EBIT adjusted guidance to the lower end of the original range. But -- and maybe this is the most important message, we confirm the guidance for free cash flow before M&A.

This will mark the third consecutive year of delivering positive free cash flow before M&A, a strong testament to our operational discipline. We are executing necessary restructuring measures effectively with positive effects already visible.

A standout achievement. Marine Systems achieved another record order backlog, thanks to major submarine orders from Singapore and a service contract with Germany to modernize 6 submarines.

And last but not least, I will give you some examples and proof points for our efforts to prepare thyssenkrupp for the future, green transformation. The partnership between Uhde and Uniper represents a pivotal step toward industrial scale hydrogen production from imported ammonia.

Moreover, at Steel Europe, we are committed to and remain on track with the DRI plant construction in Duisburg. The progress is becoming more and more visible at site.

Last but not least, we are proud to have received approval from the science-based targets initiative for our updated climate goals, reinforcing our commitment to responsible and forward-looking leadership. Turning to the Marine Systems spin-off.

We are happy and thankful to report strong shareholder support for the envisaged capital market listing. What is coming next is our Capital Markets Day, followed by the listing on the prime standard on the Deutsche Borse Stock Exchange in Frankfurt later this calendar year.

The spin-off will be structured as a minority spin. thyssenkrupp AG will keep 51%.

Therefore, Marine Systems will remain a fully consolidated entity in our financials. For existing thyssenkrupp shareholders, the allocation ratio will be 1 TKMS share for every 20 TK AG shares held.

This structure allows TK AG shareholders to benefit directly from TKMS growth trajectory and long-term value creation. And now Axel, please go ahead with your financial section.

Thank you, Miguel, and good morning, everyone. After having joined the team in -- on May 1, I'm now happy to provide some color on the Q3 results for our fiscal year 2024-2025.

What you're going to see is the usual format, highlights and challenges. So let me start with the highlights from the third quarter '24-'25.

Miguel already mentioned the group guidance. We have only specified our EBIT adjusted guidance within the previous range, and we'll get to that in a bit into more detail.

However, really important, one of our core KPIs, we are confirming our guidance for free cash flow before M&A. Our known APEX 2.0 program is helping us to increase and maintain the underlying business resilience.

And therefore, we see an increase in EBIT adjusted, despite 9% sales drop year-over-year. That is an indication for our ambitions, efforts and for our resilience.

We do also report a workforce reduction. We are 4,200 FTEs down year-to-date and only 600 of the 4,200 is portfolio-driven, so you see a decent chunk of FTE reduction with regard to restructurings.

We do have an ongoing strong balance sheet, EUR 3.7 billion net cash and on top comes EUR 1.1 billion available revolving credit facilities. Let me continue with our challenges, and Miguel you've mentioned, there are some weak demand as well as some overwhelming macro uncertainties across most our customer groups.

And these are in specific automotive, construction, machinery, and that is why there's a reason for a more cautious top line assumptions, and we'll get to the guidance at the end of the presentation. We do have some lack of clarity on the tariff development during the reporting period that also gives some uncertainty to our customers and the implications are to be closely monitored.

It's important to understand that those tariff developments are of a more indirect impact on our business and not so much direct impact as we are having a local-to-local business in the U.S., and we do not import much of steel into the U.S. Last but not least, cash flow volatility.

You're aware that our cash flow profile is somewhat geared towards the end of the financial year, and that's something we are currently experiencing in the third quarter. Let me continue with the overview on our core KPIs, financial overview.

[ Header is ] sound performance in ongoing challenging markets, and it's a mixed picture. So quarter 3, we are 9% down in terms of sales year-over-year.

First 3 quarters versus year-over-year, 6% down. EBIT adjusted, as mentioned, on a year-over-year from a quarter point of view, third quarter, we are EUR 7 million above the quarter 3 in 2023 and '24.

9 months, slightly below the previous year's time frame with EUR 365 million, and we get to our EBIT adjusted guidance at the end of the presentation, and we will provide you some comfort how to end up within the range of EUR 600 million to EUR 1 billion. Let me continue with net income.

Net income for the quarter is minus EUR 255 compared to minus EUR 227 million -- compared to minus EUR 222 million compared to last quarter. What is important to realize here that includes the devaluation of deferred tax assets resulting from the preparation of our TKMS spin-off.

And as a quick explanation, that's more or less EUR 150 million. We had to terminate the profit and loss transfer agreement with TKMS in light of the upcoming listing and the termination of the profit and loss transfer agreement is ending the tax consolidation.

And therefore, in future, we will not be able to net our carry loss forward, and that is an impact on net income in the amount of circa EUR 150 million. In addition to that, it's an impairment at steel, around about EUR 100 million, and we do also see some restructuring provisions in automotive that is a 2-digit million-euro figure.

Let me continue with free cash flow before M&A. In Q3, minus EUR 227 million.

It's EUR 28 million better than Q3 of '23-'24. From a year-to-date perspective, we are at EUR 817 million negative.

You're well aware that our cash profile is geared towards the end of the financial year. Therefore, we still expect a positive free cash flow, but more details to come at the guidance part.

Balance sheet highlights, still, as mentioned, net cash, EUR 3.7 billion. Pensions slightly down due to increased discount rates, and we're still having a very comfortable equity ratio of 34.9%.

Let's turn the page and continue with Sales and EBIT adjusted development. I will only highlight a few effects with, let's say, major impact on the bridges.

Again, sales from a quarter perspective, down from EUR 9 billion in Q3 '23-'24 to EUR 8.2 billion in Q3 '24-'25. That's more or less EUR 800 million down.

The major, let's say, reasons are in our Steel business with around about EUR 400 million decrease followed by the Materials business, EUR 300 million; and Automotive, EUR 0.1 billion -- EUR 100 million. And for both Steel and MX, it's mainly price and volume.

For Auto, it's more or less demand driven and not so much price. The -- let's continue with the EBIT adjusted bridge for the third quarter.

Here, you see the development from EUR 149 million to EUR 155 million, slight increase for this year's quarter. You see Decarbon Technologies, where we are benefiting from a [ EUR 101 million -- EUR 100 million ] increase.

That's basically driven by a prior year negative onetime effect, and we've given some transparency on the EUR 80 million effect in our past calls. For Steel, it's a top line development plus some underutilization.

That's why you see the almost EUR 70 million negative development from an EBIT adjusted point of view. So the EBIT, the EBIT adjusted, it's decreased despite lower sales.

And again, it's an indication from our point of view for an improved resilience; and therefore, also includes some contributions from our ongoing efficiency program, APEX 2.0. Let's move to the segments and start with Automotive Technology.

There, we see some solid earnings in an ongoing challenging market environment. Sales are from a quality perspective, down by 7%.

Year-to-date, 9 months, minus 8% I've mentioned the persistent soft demand and some challenging market environments. However, although we do report a decrease year-over-year, we have Q3 versus Q2 stable, supported by some higher sales at Bilstein and Forged Technologies.

EBIT adjusted for Auto quarter-over-quarter, EUR 16 million down due to the reduced sales. On a year-to-date basis, EUR 174 million to EUR 98 million.

That means a EUR 77 million decrease. Again, lower volumes and a negative onetime effect outweigh the decline in our personnel expenses.

And we've already announced and we are running a restructuring program of around about EUR 100 million savings. And very recently, we announced another transformation and those -- that impact will come on top.

So bottom line restructuring and extended cost-cutting initiatives are on track at Automotive. Correspondingly, business cash flow down from a quarterly basis, EUR 44 million, EUR 81 million to EUR 37 million.

And on a year-to-date basis, minus EUR 297 million, down to minus EUR 182 million. And you will see here the impact from restructuring cash outs and also the earnings decline versus some lower invest that we have counter-steered starting over the past months.

Let's continue with Decarbon Technologies. There, we do see a step-up in earnings despite a hesitant market environment.

And so from a sales perspective, we do see a 10% decline. However, very important to note organically, so if you would not consider the sale of TK Industries India last year, we would see 2% sales increase for the first 9 months of the year '24-'25.

EBIT adjusted, important to note, almost all businesses with an increased contribution. Nucera has reported earnings a couple of days ago.

We would consider them as stable. And we do see some -- at Polysius, we do see some -- a periodic higher cost versus prior year.

APEX measures are in full swing at Decarbon Technologies and support with restructuring efficiency gains and some purchase optimization. Let me end Decarbon with business cash flow.

Here, we do see some impact by a temporary negative cash profile in the Project business. We do have some projects where we are at a stage where usually the cash-in is a little bit lower than at the start of the project.

And the year-to-date development more or less follows the EBIT adjusted, compensated by some higher investments. Material Services, sales down by 10% for the third quarter from a year-to-date perspective, 6%, EUR 9 billion (sic) [ EUR 9.2 billion ] to EUR 8.6 billion.

As mentioned, we do lower price levels in key product groups and a pretty weak demand across Europe. However, we do see some slight growth at our distribution business in North America.

Our shipments are down year-over-year, and that is mainly impacted by our direct-to-customer business. Let me continue with EBIT adjusted.

EBIT adjusted is down corresponding to our sales decrease by EUR 30 million in the third quarter. From a year-to-date perspective, it's minus EUR 71 million.

However, all business units are profitable, Supply Chain Solutions business with the highest earnings contributions amongst the business units. Despite the top line decrease, we do -- a sequential quarterly increase year-to-date.

We have -- compared to -- comparable to Decarbon, we do have continued support by our APEX measures. For example, we are still in the midst of restructuring in Germany.

That gets me to the business cash flow for Materials. From a quarterly perspective, following our sales decline, we have a decrease of minus EUR 96 million.

From a 9-month perspective, we have a decrease to minus EUR 311 million. That is due to the net working capital increase, which is a decrease of payables and an earnings decline.

And again, particularly for MX, you will see a cash flow profile that is geared towards the end of the fiscal year. So you can expect different numbers towards the end, towards September 2025.

Let me continue with Steel. Steel Europe, persistently weak demand and lower price levels weigh on our performance.

We do have a sales decline for the third quarter of 13% year-to-date, minus 11%. We do see market headwinds from lower price levels and also ongoing soft demand, and that is due also to the industry dynamics I've mentioned at the beginning of the presentation.

Shipments are down by 8% year-over-year and what particularly burns us is the Automotive and Industrial businesses. We do see some better development at Packaging Steel.

This leads me to the EBIT adjustment, EBIT adjusted of Steel. There for the third quarter, we report a decrease from EUR 100 million in the previous year to EUR 31 million in the third quarter '24-'25.

Year-to-date, it decreased by minus EUR 61 million from EUR 238 million to EUR 177 million. We do see a top line -- that is due to the top line development, as mentioned.

We have also some underutilization of plants as we are currently, let's say, having some conversion shutdowns, particularly in May and June. This is to be improved over the remainder of the quarter.

We do see some positive effects, though, from some favorable raw material prices, and as with the other 2 business segments, we do see the impact from APEX measures. Coming to business cash flow for Steel, we do have an increase in business cash flow from minus EUR 197 million to EUR 127 million.

Year-to-date, we are still negative at EUR 350 million due to the net working capital release and some lower investments versus the earnings decline. You will also see what we're going to guide for the rest of the year.

We have -- we are applying some strict capital discipline, and that is why we have reduced capital investments, not only in Steel, but also across other segments. Let me now continue with Marine Systems.

Marine Systems is displaying a record order backlog, and it is paving its way not only for future growth, but also hopefully paving its way to the listing until the end of the calendar year 2025. So let me report on sales of Marine Systems from a quarterly perspective, up 14%, EUR 438 million to EUR 500 million.

Year-to-date, we are up in sales by 14%, 1-4 -- with now EUR 1.6 billion for the first 9 months '24-'25. We do see a very nice progress in execution of new projects, both in Service and Marine Electronics.

We are enjoying a record order backlog of EUR 18.5 billion, and we have just recently reported a new order for 2 submarines from Singapore. And we're also very happy to report the largest service contract ever for 6 submarines from Germany.

EBIT adjusted, that's important to explain, and I'll get to that in a few seconds. Third quarter down by EUR 7 million from EUR 30 million to EUR 23 million.

Year-to-date, EUR 72 million to EUR 85 million. Despite the progress in project execution and service, we here have a negative onetime effect, and we'll get to a bit more detail during the part for our guidance for the remainder of the year.

It's basically the application of IFRS 15. It's clarifying the allocation of contractual obligations for long-term orders.

It's a so-called serious guidance. So we kind of -- IFRS 15 kind of flattens the EBIT.

If you have, for example, 4 submarines in a row in the past, there was a different profile for EBIT adjusted. This is going to be flattened, and that's why you see the onetime effect.

But from an operational point of view, nothing has changed, and we'll get to that at the end of the presentation when it comes to our guidance for the Marine segment. Business cash flow for Marine Systems is down by EUR 126 million for the quarter to EUR 160 million.

It's still up for the first 9 months of the year to EUR 582 million. And the decrease is mainly due to project-related cash outs.

Let me now get to the bridge for the third quarter from EBIT adjusted to net income. Again, I will highlight only the major effects here.

We're starting at EUR 155 million EBIT adjusted and the deduction of the special items. Here, as mentioned, around about EUR 100 million for the impairment at Steel comparable to the previous quarter.

And we also do see some restructuring expenses at Auto at the amount of almost EUR 70 million. Let me also highlight the tax column at the right of the chart.

That is, again, as mentioned, the devaluation of the deferred tax assets resulting from the TKMS spin-off. As explained, we had to terminate the profit and loss transfer agreement, and therefore, we will not be able to net losses on a group level with the segment's EBIT in future.

And that is hitting the net income by more or less EUR 150 million and gets us to minus EUR 255 million. Net income, it's important to keep in mind that's some specific onetime effect.

Continuing with the bridge on the next page, net income to free cash flow before M&A. Major chunk are here some negative net working capital effect.

Obviously, we're also adding back the positive noncash items, depreciation and amortization and again, the -- more or less EUR 150 million of deferred taxes. The EUR 260 million cash flow invest, around about 50% of the EUR 260 million relate to Steel Europe.

And a major part of that is also our DRI power plant at Steel, which gets us in the end at minus EUR 227 million free cash flow before M&A. Important to keep in mind, we'll spend some few, let's say, some further comments on the guidance towards the end of the year.

Now on the next page. So this is here the overview for our updated fiscal year 2024-2025 outlook.

Let me start with sales. We are now expecting for the fiscal year '24-'25, minus 7% to minus 5%.

Previously, we've guided minus 3% to 0%. That is due to the headwinds we're experiencing in our main markets.

EBIT adjusted already mentioned, we are now guiding at the lower end of our previously guided range of EUR 600 million to EUR 1 billion. Free cash flow before M&A on a group level, unchanged, EUR 0 million to EUR 300 million and where -- we're comfortable to reach that until the end of the year.

Let's now switch from the group level to the segment level. Auto -- Automotive Technology sales, new guidance is minus 7% to minus 5%, previously minus 4% to 0%.

The EBIT adjusted is now expected to come in at the lower end of our guidance of EUR 200 million to EUR 300 million. Decarbon Technology, we do expect for the fiscal year 2025, a sales development of minus 9% to minus 5%.

Again, I've mentioned the impact from our sale of TK Industries in India. If you would consider that and net that out, we would be almost flat for fiscal year 2004-'25 (sic) [ 2024-'25.

] Continuing with Materials Services, also experiencing some headwinds in its core markets, also particularly in Europe. New guidance range is minus 6% to minus 3% for sales, previously minus 2% to 1% and EBIT adjusted is now EUR 100 million to EUR 150 million, previously EUR 150 million to EUR 250 million.

Steel, minus 10% to 8% -- minus 8% in terms of sales, also lowered guidance from previously minus 6% to minus 3%. Important to note, EBIT adjusted still at EUR 250 million to EUR 500 million.

Now very important, the guidance for Marine Systems. I've mentioned the application of IFRS 15 already.

And with the application of IFRS 15, we do expect sales of minus 2% to 1%, previously 3% to 6%. What's really important is from a segment view, Marine Systems itself, nothing has changed in terms of operational performance.

And if you will take a look at the listing perspectives and the combined financial statements, you will see the consistent application of IFRS 15 will lead to the previously guided sales growth of 3% to 6%. EBIT adjusted for Marine, still EUR 100 million to EUR 150 million.

So with that, in summary, we're experiencing some headwinds with regard to sales, but are really applying efforts and are keeping our guidance at the lower range for our adjusted EBIT. We are confident that we are still going to achieve the positive free cash flow before M&A.

And with that message, I hand over back to you, Miguel.

Thank you, Axel. Before we close, I would like to share a few reflections.

This chart looks very familiar to you and is basically unchanged. Let me shine a light on some key achievements from our strategic agenda.

We are just about to finalize the business plan for Steel Europe on the back of the recently reached consensus on the collective restructuring agreement. I know many of you are eager for financial details.

Once everything is finalized, we will have more information. And as already mentioned, we pushed ahead with the minority spin-off of the Marine business in calendar year 2025.

And this might serve as a blueprint for strategic steps ahead, such as the stand-alone options for the remaining segments to reach our vision of a strategic holding company. Additionally, leveraging opportunities from the green transformation and making necessary restructuring investments will be crucial for positioning thyssenkrupp for future success.

And with that, we wrap up today's presentation. Andreas, over to you.

Thank you very much for your presentation. We are now coming to the Q&A session.

[Operator Instructions] And now we're coming to the question of the first analyst, which is Boris Bourdet.

I have 2. The first one is on the EBIT guidance.

So the group achieved an EBIT of EUR 155 million in Q3. When we're looking at last year, the Q4 EBIT was pretty the same as Q3.

So the implied number for Q4 to achieve your guidance this year is EUR 235 million in Q4. So can you share the bridge here to -- what will be the drivers to improve the performance from EUR 155 million to EUR 235 million?

That's the first question. And the second, it's obviously on Steel Europe.

So I would be curious to know what will be the next steps now that consensus has been reached? What are the next milestones to reach?

And what would be the contribution of this consensus agreement on restructuring in terms of cost cutting?

Okay, Dominic, (sic) [ Boris ] thank you. Let me provide some color on our way to go until the end of the year.

You've mentioned the EBIT guidance. And you're right, there's still EUR 235 million to go.

And we do feel confident backed by a couple of aspects. First of all, I've mentioned the reduction of around about 4,200 employees year-to-date.

That will have an effect on the remainder of the year. We're still pushing hard.

Our efficiency program, APEX. We will see some positive effects also from Automotive.

We are talking here about claims management until the end of the fiscal year. And last but not least, very importantly, we do, let's say, anticipate also some personnel cost improvements at Steel.

So we have some flexibility to also, let's say, reduce one or the other provision that has been part of the most recent negotiations. So overall, it's still some way to go, but we do believe and we are confident that we're going to make the EUR 235 million to go.

And with that, over to Miguel, maybe you want to provide some color on the current situation at Steel.

Yes. Thank you for the question, Boris.

I believe it's, first of all, to say it's a big milestone that we could achieve here with this agreement. And you know the raw data that will now kick in, in the next years, which is the number of job cuts and the number of outsourcing amounting overall to 11,000 in total over the next years.

I think the next steps here to go, there are basically 2 things that we're going to do. First, from a union perspective, they will -- they are asking their members for approval, and this process is ongoing.

And there's a second very important thing is how to secure the financing overall. And we are also working on that, and this will be clear in the next couple of months so that everything can be executed as planned.

Around the cost contribution overall, I would be taking this to the next quarter in order to make sure that everything is then really already planned for the subsequent years. So give us a little bit more of time to be more precise on this one.

Okay. And just as a follow-up on that, how would you describe the discussions at the moment with Daniel Kretinsky?

Well, we are in a very good relationship. He is a 20% shareholder.

And we are getting now more and more certainty around the elements that we need to have in order to continue with our 50/50 discussions.

And the next in line is Tom Zhang from Barclays Capital.

Two for me as well, please. First one, just following up on the guidance in Steel Europe.

There's a very wide range, right, that you've kept the EUR 250 million to EUR 500 million on EBIT. Could you just talk us through what assumptions you might have to hit the bottom or the top end of that guidance and basically why that range wasn't narrowed?

And maybe you can, if possible, clarify just how many provisions are currently built in for those negotiations that you mentioned we might get some provision release. Maybe any color there?

And then the second question, just around Marine Systems. So you mentioned around IFRS 15 clarifying the allocation of contractual obligations.

Could you just let us know, one, are these linked to some of the recent contracts you booked this year? Or are they from older contracts?

And could you also just clarify that there's no actual change to your obligations. This is purely a sort of timing of revenue recognition issue.

There's no actual change in your -- what the project actually entails?

Thank you, Tom. You've mentioned the guidance around Steel.

And as mentioned, it's difficult to provide you with the bridge, but I've mentioned the provision that we may consider to release. And maybe you would expect something between EUR 50 million and EUR 100 million.

But this is, let's say, the ongoing assumption. And can you clarify your second question again?

So it was just the IFRS 15 adjustment that you made, could you just clarify, it's a purely timing of revenue recognition or is an accounting thing. There's no actual change to your obligations because when it says clarifying the contractual obligations, just wondering if there's something that's actually different with the project or it's a pure accounting issue?

It's a pure accounting issue. And thanks for asking the question, Tom.

It's more or less flattening the pattern, but from a pure amount, there are no changes. It's -- as you said, it's a pure accounting technique.

And unfortunately, we had to correct it in our TK AG reporting, but what you're going to see at the segment at the listing perspective will be, let's say, very much known to you because we're going to repeat the guidance of 3% to 6%. So bottom line, it's only an accounting impact.

Okay. That's clear.

And then maybe if I could just follow up just on the Steel segment. So I see there's this EUR 550 million (sic) [ EUR 50 million ] to EUR 100 million provision release, but I guess the EUR 500 million full year number at the top end would be over EUR 300 million EBIT in Q4.

I mean, are there any other levers that we're missing that means that might actually be possible? Or do you think towards the middle or the lower end of the Steel Europe guidance is reasonable?

Yes, I think the range kind of reflects the volatility we are seeing also until the end of the year. And that's why we need the remaining 2 months in order, let's say, to have the final result.

And I ask for your understanding that we cannot provide more color at this point in time.

And the next in line is Jason Fairclough from Bank of America.

Congrats, I guess, on getting Marine Systems over the line. It's nice to see some progress on some of these levers.

Just thinking about some of the other levers you can pull, buttons you can push. You've got this Elevator stake.

And then I guess I'm also thinking a bit about Material Services. So for the Elevator stake, could you just remind us what are you carrying that at on the balance sheet today?

And how do you think about how that compares to the recent transaction that we saw in that business? So that's the first question.

Thank you, Jason. And so you've mentioned the TKE stake.

And as you've probably seen, we saw a transaction at the end of July closed by Alat. And we've also mentioned in our interim report that we are considering to provide some more transparency on the actual value of the TKE stake.

So that's most likely to crystallize until the end of the fiscal year.

So -- and the carrying value today?

Could be more or less EUR 1.1 billion.

But -- and there's no sort of need or accounting requirement to sort of write that to a more appropriate value at the moment?

What could happen? We may see an appreciation until the end of the year.

It's kind of indicated in the interim report, and you may very well see the appreciation of that stake.

Okay. Look, my second question is on another business that we've spoken about before, which is Material Services.

Last I checked, this business had capital employed of north of EUR 3 billion. I don't know how much that's changed lately.

And really not much business cash flow at all. There was a news story earlier this year that suggested that you were considering your options here.

As you progress with the other levers, as you progress Marine, as you progress Elevators, as you progress Steel, is it time to start taking a harder look at Material Services?

Thank you, Jason. Of course, we are developing in detail the concept for what we want to achieve in the long term, which is the strategic holding.

And obviously, we are also looking to the Material Service businesses as we are also looking to the other businesses, how to get them to play a significant role in the long run being participations in this strategic holding. So planning is ongoing here.

And so we will certainly see at the moment in time that we consider to be ready then also to communicate the next steps here, but we are looking at it.

Could you just remind us the capital employed in this business these days? Is it still -- is it still over EUR 3 billion?

And do you think this business achieves the cost of capital?

Yes. Well, I can provide you with a number for the net working capital, not with the capital employed.

The net working capital is currently at EUR 2.5 billion. And capital employed is most likely a bit higher.

Okay. And do you think it achieves a return in excess of its cost of capital?

Well, that is debatable. But our ambition is certainly to achieve that in the future.

As Miguel said, we would consider next steps once the -- any segment would be capital market ready. And let's say, earning cost of capital may be one element of being capital market ready.

And the next in line is Bastian Synagowitz from Deutsche Bank.

My first one is starting off on Decarbonization Technologies. And I guess when we look at your performance, it has obviously improved a lot versus the last couple of years.

But then at least when we look at your book-to-bill ratio, it's been just at 0.7x this year, which does suggest some contraction into next year. So could you maybe just briefly update us on what the various trends are there in the businesses which are being casted into that division?

And then also whether you see any improvement or indication of improvement in your order pipeline? Or whether you think you have to step up the restructuring in that business to basically counter the top line trend?

That's my first question.

Thank you, Bastian. Well, we can see that over the last 2 years, you remember, we started with Decarbon Technologies.

We formed it after me starting to be the CEO of TK AG. And at the time, the growth rates indicated for the green molecules business specifically were super, super positive and the growth rates were double digits at the time projected into the future.

Right now, so over the last 24 months, we have seen because of known uncertainties, the interest rates developing as they did, but also regulations missing in different parts of the world, we have seen that many FIDs were not simply done. Nevertheless -- and that was the reason for then book-to-bill ratio being as it is today.

Nevertheless, if we look to the project pipelines, the project pipelines are very full so that from a perspective of further driving the green transformation in different parts of the world, we need to expect that at a certain point in time, I would think in the next 2 years, we will see growth again here for sure. This is true for what we are doing around hydrogen and green hydrogen.

This is true for what we are doing in the other green molecules like ammonia or e-fuels or e-methanol. And this is also true for our Wind business.

A significant part of [ Rothe Erde ] is Wind business, and we are also seeing there the first signs of improvements, specifically in China. So overall, I think it's a temporary development.

We will see growth rates -- important growth rates in the next years to come.

Okay. Sounds good.

That does sound very confident, which is good to hear. And then my second question is coming back on your guidance, which obviously implies quite a significant improvement in the fourth quarter, pretty much against most market trends, I guess, which you're seeing in the Materials business, maybe also in terms of general market seasonality.

And you mentioned obviously a lot of that is cost cutting driven. You mentioned some other effects.

Can I just clarify, I didn't catch that probably. The provision release in Steel you're expecting in the fourth quarter, is that in the magnitude of EUR 50 million to EUR 100 million?

Did I capture that correctly?

That's correct, Bastian. EUR 50 million to EUR 100 million.

It's personnel expenses, and that's something we will utilize to bolster the remainder of the year. It's one of the levers.

And I've mentioned a couple of other levers, strong fourth quarter at Auto, some claims management the ongoing positive or the increasing -- the positive effects from the FTE reduction [ ETC. ] But to your question, it's the EUR 50 million to EUR 100 million.

Understood. And the claims management you mentioned in Autos, is that like a year of the end exercise event?

And could you also quantify that by any chance?

Yes. It's -- I can confirm that is a typical pattern of the business towards the end of the year, settling some ongoing claims on demand and volumes.

However, I cannot quantify it.

Okay. Understood.

Okay. Great.

And then maybe moving over to the Steel business. Just on -- I guess, on the restructuring process, so did I understand correctly that you will provide us with an update on the restructuring provisions in the fourth quarter.

So those will be booked in Q4? Or may those be actually shifted into the first fiscal year quarter of the next year?

Bastian, the latter could very well be. So as of now, we do expect a 3-digit million-euro number.

But at this point in time, we would not expect to book it still in this fiscal year.

Okay. Very, very clear.

And then maybe moving over to the other aspects of your plans. So you've not yet determined the business plan.

And I guess that means you should also have generally pretty good visibility on the starting balance sheet, which is required for the business as it's being separated, and hence, the amount of cash you will be putting in there to facilitate the separation. Could you maybe give us at least an early update or broad guidance on where that number could be?

Is there maybe at least a floor you could guide us towards, which people should be expecting, also I guess, for the capital markets, it's obviously an important number to keep in mind.

Thanks, Bastian. It's difficult to quantify, but I guess we can confirm that in whatever shape and whatever form the business is going to operate, it will have the required liquidity.

Okay. Okay.

Fair enough. But is that a number which you will be able to share with us as well by the year-end?

Unfortunately, I would not expect it to be ready at the end of the year. As soon as we have it, we're going to share it.

If you ask me now, probably not until the end of the year.

Okay. Okay.

Got you. And then just maybe taking even a step higher.

So I guess on the big picture strategic future of the business. So you clearly stated that you're still aiming for a separation and I guess, that 50/50 JV structure with EPCG.

Now I guess, at least when we look at the policy side, there's a possible scenario out there where the EU may obviously do something in the next couple of months, which could be very supportive to the Steel sector. And I guess that will be moving, I guess, the NPV and value of the business quite considerably.

And so depending on the outcome there, is there a chance that you may ultimately be ending up retaining the Steel business? And also similar to the put option, which is held by EPCG, do you actually also have a call option, which would allow you to claim back 100% if you wanted to?

Well, Bastian, of course, the considerations on what will policymakers do is one of the elements that we are, of course, working on. We are talking to Brussels.

We are talking to Germany in -- or to Berlin in this case in order to get them to understand what we consider the important things that we need to establish in terms of tariffs or in terms of import regulations. We are -- you know that we have been always very clear on that we are not happy with the current shape of CBAM and the like.

So this is something that is indeed one of the very significant elements in order to also get the business plan in shape. And we need to further work on those topics with Brussels and Berlin and then get certainty.

And then we will see. So you will certainly hear as soon as this -- regulations are established, you will hear about it, and then we can talk also about the impact on our end.

Okay. Okay.

Got you. But I would say like depending on the outcome, and that could be at least in theory, very positive as well for the Steel business.

Is there a scenario where you may just say, well, in this environment and with that new framework, you basically feel more comfortable to be retaining a majority?

I would not see any reason right now for changing our way that we defined. And so I would keep it there.

Thank you, Bastian, I just want to move on to the others so that they have a chance as well. So next question comes from Alain Gabriel.

I just have one, which is on the restructuring costs. I appreciate you're still working out the details for Steel Europe.

However, for the rest of the business, can you give us some color on the cash restructuring and transaction costs that you are budgeting for Q4, and then for fiscal '26? I would say, mostly relating to APEX, the Marine Systems transaction costs and any other material costs that you are budgeting for the business?

Thanks, Alain. First of all, with regard to Steel, we've touched upon the, let's say, the finalized negotiations.

We've also talked about the provision that is most likely to be built next year. And what we've already indicated is that provision is going to be in the ballpark of around about 3-digit million-euro.

So that is Steel. There is also a new transformation for Auto, where we have not yet finalized our quantifications on possible, let's say, provisions.

But I can give you a number for the year '24-'25. We would expect restructuring cash out in the amount of around about EUR 250 million.

So this year, EUR 250 million. Next year, possible provisions for Steel in the amount of a 3-digit million number, plus potentially upon further, let's say, confirmation and then quantification, additional restructuring cash out with Auto due to the most recent announced transformation into 4 business units, [ ETC.

] I hope that answers your question.

And for the transaction cost for Marine Systems, any guidance you can give there? And for the other businesses, is there any other restructuring going on for everything else that you haven't really touched on?

Yes. For Marine, ballpark number, I'd say, EUR 50 million to EUR 100 million.

And let's check back and then maybe we're going to provide you in the aftermath. But from the top of my head, separation of the segment, EUR 50 million to EUR 100 million.

Thank you very much, Alain. And now the final question for today coming from Christian Obst of Baader Bank.

Just one left. It's concerning the FX impact you have on your top line and your EBIT line so far and what you expect for the entire year, maybe a little bit more specific when it comes to Rasselstein packaging steel, the export in the U.S., how much of the share are you exporting in the U.S.?

And is that at risk currently?

Sure. Thanks, Christian.

First of all, FX currency impact from the top of my mind, around about EUR 300 million decrease in light of the U.S. dollar development, and that's a major chunk.

That's more than EUR 100 million, somewhere between EUR 100 million and EUR 125 million; then the renminbi; and last but not least, the Brazilian real, that is more or less the impact from FX. So it is a considerable amount, but not really changing the overall picture.

With regard to Rasselstein and import or exports into the U.S., it's a small amount of the business. So overall, we are -- although we are experiencing the indirect effects, we are not, let's say, burdened by too much direct tariffs as the amount or the share of steel we are exporting to the U.S.

is rather limited. On the exact amount of Rasselstein, I would need to look that up.

Maybe we'll get back to you in the aftermath. I hope that is okay for you.

The EUR 300 million, this is a top line impact, right? And what is on the EBIT?

The impact on the operating EBIT?

The impact, I mean, it's probably on EBIT is way below EUR 50 million for the entire year.

Thanks, Christian. And with that, we are concluding the Q&A session for today.

Thank you very much. Have a great day, everyone, and speak soon.

Thanks, everyone for dialing in.

Thank you. Bye-bye.