Annual Report 2014 / 2015 C2 thyssenkrupp annual report 2014/2015 thyssenkrupp in figures thyssenkrupp in figures thyssenkrupp in figures 1) Full Group Continuing operations 2013/2014 2014/2015 Change in % 2013/2014 2014/2015 Change in % Order intake million € 41,376 41,318 (58) 0 41,376 41,318 (58) 0 Net sales million € 41,212 42,778 1,566 4 41,212 42,778 1,566 4 EBITDA million € 2,330 2,445 115 5 2,145 2,456 311 14 EBIT 2) million € 1,145 1,050 (95) (8) 959 1,061 102 11 EBIT margin 2) % 2.8 2.5 (0.3) — 2.3 2.5 0.2 — Adjusted EBIT 2) million € 1,329 1,676 347 26 1,329 1,676 347 26 Adjusted EBIT margin 2) % 3.2 3.9 0.7 — 3.2 3.9 0.7 — EBT million € 429 485 56 13 243 496 253 104 Net income/(loss) / Income/(loss) (net of tax) million € 195 268 73 37 9 279 270 ++ attributable to thyssenkrupp AG's shareholders million € 212 309 97 46 26 320 294 ++ Basic earnings per share € 0.38 0.55 0.17 45 0.05 0.57 0.52 ++ Operating cashflow million € 903 1,300 397 44 903 1,311 408 45 Cashflow for investments million € (1,260) (1,235) 25 2 (1,260) (1,235) 25 2 Free cashflow before divestments million € (357) 65 422 ++ (357) 76 433 ++ Cashflow from divestments million € 1,054 597 (457) (43) 1,054 597 (457) (43) Free cashflow million € 697 662 (35) (5) 697 673 (24) (3) Net financial debt (September 30) million € 3,677 3,414 (263) (7) Total equity (September 30) million € 3,199 3,307 108 3 Gearing (September 30) % 114.9 103.2 (11.7) — ROCE % 7.2 6.5 (0.7) — thyssenkrupp Value Added million € (282) (399) (117) (41) Dividend per share € 0.11 0.15 3) — — Dividend payout million € 62 85 3) — — Employees (September 30) 162,372 154,906 (7,466) (5) 1) Prior-year figures have been adjusted due to the adoption of IFRS 11 (cf. Note 01). 2) Prior-year figures have been adjusted due to the definition change from fiscal 2014/2015 (cf. section "Fundamental information about the Group", subsection "Management of the Group"). 3) Proposal to the Anual General Meeting Following the disposal of the discontinued operation Stainless Global at the end of the 1st quarter 2012/2013 as a result of the combination with the Finnish company Outokumpu Oyj (OTK), income and expenses were recorded which are directly related to this and represent the discontinued operations. The 29.9% financial interest in Outokumpu obtained as part of the transaction was accounted for by the equity method until the announcement of its sale on November 29, 2013 and its equity method income was not included in EBIT due to its non-operating nature. The sale was closed on February 28, 2014. Contents C2 thyssenkrupp in figures 02 Letter to shareholders 06 To our shareholders 33 Combined management report 07 Executive Board 34 Preliminary remarks 09 Supervisory Board 35 Fundamental information about the Group 11 Report by the Supervisory Board 44 Report on the economic position 17 Obituary 81 Compliance 18 Corporate governance report 83 Employees 31 thyssenkrupp stock 86 Technology and innovations 90 Environment, climate and energy 92 Purchasing 94 Subsequent events 95 Forecast, opportunity and risk report 116 Legal information 126 Consolidated financial statements 225 Additional information 127 Consolidated statement of financial position 226 Multi-year overview 128 Consolidated statement of income 228 Other directorships held by Executive Board members 129 Consolidated statement of comprehensive income 229 Other directorships held by Supervisory Board members 130 Consolidated statement of changes in equity 231 Glossary 131 Consolidated statement of cash flows 234 Contact and 2016/2017 financial calendar 132 Notes to the consolidated financial statements 222 Independent Auditors' Report Our fiscal year begins on October 01 and ends on September 30 of the 224 Responsibility statement following year. Three words to describe who we are, what we do, and how we do it. ... is part of our identity. It describes how we think. In the factory, in the office, in every location worldwide. It means developing solutions for our clients – both big and small. Today and tomorrow. As a diversified in­ dustrial group we deliver reliable, premium products, services, and solutions – on time and at affordable prices. We know our clients and their markets. We invest in important technological innovations and in this way help make the world a little better. We are a reliable partner – that is our promise. For over 200 years we have been shaping industrial history. From this history comes our strength and our knowledge. But a prestigious past is not enough to take on the challenges of the future. Which is why we are thinking today about what we want to accomplish tomorrow. We know now what the future world and our clients need. We are developing sustainable solutions to meet future demands, improving what already works and revolutionizing industries to make lives better and to give our customers a competitive advantage. We share our knowledge, combining and leveraging it to create innovations – beyond the borders of individual companies, industries, and nations. Our enterprises profit from cooperation and collabo ration across different divisions and departments. “together” is a promise to our clients, our partners, and each other. We trust and are trustworthy, working as a team, learning from one another and developing collectively. Because the greatest goals can only be achieved together. 02 thyssenkrupp annual report 2014/2015 Letter to shareholders Letter to shareholders Dr. Heinrich Hiesinger Chief Executive Officer 03 thyssenkrupp annual report 2014/2015 Letter to shareholders From a macroeconomic viewpoint the past fiscal year 2014/2015 was very unsettled. Over the course of the year the business outlook darkened. Uncertainty on the markets increased. Nevertheless we held course: We had set ourselves the task of continuously improving the efficiency of our businesses, growing in our capital goods businesses, and increasing our overall earning power. We succeeded. • We significantly improved adjusted EBIT from continuing operations to €1,676 million, up 26% from the prior year. • With our efficiency program "impact" we achieved savings of €1.1 billion, clearly exceeding our target of €850 million. • At €268 million, consolidated net income for the year improved by 37%, with net income attributable to thyssenkrupp AG's shareholders climbing 46% to €309 million. A further goal was and still is to strengthen our balance sheet. With a slight increase in equity and a reduc- tion in net financial debt, we succeeded. But the most important milestone for us in the past fiscal year was to achieve positive free cash flow before divestments. For the first time since the 2005/2006 fiscal year we earned more money than we spent – €65 million more – even without the cash flows from the sale of invest- ments. We generated €662 million free cash flow. This allowed us to further reduce our net financial debt and gearing. All this progress was only possible through the exceptional performance of our employees, and on behalf of the Executive Board team I would like to thank them for their efforts. To ensure you as owners participate in our continuous improvement, the Executive Board and Supervisory Board is proposing the payment of a dividend of €0.15 per share to the Annual General Meeting. This cannot be a satisfactory dividend level over the medium term for you as shareholders or for us. But it is a step in the € 0.15 right direction which also takes into account our balance sheet needs. dividend proposal So over the past fiscal year we have stabilized and strengthened your company. But that is not enough. We are still some way from our minimum requirement and goals. At the same time we see the world around us growing increasingly uncertain. For this reason we will carry on concentrating on the things we can influence ourselves. 04 thyssenkrupp annual report 2014/2015 Letter to shareholders The framework for this is our Strategic Way Forward. Our vision of becoming a diversified industrial group is linked to the ambition to generate strong and stable earnings, cash flow and value added. For us the diversi- fication of thyssenkrupp is not an end in itself. It is a means to seizing growth opportunities while at the same time increasing the stability of our business in a volatile environment. To significantly improve our earning power over the long term we are applying two levers: Firstly we are in- creasing the efficiency of our businesses. Clear performance targets based on sector benchmarks have been set for each business area. All our business areas are working on detailed programs to achieve these targets. Secondly we are systematically utilizing the combined strengths of our diversified Group in Groupwide initiatives. Major research and development projects such as InCar®plus for the automotive industry or our mobility solutions ACCEL and MULTI from the elevator business are the result. These are examples of how we combine the different capabilities of our business areas to create new products and market opportunities for thyssenkrupp. Without working together as a group we would not have succeeded. The efficiency improvements under our corporate program "impact" are also managed on a systematic Group- wide basis. In the past few years we have already achieved €2.7 billion. This progress continues to be the key driver for our earnings improvements. Through "impact" we introduced methods and systems in all compa- More than €2.7billion nies of the Group which have now become an integral component of our performance culture.