thyssenkrupp AG (TKA) Earnings Call Transcript & Summary

Hello, everybody. My name is Claus Ehrenbeck. I am heading the Investor Relations Department here at thyssenkrupp. And on behalf of the entire team, I wish you a warm welcome to our Capital Market Update 2022. It's about on track with transformation and performance today. And before we go through the agenda, I'll do some very brief housekeeping remarks. Please allow me to show you this slide here that comes with kind regards from our legal department. Now the agenda. The entire event will take about 2.5 hours. And we have 4 presentations today. The first one will be by Martina Merz, our CEO. It will be on thyssenkrupp Group of Companies and on track with transformation and performance. Then there will be 3 presentations by our businesses, which are Materials Services; nucera, our hydrogen business; and Steel Europe. Each of the business presentations will be followed by Q&A sessions. And at the end, after all these presentations, then there will be a final Q&A session. There will be a wrap-up by Martina Merz first, then a Q&A session where Martina Merz, and our CFO, Klaus Keysberg, will be available for you, together with the CEOs and CFOs from the businesses. Now the housekeeping, very briefly. This Capital Market Day will be recorded, and a replay will be available afterwards on our websites. All the documents for this event are already available. And in this event, there will be a Q&A session, an interactive audio Q&A session. [Operator Instructions] And with that, I'm already at the end of the housekeeping remarks and would like to hand over to Martina. Martina, please, now the stage is yours.

Thank you, Claus. Thank you very much. Hello, thanks. Hello, everyone. A warm welcome from my side to our Capital Market Update. Let me start with a brief recap of our Capital Market Day around the same time a year ago. We introduced our Group of Companies concept that enables us to more flexibility and the businesses to more self-reliance, autonomy and accountability. Consequently, we featured equity stories for each of our segments based on our strong technological digital expertise and concepts for green transformation. On this basis, promising prospects for growth and value are opening up. Furthermore, we introduced our midterm targets at that time. We have to keep in mind that this was before the terrible war in Ukraine and its global implications. These are milestones on the way of the business achieving benchmark performance to be accomplished with strong performance program by moving defined top line and bottom line levers. Our financial targets for fiscal year '21-'22 were also presented with the goal to reintroduce the dividend, and we are pleased that we have delivered on these points. Despite the more than challenging environment, we have been able to improve our financial KPIs and further strengthen our balance sheet with clear focus on performance. By doing so, we significantly gained inner resilience. Altogether, we have reduced debt and significantly enhanced the balance sheet. Now our net cash position is EUR 3.7 billion, which is, by the way, slightly more than at the end of the last fiscal year 2021 and positively impacted by proceeds from M&A transactions in the amount of more than EUR 800 million. And last, but not least, our equity ratio is almost 40%. Overall, we can say that we are slowly leaving the necessary restructuring phase behind us. A very large part of the restructuring is already finalized. Headcount reduction is close to 10,000. It is becoming visible that our clear focus on performance is paying off. Our productivity and efficiency helped -- really helped us to achieve the results that you can see on the slide. All in all, the group achieved an adjusted EBIT of more than EUR 2 billion in the past fiscal year. This is the highest operating profit since 2008, for sure, also supported by the strong price development for industrial materials. This slide depicts our midterm targets set in December last year. On group level, those targets result in an increase in the EBIT adjusted margin to a range of 4% to 6%, a significantly positive free cash flow before M&A by progress in performance and transformation as well as the resumption of a dividend payment. Each segment has committed to its own targets, which you can see in the bottom part of the chart. For the first fiscal year, we had already forecasted a significant increase of free cash flow before M&A to breakeven, then the war in the Ukraine started on top of COVID-19 and supply bottlenecks. Of course, headwinds have increased. We have, therefore, agreed on concrete measures to ensure that we can meet our cash flow target, even in the event of a potential worsening of the overall economic situation. The plan is based on 3 pillars. First, pillar to preserve earnings and cash flow. This includes programs within the businesses to cushion headwinds and to achieve their targets even in case of a recessionary environment. Second, improvements in capital productivity, in other words, achieving more with less. The main aim here is to reduce net working capital, which has been inflated by price increases. And third, a flexible approach with regard to capital expenditure. We are also planning to invest well above depreciation in the current fiscal year, which improves and widens the range of our high-quality offerings in products, technologies and services. However, the release of funds will be disciplined and gradual depending on how the overall economic situation develops and what progress the businesses make in preserving respective returns and capital productivity. So we are taking a classic portfolio approach here. The businesses have to earn their investments by themselves. Here, I would like to present you the top line opportunities I have just alluded to that are based on multiple transformational trends. I'm proud to say that most of our businesses can build and participate on fundamental developments in their markets. Due to their long-standing expertise in engineering and technology, they are ready for both. For us, this is not just about becoming climate-neutral ourselves, we want to be part of the solution for the entire system. In green energy and decarbonization, thyssenkrupp is standing out in technologies that enable the green transformation such as hydrogen electrolysis, green ammonia and renewable energy. nucera is making -- is a market leader in industrial-scale plants for alkaline water electrolyzers. While our chemical plants business, Uhde, is market and technology leader for ammonia plants and ammonia crackers in large scale. Besides being essential for fertilizer production and thus global food industry, ammonia will be a carrier in transportation of hydrogen. And ammonia crackers will be used to release the hydrogen from ammonia. The bearings business of Industrial Components has a leading position in its field of mission-critical components for EEG wind turbines. Decarbonization has become a central topic at Steel Europe, where the green steel road map is clearly defined, including the start of production in 2026 and complete climate neutrality in 2045. The conversion of steel production will also help a potential de-industrialization -- will avoid a potential de-industrialization, excuse me, in Europe. MX acts as a first mover in decarbonization by supplying CO2-reduced materials and CO2-optimized supply chains with its materials distribution division. In advanced mobility, we are at the forefront of topics such as e-mobility and automatic driving, where tk takes leading positions within the segment of Automotive Technology and Steel Europe in important areas such as electric power steering and materials for e-engines, namely nongrain-oriented electrical steel. For lightweight solutions, in particular, high-strength steel, our colleagues in Duisburg built up capacities for steel that is making car bodies more energy efficient but not compromising on safety. Digitalization takes obviously place in all our businesses. Especially emphasized should be the services with state-of-the-art digital offerings for resilient supply chain solutions at Material Services. And the in-house expertise at since software-assisted mechanical functions are becoming increasingly important. Here, to mention the electric power steering control and the fully active temper for vehicle motion control. Overall, this shows that our businesses keep up at the forefront of the development in some of the most promising transformational trends. My colleagues from the segments will provide you with more information on that in a few moments. Today, you will hear more from 3 of our CEOs, who will outline their longer-term perspectives. Naturally, Materials Services and Steel Europe are earnings and cash flow swing factors for the upcoming fiscal year, and they will provide you with an in-depth view on their prospects and value opportunities in the long term; while nucera stands out as an essential element of the hydrogen economy with strong growth opportunities. But I don't want to preempt too much at this point and rather let the experts from the segments give you a deep dive on their topics. Today, after 3 years of transformation, we are taking a positive but also a self-critical interim summary. We have not achieved everything we have set ourselves as a target, but we have made progress in transforming thyssenkrupp into a group of largely independent, high-performing businesses. This has enabled us to successfully cope with the external impacts such as the terrible war in the Ukraine. We assume that the intensity of competition will continue to increase in the current environment, and that is why performance and productivity will remain our top, top priorities. And that is why we must resolutely continue the path of transformation. The businesses will drive their operating performance with very efficient and effective initiatives, for example, Steel Europe by further implementing the Steel Strategy 20-30. Moreover, we will continue to consistently position our businesses as enablers of the green transformation and prepare them for growth opportunities. And last but not least, portfolio streamlining will be continued with full commitment. And my colleagues and me will develop the organization and further adapt our structures to this decentralized setup of the company, which includes consequently that businesses will even become more self-reliant, autonomous and accountable for their strategy and their performance. Having said that, I now want to give the stage to my colleagues from the segments. Thank you very much.

Thank you very much, Martina.

Thank you.

And Martina will be on stage again at the end of the session. And we now welcome here Martin Stillger, the CEO of Materials Services. And Martin will be then followed or joined by Daniel Wodera, the CFO, for the Q&A session. Martin, please go ahead.

Thank you very much. A warm welcome also from my side. I'm Martin Stillger, the CEO of Materials Services. I think I've met some of you last year when we updated you on our business. I have just a few minutes to talk about Materials Services, so I would like to emphasize 3 important points: First, cash. Material Services means rock solid cash flow, consistently good performance. Secondly, flexibility and agility. We have taken steps to make our business more efficient. In turbulent markets, we can act fast and we will stay focused on delivery to our customers and financially. Third, opportunity. We are looking to grow by offering new services and expand our market presence. And please remember that our products we deal with are mission-critical. Our products and services ensure that cars are rolling off the line, planes take off, machines and plants are built. We love our business with full passion, and we -- that's exactly the team it was 1 year ago. In fact, we are 1 year more experienced. Overall, the Board has about 70 years of experience and being as a team responsible for MX for 3 years now. It's the CTO, Ilse Henne; the CHRO, Marc Schlette; and Daniel Wodera, who is today with me and later on, on stage. And since our first day on, we are working hard to increase the value of our business. Our business, that's what you have seen on Page 1. We are distributing and processing steel, stainless steel, aluminum, plastics in our warehouses and service center and we trade metals and raw materials and we offer supply chain solutions to our customers. All of those businesses are digitally enhanced. Important to know is that Material Services is mill-independent. That means thyssenkrupp Steel is one of our suppliers, and we buy around 10% from them. We know our customers and our suppliers. We are building a bridge between a network of 4,000 suppliers on one hand and 250,000 customers on the other hand. With about 380 branches, we are very close to our customers, and we can almost feel the breadth of them. And even more, through our worldwide network, we offer a wide range of products and different business models along the supply chain and to ensure a balanced portfolio. Let us look at our geographical footprint. It shows crystal clear that we know where to punch: Europe and North America. And we deliver what we promised to deliver. We have successfully increased the share of the North American revenues from 22% to 31% within 2 years. Our customers trust us. Look at the list. And these are only a few of our key accounts, all super professional companies that need a reliable supply chain partner to keep their lines moving. Of course, not all companies we are working with are on that list as some relationships are really confidential, especially when it comes to the new players in the field of EV or renewable energy. Let me give you some examples for our new supply chain service business. We are enabling solar panel producers to go to market very fast. How? They know how to produce the panels. While they focus on their production, we make sure that their logistics is running smoothly and we offer a wide range of services. We are so good in logistics that we have even taken over distribution for a large U.S. [ works ware ] producer, a new account for us, and saved their business 1 of their major accounts. We have a deep and broad knowledge of our customers' need, but we know as well how to make our business future-proof. We have ambitious ESG targets, and we deliver successfully on these targets: additional 5% carbon emission reduction, and by the way, we have also won the '22 Sustainability Award in operations of the Berlin Institute of Supply Chain Management; all-time low on accident frequency rate of 1.4; and we have doubled the number of women in leadership positions, and we, of course, will continue to improve that. But also important under social responsibility, when the war in Ukraine started, all of our Eastern European companies at the border to Ukraine, have immediately started to have refugees not only financially. And we are proud on this, too. As you can see, our business did very well in the last 2 years. We have performed far above targets. We made a clear decision to focus on high-quality volumes and so increased profitability and cash flow. With everything that's going on in the market, we again confirm our midterm targets. And even if demand is restricted due to the geopolitical situation, the good news is we will still increase our operative cash flow and we'll continue to invest in growth opportunities. If you look back '21-'22, a great year and, of course, we had strong tailwinds. But we have also improved our performance through 3 dedicated measure programs: growth, new customer solution and efficiency, then have overcompensated inflation. Neutralizing the price effect, we have increased our normalized EBIT adjusted level like-for-like by 25% compared to the years before COVID. As we have seen, the last 2 years have been very good ones for Materials Services, but there's no doubt that the markets are unsettled. And our organization knows what to do. We are fast and focused. We are more lean and efficient than ever. In the past several years, we have consolidated or closed 25% of our smaller warehouses and distribution sites and we reduced the workforce by over 2,500. Through all these uncertainties over the past years, we haven't missed one ton of shipment. Not only did we keep our customer supply chain moving, but also make them more resilient by strong capabilities in digitalization, artificial intelligence and automation. In these times of increasing costs, we have pricing power. We are able to pass on rising energy and transportation costs to our customers. We also have the ability to quickly manage our inventory. In case of declining demand, we can reduce our stock level and turn material into cash flow in a short time. And that's why we confirm our midterm targets. We believe in our measure-based program: growth, new customer solution and efficiency. And the 3 levers will make sure that we achieve our target, a ROCE above 9% and a cash conversion rate of 0.8 over the cycle. Let me now come to the highlights. With about 250,000 customers worldwide and the leading position in Europe and North America, we have the undebated power to act. Our growth program for North America will be accompanied by cost improvement measures in Europe and margin upside potential from new business, supply chain and in digital supply chain solution and sustainability. And we always deliver positive cash flow. Let's go through the details. 85% of our key accounts are in continuous business with us for more than 4 years. They are satisfied with us and with our work. That's proven by a Net Promoter Score of 54 as well. What is one of the keys? We know our 250,000 customers and we know what they want because we talk to them. They talk about near-shoring and the need for more local stock and services. We have chosen the markets we want to compete in with our network, and we are pretty close to them. They talk about resilience of supply chain. And as we have not missed one shipment, they ask us for increased transparency and risk mitigation measures for their own supply chain. We are experienced in supply chain resilience. We are doing this for more than 20 years in the Aerospace business, and now we started to do in other businesses as well. They talk about sustainability and they may, too, help to accelerate decarbonization. We can do this with our capabilities in digitalization and artificial intelligence. Growth in North America. We allocated our growth funds to the right markets. We already opened several new plants, for example, in Woodstock in the U.S. and in Silao in Mexico. And the next 3 projects are already underway: 2 of them will be opened '22-'23 and the next 1 will come in '24-'25. These projects will deliver above average and improve our market share. And we have already outperformed the growth of the North American market by 2% in '21-'22. Improved cost base in Europe. Being the #1 in Europe, we are continuously making the whole network more efficient. What does it mean, in short? Less sites, less people, more customers. And the key to this is automatization, standardization and digitalization. New customer solutions. The core market of our business is with EUR 170 billion, quite big. But this market is only growing by 2%. The new markets, digital supply chain, sustainability, are smaller but fast-growing with 8% to 10%. That's very promising. And we already entered this market. We did our strategic homework, and our customers love the results and they take full advantage of that. One example is our carbon footprint calculator. What does that mean? That means we can tell our customers for each and every product what the CO2 emissions are. And that is far from more. Last time, I announced our control tower contract with Rolls-Royce. This year, we are proud to announce another successful project. We won a control tower contract this time with Saab in Finland. Rock solid cash flow. No matter what the cycle is in good times, in bad times, we provide cash flow. Awesome. Because we have an asset-light business model, low CapEx requirements as well and 80% of our capital employed is net working capital and can be released within short time. And we turn EBIT into cash. Over the cycle, we have a cash conversion rate of 0.8. So this is my final slide, and it shows a summary of my presentation. In the beginning, I kindly asked you to take away 3 messages and they are all in here: First, cash. Material Services means rock solid cash flow, consistently good performance. Secondly, flexibility and agility. We have taken steps to make our business more efficient in turbulent markets. We can act fast and we stay focused on delivery to our customers and financially. Third, opportunity. We are looking to grow by offering new services and expanding our market presence. Thank you very much. And now it's time for questions.

Thank you very much, Martin. And now also, Daniel Wodera is coming here on the stage. [Operator Instructions] So I can see that the first one to ask questions is Ingo Schachel from BNP. Ingo?

And my 2 questions would be on the North American expansion. I mean, you've completed your EUR 110 million program and seems to be successful, as you said. How do you expect organic investments in the Americas to evolve after completion of the program? Should we expect more CapEx at a similar level in the future or even a step-up given the success of the last program or maybe even this strong complement of acquisitions as well?

The North American market is fragmented. We have a #3 position in the North American market versus the #1 position here in Europe. It gives us the potential to grow our business. And we have allocated funds clearly to the North American market in our strategy, and we will do this furthermore. Because, once again, the North American market is service-oriented and gives us -- so that's why they give us, let's say, better returns on our Materials-as-a-Service strategy.

And if you think about returns and also the value of this 2 percentage point outperformance, can you comment a little bit on what your vision for the profitability of your North American activities would be? I mean, clearly, we can benchmark it with competitors, but also in your internal assessment, comparing it to the 2% to 3% margin target. Can you give us a rough indication how much higher in your internal assessment the North American profitability should sit?

Okay. Maybe I'll take over this question. Let's say we are very selective with our investments. That's why we are investing especially in this market because this market is very attractive as we see in our business, which is on a benchmark performance. But we also see it, let's say, from the market of the competitors. And that's why we have given you an indication. The ROCE of more than 40% we have with these projects is much more than our average. And therefore, of course, also the average margin you can expect that's higher than the 2% we are indicating here.

Yes. Thank you, Ingo. And the next one is Alain Gabriel from Morgan Stanley.

I have one question to ask you. Is it fair to conclude from your comments that you are now much more focused inwards on your growth and any large-scale M&A is off the table for now or even separation of the business from the thyssenkrupp Group?

Our growth, we have organic growth plans and we have invested and allocated funds to the organic project, which we have shown to you. Of course, we are working on inorganic opportunities as well. Daniel said we are pretty much selective. That means we have a market presence in the U.S. already. We have also a clear strategy where to grow with reference to location, product, customers. And we are looking for the right opportunity and then we execute.

All right. So if this has answered your questions, then the next one in the row is Bastian Synagowitz from Deutsche.

I've got one question also on the growth strategy. If we look at your shipments, I think they were down 500,000 tons to roughly 1 million tons over the last 2 business years while obviously being in a boom environment. Why was that? Was there anything structural? Because the 6 million target which you're laying out here would only take you back to where you were before in good years. And given the investments you're taking, one could have thought that you could be even more ambitious.

We are -- I think we are very ambitious to achieve our target. And when you look on the last couple of months and on the last business here, I said before, there was an opportunity to concentrate on high-quality volumes. So we have made a clear decision that says price and profitability before tonnage so we could use the cycle in the best possible way and improve our EBIT, our ROCE and our cash flow. So that was a clear decision. With the networks we have, with the customers we have, with the market presence we have, we will grow the volume easily. And by the way, with the investment decisions that we have taken, and they will come to market and they will be operative pretty soon, we of course increase our market share and tonnage as well. But please allow me to say, well, there's a priority. And the priorities means cash and profit before the simple tonnage number.

Okay. Then I've got a second question, if you'll allow me. And that is actually on your procurement strategy and your decarbonization strategy. I guess you're saying you want to become free by 2030 also on a Scope 2 basis. That obviously means you need quite a lot of fully decarbonized steel. Now the captive steel business within thyssen can only provide, I guess, a limited current contribution within that time frame. And then also other steel players are partnering with OEM clients, which means they may not have as much decarbonized material available up for sale potentially into the service center segment. So where do you aim to procure that steel from?

Number one, I would like to clarify the Scope 1, 2 and 3. That means we want to be carbon-neutral on Scope 1 and 2. And the material itself is then, of course, in Scope 3. Today, we have carbon-neutral and also carbon-reduced products on our stock in steel, other products, of course, recycled plastics and so on. We believe we are the leading -- we're the leading position in this market. We will also be the leading company, which will offer such products to our customers. Today, we talk -- of course, when we look in our tonnage, I would say, if you look at very small number, we are talking about . Tomorrow, we will talk about 1%. And 2, 3 years ago, we might probably talk about 10% steps that can be taken, right? So that is, I would say, in the curve at the moment. And my colleague from Steel, Bernhard Osburg, will also later explain that this is the message of the decade, to get into decarbonized steel. And the market is really looking for that.

All right. The next one to ask a question Christian Obst from Baader Bank.

I have 2 also. One is on working capital release. How much of some kind of working capital -- additional working capital release towards some kind of normal do you expect in the next 2 quarters longer term? What kind of cash flow -- free cash flow growth or business cash flow, like, you name it, business cash flow growth you can expect in the next 2 to 3 years?

I think I will take this question. First of all, it's correct that we are expecting a net working capital release. If you would look on our capital employed for last fiscal year, you see an increase by EUR 700 million. This is pretty much in the net working capital price related. It's even more than this because we were very good in turning our inventories in the last fiscal year. And therefore, we're also expecting now where prices in some product groups still going slightly down a release. Of course, what we will have, we will have a seasonal pattern. It takes some time until we see this release in our cash flow. And we were also stuck a bit towards end of December because then, the accounts' normally strong months in January and February and, therefore, you will see net working capital release over the next months to come in this fiscal year. And that's, by the way, also indicated in our guidance. You have seen what Martin presented, that we are expecting a cash flow in this fiscal year before a major contract prolongation on IFRS 16 side, which is higher than the previous year, previous year were EUR 420 million. So you see a rough indication on what working capital release you can expect. And then of course, it depends, let's say, you're asking about the longer-term position. First of all, what we are doing in digitalization, what we are doing with our site consolidation, that has a positive effect on the EBIT. But of course, it also has a positive effect in terms of net working capital because we are getting more efficient. And of course, all other, let's say, improvement areas also in the EBIT levels we have presented, with a cash conversion rate of 0.8, we consider rather high, this will give you also a continually good net working capital level and cash flow level regardless, let's say, what the price level will be.

And this means that you will be better the next 2 to 3 years because of the measures you have just described?

Yes. Well, over the cycle, we stick to our midterm targets as we have outlined. This means in a year, over a cycle where we'll see no windfall, so price normalization, we have a target to have a cash flow higher than EUR 200 million with a high cash conversion rate of 0.8. So this is our midterm target. But as I said, in this fiscal year, we will seize on top of this a net working capital release, which is then good for the cash flow.

And the next one is concerning the mix. So going a little bit into services, and if I'm right, you had formerly a contract -- supply sharing contract with Boeing. Are you still within that contract? And is -- are these contracts, is this an area where you also intend to grow, so these bigger supply chain contracts?

As said, we are very experienced in the aerospace business and we have long-lasting relationship with customers, I would say, good relationships with customers, right? But we are at the moment in a discussion with Boeing and other customers as well. And I don't want to give any comment on discussions which are going on at the moment. But if you look into 2 faces, we look positively in the future.

So can we expect that you will grow over proportionately in that kind of supply chain business?

In general, away from this single customer question, of course. We are -- we spent so many efforts in this business, and we offer so many solutions, as said artificial intelligence solution. I mean, we are running our own show with a lot of artificial solution that is supporting that. Our customers, they know this. And I said before, besides the major market trends of sustainability, for example, or besides the major market trend of near-shoring, all of our customers, they have experienced really a hard time over the last couple of years. And resilience, supply chain resilience is getting more and more important. So we see a growing demand for such kind of solution, and that means we will see an over proportional growth in this business.

Then as a conclusion, more or less, you should be able to reach the EUR 6 billion target at least in the next 2 to 3 years?

I mean, frankly speaking, the nice thing is that I said we have an asset-light business model. That means we serve -- we serve a lot of solution on supply chain without having any components in our pricing that are volume related. That's why our material service strategy is so important because it increases customer retention, it's getting better margins for services and it's getting recurring revenues. And that's why we are so hard on that.

Yes. Martin, Daniel, one of the questions that we're getting quite frequently from our analysts and investors is about the business model and the synergies. You seem to be operating quite a number of different business models, at least that is the perception, and people wonder whether there are synergies. Maybe you can comment on that.

Yes. Thank you very much for that question. There are a lot of synergies in these businesses. I'll give you -- let's start with the business which we are doing with trading, so metals and raw material. This gives all our businesses in distribution and in the service center area an early indication. Our traders, I would say, are 3, 4 months earlier than others. They see market trends reactions. They talk to raw material suppliers, of course, they talk to mills. But they give early indications. So I believe that we, at Material Services, with our leading position, we have also leading information. That is one of the biggest synergies that comes, for example, out of trading. On the other hand, look at the businesses that we are doing in the U.S. and look at the business which we are doing in Europe. And if we talk about service center, the traditional service center business and the distribution business, the solutions that we are providing via digitalization on supply chain solutions for people who ask for supply chain solution offers, this solution also impact our traditional business. So we do not have only new customers, we also have the existing customers. And within the existing customer portfolio, people are looking more and more in what we develop for new customers. So it's like a merry-go-round, right? It's always a back and forward from new and old business, and we believe there are a lot of synergies between these business models, and we are proud that we can handle that.

All right. And about the customer solutions that you are developing. Service, more services and, in particular, when we look at your activities in North Americas and your growth opportunities there, it's a market that is more receptive for services, where services can play an even bigger role than here in Europe. Can you illustrate this a bit, please?

Yes. Yes, I mean, when we talk about, let's say, the regions of the world, and everybody who has been in purchasing once in his life always traveled around the globe and had visited other countries, knows that you have the highest willingness to pay for a good service in North America. In Europe, we are somehow in the middle of that. But in Asia, people normally say, well, it's all in, right? And that's why we are -- especially in North America, our customers, they like the service offers and they also understand the price models behind that. And they -- let's say, they are willing to give us a return for the value that we offer to them. And that makes it a lot of fun.

Okay. Yes, great. And now coming back to Europe and looking at the situation and this terrible war that is going on in Ukraine and also the changes or the implications of that war here on the situation in Europe. Can you comment a little bit here what this means for your business? Are there -- how you handle the challenges and how maybe they're also developing some opportunities for the said reasons, of course.

Yes. Let me say only one sentence. Of course, the war is a humanitarian disaster. And first of all, we feel with the people in Ukraine. When it comes to direct impact on our business, I can comment that the -- for us, the direct impact is very small. We had a, let's say, less than 2% of the purchasing volume, less than 1% of our revenues or our sales in this region. So it's really a minor impact. As said with the 4,000 suppliers that we are working with, so we can easily change from one to another so that is really not a big problem. Indirect, we see, of course, that energy prices are now sky high. And that also leads to higher transportation costs and so on. For us, as a distributor and service provider, that's, let's say, a minor impact. For our customers it's, of course, a bigger impact. But anything that has to do with energy and also with transportation cost, with our pricing models we have, with the intelligence we have in our pricing models, we pass it on to the customer.

Okay. Good. Thank you. Another question is on cash flow. And obviously, you are generating cash flow for -- with the business and for the group on a reliable basis. The last years were very good years, in particular, the one that we have just left. However, there's a gap in your cash conversion rate. You're targeting a cash conversion rate of 0.8. In this great year last year, you were at 0.4. What makes you so confident that you really can get to this 0.8 over the cycle?

Yes. Well, as you pointed out, it's 0.8 over the cycle. And last fiscal year, we were up the cycle. So we had really extraordinary EBITDA figures and then, of course, a huge increase of net working capital. And as I pointed out before, for this fiscal year, we will see a release in net working capital. And that's why, for example, in this fiscal year, we are even expecting a cash conversion rate above 1. And then if you'll take the average, this is leading us to the 0.8, which, by the way, we have also demonstrated in the past to be on that performance level.

All right. Good. Well, thank you very much. I have no indications that there are further questions from the outside. So then thanks, guys.

Thank you very much.

You will be back on stage then at the end of the day, and see you then later.

All the best. Thank you.

Thank you. Bye.

Yes. Ladies and gentlemen, with that, we have come to a break. And we suggest to do a 5-minute break. That means we will continue with the next presentation, which will be nucera, our hydrogen electrolysis business. It will start at about 2 p.m. CET. And see you then in 5 minutes. [Break]

To continue now the agenda with thyssenkrupp nucera, our hydrogen electrolysis business. And I welcome here Dr. Werner Ponikwar, the CEO of the business. And for the Q&A session, he will be joined by his CFO, Arno Pfannschmidt. Please go ahead.

Thank you, Claus, and also a warm welcome from my side. I have to admit, I'm very excited to talk about hydrogen today. It's the new clean fuel for the world and one of the biggest markets to emerge. My name is Werner Ponikwar, and I'm the CEO of thyssenkrupp nucera, a world leader in electrolysis technology to produce green hydrogen. And here is why. We run a mature business with decades of electrolysis experience and gigawatts of installed capacity with our own proprietary technology. We are able to offer to our customers the largest hydrogen production module with 20-megawatt capacity, a standardized and modularized product based on mature technology, reliable and cost-efficient. And we are working off a large and growing order book, which clearly reflects that more and more customers are considering us to be the best partner to reach their decarbonization goals. So we are ready to take on this new market as a leader in our field. Now let me take you on a journey and show you what hydrogen does and why it is considered one of the most promising molecules of our energy future. Hydrogen can be produced with electrolysis using electricity to split water into the elements, hydrogen and oxygen. And if the power feeding the system comes from renewables, we speak of green hydrogen with no CO2 emissions. Of course, hydrogen is already used in industrial applications since decades as a process gas, as a feedstock. However, this hydrogen is today produced predominantly as gray hydrogen from natural gas using steam reforming. And this is causing more than 900 million tons of CO2 emissions every year. That's almost equal to the combined CO2 emissions of Germany and France. So replacing just this amount would be already a big step forward. And it is without alternative because it cannot be replaced by any other molecule. So electrolysis is the way to go here. On the right-hand side of the slide, you can see the project portfolio we are currently running at nucera. With our strategic partner, Air Products, we built maybe the largest green hydrogen electrolyzer in the world in NEOM, a more than 2 gigawatt electrolysis capacity that will be producing more than 200,000 tons of green hydrogen by 2026 every year. In Europe, for Shell, we are building a 200-megawatt water electrolysis in the port of Rotterdam. And at the beginning of the operations, this may be the largest hydrogen electrolyzer in Europe. And you see here as well other projects we are currently working on in the U.S. as well as in South America. And moreover, we are driving a very substantial opportunity pipeline worth more than 40 gigawatts of electrolyzer capacity. So this is just the beginning. So where do we sit in this new green value chain? Yes, right in the middle. It all starts with renewable power generation which is not emitting any CO2. And although this is key to the energy transformation, many industrial processes cannot simply be switched from fossil fuels to the use of renewable power. It requires a clean fuel, an emission-free energy carrier like green hydrogen. And this is, of course, where electrolysis technologies come into play. Electrolysis converts renewable energy into green hydrogen and makes it usable for a wide range of industries and applications like, for example, transportation, refineries, fertilizer, steel and also chemicals. So to make it very clear, there is no energy transformation without green hydrogen. It's as simple as that. And in the meantime, the world is getting the picture. Green hydrogen is a main pillar of the energy transformation towards sustainable decarbonization. By 2025, it is expected that countries representing over 80% of the global GDP will enter the hydrogen economy with dedicated hydrogen strategies. And this will further fuel the demand for green hydrogen and, with that, also electrolyzer projects over many, many years to come. By 2050, thyssenkrupp nucera expects the water electrolysis markets to increase sevenfold. In 2050, there could be a total need of around 26,000 terawatt hours per year. This is huge. This is almost 1/5 of today's worldwide primary energy consumption, and it would be comparable to the total primary energy consumption of the United States of America in 2020. And although there's an existing hydrogen demand worth already EUR 110 billion from industrial processes where hydrogen is used as a feedstock, the real fun in the future starts with new applications in different sectors such as power generation and storage, buildings, heat and power, transportation, industrial energy, so very much energy-related use cases in the future. Our company, thyssenkrupp nucera, is a unique asset in the thyssenkrupp portfolio. It is a true global technology leader in electrolysis and has been winning landmark orders and therefore, runs an excellent pipeline of large-scale projects. We are part of the business segment, Multi Tracks, and we have 2 shareholders, thyssenkrupp and Industrie De Nora, an expert in electrodes and in coatings of electrodes, an essential element of our technology and our systems. We operate 2 product lines: chlor-alkali electrolysis to produce chlorine and caustic for various applications; and alkaline water electrolysis to produce green, emission-free hydrogen. As stated, water electrolysis will play a major role in the clean energy system, and we have creating nothing less than a global leader in alkaline water electrolysis. Our customers are either energy providers or consumers of energy. And as such, they have 2 main requirements: energy security and affordable energy costs. That is what we can deliver with our 20-megawatt standardized alkaline water electrolyzer module already today. Our system is based on a very mature technology with a proven track record of being robust and reliable so undisrupted supply is what we are really good at. The alkaline water process that we are using at large scale as well as the standardization that we are currently driving enables us as well to deliver cost-effective systems. So we can clearly meet the requirements of the future energy industry already today to provide reliable and highly available systems for the production of green hydrogen at affordable cost. And that is, for us, a key differentiator in the market. In terms of delivering on our projects, we can leverage an existing global organization with strong and experienced execution hubs close to our key markets. And this, together with our network of partnerships that we have developed, enable us to grow faster and more sustainably. Finally, our service business. As much as our newbuild business will be driving the top line growth, our service business will drive the bottom line. Over the lifetime of an electrolyzer, our clients spend very roughly a similar amount on maintenance, replacement and services than the original invest, but at a way more attractive margin for us. So service is an important pillar of our business model and a key driver of profitability for us. And in my perspective, our growing order intake clearly also reflects that more and more customers are considering us as the best partner to reach the decarbonization goals. Now why are we so confident to be able to deliver on these aspects? Well, our alkaline water electrolysis technology is built on a very strong and very mature foundation. Our basis is the chlor-alkali electrolysis, which we have developed and built to perfection in more than 600 industrial-scale projects over the last 6 decades, in total, more than 10 gigawatts installed capacity, very reliable, mature and cost-effective. The alkaline water electrolysis is a very similar, even simpler technology. So it was easy for us to sort of copy-paste everything that made us #1 in chlor-alkaline: industrial-scale plants, leading TCO, successful service model and a very experienced global organization. What we have changed, though, is our approach to the market. With alkaline water electrolysis. We are not any longer delivering full-customized, stick-built plants, we are running a product approach. Our unique 20-megawatt electrolyzer is highly standardized and modularized from the single element to the 20-megawatt module, all to be produced in serial manufacturing. And as hydrogen plants typically consist of multiple modules, we can realize any capacity from small scale to gigawatt scale simply by numbering up the modules. Our experienced management team is supported by a globally growing team of over 500 electrolysis experts, many of them engineers and holding a PhD. And we are also growing in locations. This year, we have just opened 2 new offices in Perth, Australia and in Riyadh in Saudi Arabia and more might come in key areas. And we are also continuously expanding existing locations in capabilities and in capacity, and we're rolling out our know-how and our expertise to all of our local organizations very consistently because we believe that our growing global network is one of our key strengths and will help us to grow faster than others. Now to our financials. Our last financial year shows a strong top line performance with almost EUR 1 billion order intake in alkaline water electrolysis. This is really outstanding in the market. But not only the hydrogen business grew strongly, we also saw a significant order intake in chlor-alkaline (sic) [ chlor-alkali ], driven by several new build projects as well as service business. On the sales side, we show a successful ramp-up of the alkaline water side as well as a strong growth on the chlor-alkaline (sic) [ chlor-alkali ] side, driven predominantly by service business. Our positive EBIT has shown the resilience of our business model despite the well-known challenging macroeconomics over the last year. The somewhat negative development of our EBIT margin is mainly driven by 3 factors, though. There's a base effect from higher margins in the previous year, which benefited from large chlor-alkali newbuild project realizations. And then in addition, the ramp-up of our business and organization in alkaline water electrolysis comes, of course, with growing R&D and SG&A expenses. And lastly, we had to absorb also one-off effects related to nonrecurring IPO preparation costs. However, in summary, we are fully in line with our build-out plan for alkaline water electrolysis, while our chlor-alkaline (sic) [ chlor-alkali ] business is providing a solid foundation for this growth. Finally, these are the key messages I would like you to take away from my presentation. The high growth of the hydrogen market will fuel demand for our products for many years. We will manage this growth with our leading and experienced organizations close to our customers. Our long-standing expertise in chlor-alkaline (sic) [ chlor-alkali ] forms the basis for the scale-up of the alkaline water electrolysis, and our products are geared towards large-scale industrial applications, reliable and cost-efficient. And we are already executing a strong project pipeline with more than 2 gigawatts and working on further large-scale opportunities. Thank you very much for your attention. My colleague, Arno Pfannschmidt, our CFO, and I are very happy to answer your questions right now. Hello, Arno.

All right, gentlemen. All right. Yes, now questions. I got the indication that Tom Zhang has -- from Barclays has a question. [Operator Instructions] I can see Tom has joined. Tom, please go ahead.

Just one for me. Throughout the year, you've sort of been giving updates on potential contract value and size for the pipeline of nucera, and it's gone up quite significantly. I'm just wondering whether or not these EBIT targets that you set out at the Capital Markets Day last year, whether or not they still hold or you think you might be more optimistic. And I'm referring to your targets of breakeven EBIT by FY '23, '24 for water electrolysis and the high single-digit margins for chlor-alkali.

That's a CFO question, definitely. Yes. As of now, we have no update here on the guidance. So in that sense, it's confirmed. As we have said, we plan long-term, low double-digit EBIT margin.

And is the FY 2021 a reasonable base for us to think about next year? Because it's -- I noticed that in this presentation, you said FY 2021, you had higher margin from these large chlor-alkali project realizations. But in the Capital Markets Day, you actually said that, that year was a low year because of AWE ramp-up costs. So how should we think about FY 2021 as a baseline?

Well, as we said, we're in a growth phase. And that means we are ramping up further our R&D capacities and R&D expenses, also selling and G&A expenses. So we will continue to see a burden here, so to say, from this ramp-up cost. In that sense, it's not a good baseline. Regarding the margins, I think in the chlor-alkali business, we have very stable margins. And we are also in a kind of a growth phase in the alkaline water electrolysis margins.

Thank you, Tom. So the next one, yes, Ingo Schachel from BNP. Please go ahead.

And one question on your midterm cash conversion in this business and, again, fully fair that you don't want to give an update on your financial guidance. But maybe more strategically, of course, you've joined -- taken over the role of the CEO during this year. So strategically, has your preference with regards to cash generation versus growth changed? Or would you still strive to be cash flow breakeven in a few years' time? Or do you think with the success in winning orders, might be prudent to spend even more and that you rather focus on, yes, securing that market position over achieving cash flow breakeven?

No. I mean, I think that we have also -- and that is actually what Arno was telling as well. Actually, as of now, basically we are standing actually with our strategy so far. So it means really, actually, certainly as a growth strategy, we have a very strong growth plan also in front of us. But on the other hand, certainly, we are also -- and we are running an asset-light business model exactly also for that reason actually, that we also remain in a position actually that our cash flow is also supporting our business to the extent.

And on that point of asset-light business, I mean, you had targeted EUR 500 million, EUR 600 million of IPO proceeds. Do you have any comments to make as to -- I mean, as projects ramp up by when you would ideally need additional, let's say, funding on the nucera company level to be able to execute? Or are you say, fairly relaxed with regards to timing of potential yes, strengthening of the cash position?

I mean, we are pretty relaxed, I would say. If we look at Arno, super relaxed currently. So I think that actually, to your question, certainly -- I mean, this is a growing business and we want to grow. And we have to grow actually stronger with the market. At a certain point in time, that will certainly also mean that building up an organization, investing in R&D and in SG&A and everything basically will also consume, of course, financial resources. For the time being and for the next years, we are quite relaxed actually on this. Arno, do you want to comment on that as well?

I think we have published here also the cash flow after 9 months, which was positive, and that has not deteriorated here in the fourth quarter. So we have made good progress and we'll stick to the guidance here on the cash flow. So to use these proceeds from the primary -- proceeds to use for R&D expenses and also CapEx over the next years, no change in that. So also, the breakeven here for the cash flow in '25-'26 is confirmed.

All right. So then the next one will be Bastian Synagowitz. Here he is. Then, Bastian, please go ahead.

I had one question on policy. It seems like there has been a lot of push on the U.S. side at the moment, whereas, I guess, Europe is still moving a little bit slower. I guess you're well positioned on both sides of the pond, but could you please give us your view on the recent dynamics in the policy landscape? And are there any key policy milestones you're still looking for? And then also, have you done any changes to the focus of your commercial approach, please?

Oh, okay. Policy changes. I think one policy change, you have mentioned already, which is the IRA, the Inflation Reduction Act in the U.S. That is certainly considered sort of a game changer. I mean, a year from ago, basically nobody had the U.S. on the list in terms of really an attractive investment case actually for green value chains. That has changed now very significantly. To what extent basically and how fast that will go is certainly now depending on how -- yes, in which way actually this act is basically translated into legislation, and along with that certainly also how this is basically impacted in terms of authority engineering permits, et cetera. So that will certainly also play a role. We all expect that this certainly will be a very attractive market for investments in the future. And we are, as you certainly know, also in the U.S. already present with our own organization. We are actively actually also monitoring and tracking the development here. We do have already 2 electrolyzers that we are currently working on that will be great references for this market also in the future. So we are looking forward actually to be to be active and focusing also on the U.S. What does it mean for other regions? You were saying it, in Europe, it's a bit slow in terms of development. I don't believe it makes sense that we now globally go into a funding competition, if you want. But I would believe that Europe and maybe also other regions of the world, they will certainly improve their funding schemes also to the extent basically that they can also further attract investments in green value chains because that's required.

Yes. And the next one is Christian Obst. Christian?

I have 4 smaller ones. One is Project NEOM, 2 gigawatts. When do you think -- how far have you developed so far? And when do you think you'll end this project?

Well, I can't -- for NDA reasons, I cannot tell you actually how far now right now in the project. We are on track, and as expected, as I was actually also stating that in 2026, the first part of the NEOM project actually will come on stream.

The first part means what?

I think that that's a continuous process, how they electrolyzes. There are more than 100 electrolyzers. And as such, basically, they will be ramped up actually one after the other, and that's a process. That's what I meant with that.

Okay. And then you talked about 4 gigawatts in the pipeline...

40. 4-0.

40. so how much of -- what is an average size of these projects? Can you give us some kind of an indication there? Are these bigger ones, smaller ones, 100, 400, just megawatt, whatsoever.

So the 40 gigawatts are basically, I would say, the landscape of projects that we see addressable and relevant for us. What we do with that pipeline, actually, we further select and drill down to a level where we say, those are the projects that we really want to focus on, and we have to focus on over a certain period of time. So they're very, very -- our project that we want to get. That's certainly a lower number in terms of gigawatt capacity. There has also something to do, of course, with the maturity of projects in this 40 gigawatts. There are projects which are very much in the feasibility phase still, and there are others which are a bit more mature. The ones that we are really focusing on are -- very mature ones where actually we can get those projects actually in, I would say, a definite time frame. And this project pipeline is, I would say, roughly 6 to 7 gigawatts in the meantime. And along with that, basically coming to your question about the size. The size -- the average size of the electrolyzers is growing in the overall market, and it's even more growing actually for those projects that we are really focusing on because we are -- we believe we are the ones actually for the large projects, which is a differentiator for us in the market. And certainly, that is where we are focusing on. And along with that, certainly, we all know that we have not unlimited resources. And of course, if I can actually put my resources on a larger project, instead of a smaller project, I get a bigger buck for the bank, so to speak.

Then if I'm right, you talked about the -- at the IPO presentation, you talked about some kind of a meaningful improvement in technology in the next 2 to 3 years. So how far are you with this kind of development so far? And does that impact any kind of order intake because customers are possibly waiting for another certain milestone.

So there's one thing we're basically doing all the time which is improving our technology. And this is a continuous process, of course. If you're referring actually to our new technology development, and I think at the Capital Markets Day, we have given here an indication that by, I think, end of '25, right? '27.

We didn't give a precise...

So in that framework, actually, we will be having developed and market-ready technology actually that will be sort of a real step change and that is something we are currently working on. It's on plan from our perspective right now, but it's certainly a couple of years down the road.

Okay. And it has no impact on the current order intake because customers are waiting for the next big thing?

Not at all. Not at all.

Okay. And last but not least, the delay of the IPO. What kind of meaningful impact has that on your development of your business and maybe your own -- yes, how much are you convinced to drive these business without an IPO?

So as we were actually saying in terms of cash flow, and with that also in terms of financial firepower, we are pretty relaxed for the time being. And as such, basically, I would say, for the next 1 or 2 years, we should be in a good position actually to follow our strong growth path. Of course, with further growth and down the road in the midterm, we certainly need to raise funds. That's for sure. But for the period of time, actually over the next years, I think we are -- we can be quite relaxed and wait for the right moment actually to go public.

And there is no frustration within the organizations that they are not public so far?

I would say, it's basically continued excitement actually in our organization because we're staying prepared. We're staying ready actually at sort of almost any time. And that's certainly something which is sort of keeping also the organization up and running.

Thank you, Christian. So the next one here are Dominic O'Kane from JPMorgan. Dominic, welcome.

My question relates to technology. I wonder if you could maybe elaborate on the technology solutions that you're thinking about? And specifically, with thinking -- are you considering pressurized alkaline technology as a potential future technology solution?

Well, now it's getting technically. So first of all, I don't know what you want to know about technology. I mean is it our own technology development? Or is it more geared towards actually a comparison of different technologies in the market? I mean you can -- we can talk for hours on that, I guess. But in general, actually, we believe that with our alkaline water electrolysis technology, we are certainly having here a technology which can go and will go a long way. And has its advantages also certainly over other technologies like PEM or other technologies, of course. They all have their pros and cons, and there might be more geared towards a certain business case and other more towards -- other business case. But in general, actually -- and I think there's also a common market sense in the meantime. Alkaline water electrolysis will certainly have a quite significant say in that game. Pressurized versus nonpressurized. You certainly know that we are currently running a non-pressure process in our systems, which has a couple of advantages of course. One advantage is you don't need that much material because you have no pressure to withstand. And as such, actually, that is certainly also having a price effect. Secondly, there is also a safety aspect to that. I mean if you're not working on pressure, actually, the chance that you release a large amount of hydrogen from the system is, of course, lower than if you have a highly pressurized system. So that's the advantage side. Of course, on the other hand, basically, you need to pressurize then the hydrogen after the outlet, so to speak, which means actually you need a compressor system to do that, which is certainly also adding costs. However, also here, I believe this can also be an advantage because you can also steer more your requirements in terms of redundancies. Are we looking at pressurized? We look currently at almost everything you can imagine because we really want to find out for us what is the way to go to really do that step change. And it might be something at, I would say, elevated pressure, it might be something at even higher pressure, but it could also well be and that we are simply not there in terms of answering that question. It can also well be that we stay with non-pressurized systems.

Yes. All right. With that, we have come to the end of this Q&A session, and we continue in our program. You guys will be back here at the end of the session or the agenda. So thank you very much for so far, and we see you back soon.

It was our pleasure.

Thanks.

Yes, next here on the agenda is Steel Europe, presented by Bernhard Osburg, the CEO of the business. And Bernhard, I give the stage to you.

Thank you. I just need to get one of these. Thank you very much. Yes. Good afternoon, ladies and gentlemen. And also on behalf of thyssenkrupp Steel, I would like to welcome you to our capital market update here in Essen today. My name is Bernhard Osburg. I'm the CEO of the Steel business. And we have implemented within the last year a lot of very important topics coming out of our strategy 2030 as well as on our decarbonization path. And what you see here on the -- let's say, on the first slide on the picture, that is just one proof point. You see here a picture of the hot-dip galvanizing line #10 in Dortmund. Right now, the most modern and for sure, the most energy-efficient galvanizing line in Europe just commissioned 2 months ago here in Dortmund. Success for the business is always coming from a successful team. And let me introduce my management team in thyssenkrupp Steel. All together, we have a very balanced skill set, more than 130 years of experience, of course, mainly in steel, but also in automotive, in shipbuilding, in construction, nationally as well as internationally. And from left to the right, we have Dr. Kofler, who is responsible for the technical side of our business, then Carsten Evers, who will join me later on for the Q&A, our CFO. On the very right-hand side, Markus Grolms, responsible for the HR topics in thyssenkrupp Steel. And then Heike Denecke-Arnold, who is new in the team as we have decided to implement Chief Operations Officer function just in May this year. And Heike has a very proven track record when it comes to managing large sales department. She has a very proven track record when it comes to manage corporate planning functions on a high level. And of course, she knows how to manage production systems. And therefore, I think, together with Heike, we will push our operational excellence to the next level in the next years. Let's have a short view also on our customer markets, on the end customer markets. I think most of you quite well know how we are structured in the business. You see the figures and numbers from our business on the right-hand side on the slide. And you also see that we are a true automotive supplier, and this is, of course, our biggest exposure to the market. And you will know that automotive business for the last 3 years is quite a difficult area to be in Dieselgate. We had the corona and COVID shutdowns and then followed by supply chain disruptions, mainly or most prominent with the semiconductor crisis. But we are also, in many other very important areas on our customers' household packaging, construction engineering and also energy, one of the key elements in our strategy. And therefore, we have quite a balanced product mix here. And what you can see on the right-hand side even despite the fact that automotive is really a tricky business over the last 3 years. And of course, also the war on the Ukraine has done and has had a massive impact to our business, we were able to increase sales as well as EBITDA quite significantly. And I think that is a very good message for you and for the capital markets. So if we have a look on the agenda, what has happened in improvement of the EBITDA figures, I will provide a bridge, and I will guide you through it. You can see on the left-hand side, the fiscal year '19, '20, where we had a negative EBIT of EUR 820 million. So it has been improved to the last fiscal year, roughly about EUR 1 billion and over EUR 330 million out of it is coming from operational excellence as well as from headcount reductions, or restructuring of our business. And we have closed one of our loss-making businesses in heavy plate, and on the other side, we have fixed another loss-making business, electrical steel, which has contributed this year with over EUR 160 million positive impact. Then we have seen a huge and very good development on the spread, mainly driven by very good material prices. But still, also in the last fiscal year, we were able to add another EUR 100 million coming from operational excellence and coming also from further headcount reduction. We had counter effects mainly high raw material prices. And of course, the energy truck is also visible in our agenda, but still we were able to deliver EUR 1.2 billion. So a switch of more than EUR 200 million in the last 2 years. And 1/3 of it is coming -- from our homework is coming from our strategy 2030 from operational excellence and restructuring measures. I will guide you through 3 of our 5 top investment highlights. And I think you are pretty much aware, number three, here is the green transformation, that's the future license to operate. And therefore, for us, it's a very, very important topic in full dedicated focus from the management on this agenda here. The number 4 is the turnaround program in execution, I would call that the operator license today. And I will also guide you to what have been achieved over the last fiscal year. And as a delta to what I've told you last year here on the same stage and then with the number 5, I will also give you an insight how we look in the market and what does that mean for us. Let's start with the green transformation with our decarbonization and past 4 elements on that slide. On the left-hand side, the upper one, that is -- I think the most important decision we have taken in the last fiscal year, and this decision means that we will double our speed on the decarbonization agenda from what we have planned originally. We are doing that because we see quite good markets and customer markets and market demands for green steel down the road. And we are also doing that because we have a strong commitment here from the state of North Rhine-Westphalia and they will provide a mid-3-digit million euros number from subsidies to this program. And we expect that this will be maybe 30% from the whole subsidies we expect from the German government. On the upper right-hand side, you see our technology concept. And this technology concept is a unique one. It's a first of its kind one. And we have chosen to go this way because we are not going to do direct reduction and then EAF, Electric Arc Furnace to produce steel. We have a concept where we have direct reduction, a direct reduction plant and below this plant, we have a submerged arc furnace, and we are doing pig iron there. And that means that we start also in the green world, again, in our steel mills, and that means for our products, and we deliver more than 2,500 specifications to the market that there is no need for us to touch our product in terms of R&D and for the customer, the very important approach here is that from the first day on, when we deliver the first green steel out of the new assets, they can have all the specifications they want directly in green. That's a very big advantage to our competitors. Of course, left-hand side, we need to build up a supply chain for green energy, high massive amounts of green energy as well as for green hydrogen. And here, we are talking to all the big numbers and the big names in these markets. And right now, we are in the final negotiations in the head of terms together with the companies. And our target here is to get the balanced and risk-mitigated portfolio to really supply to our new plant in the beginning of 2026. And very right and on the lower side of the slide, we have also created a market. I have introduced last year to use the bluemint product. It is a product, a carbon-reduced product from the existing processes certified by TÜV Süd and DNV. And since then, we have more than 40 customers who are buying these products from us and paying an extra on the green product, which is very important for us to establish this market, and we have more than 1.6 million tons already contracted in MOUs together with our customers from the volumes from the new technology. And I think altogether, that is telling you and telling us that we will have one of the most interesting offers to the market beginning of 2026. To build a green transformation and to build a green future for a steel company, that means you now to have a strong foundation. And this strong foundation, that is why we have created the strategy 2030. I have already -- I gave you an update with the financial bridge on the performance side on the business. On the portfolio side, where we invest EUR 800 million on top to help us to build up technology in a way that we are quality leader that we improve our supply chain performance that we improve also our portfolio in a way that we are more advanced in the portfolio structure. That's well on track. We have been able to build up the walking beam furnace in our hot strip mill #2. You have already seen the hot-dip galvanizing line, #10, commissioned just 2 months ago. And there is another galvanizing line in Andernach, in our packaging steel business, again, first of its kind. It's the first line in the world who can code chromium without chromium (VI). And this is also a very big advantage for our colleagues from packaging steel. And we stick to our targets, which has been the basic of the strategy, the midterm targets to go to EUR 700 million of EBIT. And long term, we want to add EUR 1 billion coming from the strategy 2030. And EUR 430 million have already achieved within the last 2 years, and that makes a shift in EBITDA per ton of over EUR 200 per ton. I think also that we can say that these are very good proof points that the strategy is doing what it is built for to deliver EBIT as well as cash. So looking a brief picture on the market. I think everybody is aware that as a result of the Russian attack on the Ukraine, short term and midterm. But also the inflation Reduction Act in the U.S., more on the midterm and long term, this will do something to the European markets, and we are a player in the European markets. And that is also reflected in the growth rates in the EU as well as on the global scale, and you can see that especially the next year, the 2023 year will be a challenging one. But there is also good news on the agenda because the core segments, we have defined in our strategy. What we want to emphasize on and what we want to grow in automotive production as well as infrastructure, construction and energy have still quite good growth rates over the next years. Here, you see the numbers, '21 to '27, both more than 3%, and that is exactly where we want to grow with that business and overperform and outperform our competition. That is why we invest the money we are investing now. But nevertheless, there are so much changes in the market that we also need to focus again and to look what are the absolutely key priorities for the management team, what are the top priorities for my whole team over the next 18 months. And here, you can see 4 we call that strategic drivers where we fully focus on. This is operational model business steering, it's clear we need to be flexible. It's clear that we are in a very volatile environment. And that means, for example, how to build up the customer contract structures as well as how to run the stock level in the plant and things like that. Then we are investing a lot of money. And of course, our focus is also to have a risk-controlled implementation of these CapEx and these investments. It's critical to do that right now because the supply chains are heavily under pressure, but this is absolutely top priority to get that in controlled. Transformational mindset, performance orientation is everything if our people are not ready to fight every day also for small items because we multiply everything with 11 million tons. Everything is very important to add to EBIT, to add proof points and also increased numbers into the cash portfolio. That is where we are working on them very hard. And then absolutely clear, the license to operate tomorrow is green transformation is decarbonization and that is the fourth priority where we should not make any faults. And in the next 18 months, we have a very, very clear agenda, what needs to be delivered here that we are and that we keep on track, on time and also on budget. Let's have a short view on the financials and the KPIs. You can see our results, of course, '21, '22, and you have already seen them before. Then our outlook in '22, '23, the current fiscal year. We expect that the shipments will somehow flat to what we have also had last year was around 9.5 million tons. EBITDA, EBIT, and, of course, also the EBIT margin will go down because prices are going down. So we see here that we have a slight downturn here. And on the business cash flow, we see that we can improve and mainly, this will come from further net working capital release. On the midterm targets, I will say the same like last year. We will commit to our midterm target numbers. There's no need for us to adjust anything on the midterm performance we want to achieve. So let me summarize the updates on the capital market update this year. I think when we look at the strategy 2030, EUR 430 million already on the table, and we can say that this program is delivering what we -- what it should deliver and what we have promised here. Look on the green transformation. Of course, the most important decision here is to double the speed, which will help us to get the good and bigger share of the green market when it starts maybe in '25, '26 with the first volumes, we will be prepared, and I think we will be prepared here also with the best technical concept. EBITDA and margins, EUR 2 billion in 2 years, I think it's also a very good result here. But we know that we really have to tackle the cash side of our business that is hard to do, and we are not only dedicated but also 100% committed to them to do that. And we will, of course, not stop on the technology leadership. We will push that and emphasize that topic again. And that means that our team is highly committed to deliver on our targets and to deliver on what we have promised. And we do that as our sustainable produced steel is the foundation of industrial value creation. That is not only the purpose that is the responsibility we have, and we want to be successful. Thank you very much. And now I would like to invite my colleague, Carsten Evers here to answer your questions. Thank you.

All right. Yes. Thank you very much, Bernhard. Carsten, welcome here. Now Q&A, and we already see Ingo Schachel here on the screen.

My first question to start with would be on your revenue and selling price expectations. I think shipment's flat. I think we're fully understandable that then when you say revenue is slightly lower, I hope I understand you correctly that this drop would probably mean a rather single and double-digit decrease of revenues, whereas probably steel spot prices at least to hot spot, suggests that revenues might decline double digits. Can you shed a bit more light on why you are presumably not as pessimistic as spot prices would suggest? Is that -- that your contracts expectations also rather only the single-digit range? Or do you expect mix to improve? What are the drivers for potential outperformance versus what will this spot pictures would tell us?

No, we are -- I would first answer it from what is our view. We will not deep dive, of course, in our expectations on pricing. That's sure. But our view is -- I think you know the numbers, and you are looking also on the indices on the price side, but we see also that also on the cost side, we have some releases. And that together is something where we expect at the end of our period here to be in the mid-3-digit number of EBIT. That is our expectations here in the term.

But on the revenue guidance, is it -- when you say slightly lower revenues, can you quantify what slightly would mean for you?

I think what you definitely know is that January is for us the important month when we enter into our new contracts. I think it's too early to say what's the outcome there. But we are optimistic that we deliver on our guidance, and that is in particular true as well for the cash side.

Okay. And then maybe on the green steel opportunity and your mid- to long-term EBIT expectations when we compare your midterm target of EUR 700 million to a long-term EBIT of EUR 1 billion, to get from EUR 700 million to EUR 1 billion. What the large part of the delta be related to profitable green steel business opportunities that you see arising from your investments in this area? Or what continued performance improvement be also a big contributor to a potential increase of EBIT from EUR 700 million to EUR 1 billion in the midterm?

Yes. I think what we need to take, first of all, is that there is still homework which needs to be done. We are pretty good on tracking all our basic fields, so there is no doubt that we achieve what we have promised. And that basically will give us then the margins on the midterm side. So absolute commitment and reconfirming of that part. Profitability then in the green world is clearly something where I think every one of us would be happy to have the crystal ball. Our careful expectation would be that profitability basically should at least be the same that we provide today on our midterm target. Really too early to make it hard what we expect moving forward is that with basically supply chain, which should be then as well development on the regional side that we might get a little bit rid of the cycles that we have today. But clearly, the green world is something we're going to experience in 10 years and beyond.

All right. So the next one is Tom Zhang from Barclays. Welcome.

Just a question on the technology that you've chosen, the DRI, the submerged arc furnaces. I think beyond the sort of ability to use different iron ore grades and the fact that you're reusing the oxygen furnace infrastructure. Could you maybe talk about the other advantages and risks with the technology that you've chosen? So perhaps product quality? Is that an issue? And also ramp-up risks, what gives you the confidence you will have this up and running by 2026, given it would effectively be one of the first in the world at this scale?

Yes. Thank you for that question. Maybe the decision to go to a submerged arc furnace because 3 years ago, we have also worked on the EIF side. That was our original plan. The decision comes with 2 major points. Point number one, we have with packaging steel with exposed parts for automotive, with electrical steel, the portfolio mix. It's 1/3 of our portfolio, which you rarely see from EIF over the world. And there is a reason for it because either it is not feasible to do it in this part of the technology or if it's feasible, it's very, very difficult to do it and therefore, very costly to do it. So that is why we have chosen for another approach and still use the steel mills. You are right. We expect that we can go with, let's say, say, more flexibility on the input material pellets, we, for sure, do not need to have very specialized pallets, things like that. That is one advantage. But the biggest advantage is that we can run the SIF in a way that it perfectly fits to our steel mill as well as to our continuous caster from the tap sizes on. This is very difficult also with an EIF concept. And the core item is, of course, that it is absolutely key to have the technology installed for the premium parts, a very premium high sophisticated parts of our portfolio to really be on the safe side that what we deliver is in quality 100% of what the expectation of our customers is today. These are the 3 main reason why we have chosen for that technology. And to your question number two, every time you do things, first time, there is a risk involved. That's absolutely for sure. But the DR is a conventional DR line and the challenge will be to run it with 100% hydrogen. But this challenge is a challenge of the market. It's nothing special compared to what competitors are doing. And on the submerged arc furnace, it's also a 60-year-old technology. There's nothing new. It's new to make steel out of it. But for molding and other, it's a state-of-the-art technology. Here, I think the biggest challenge from a technology point of view will be the scaling to the right dimension, but we are working on it now since 3 years with 2 very experienced companies. And of course, we are confident that we will control this process.

And then just another one, please, on the downstream investments. So after the continuous casting line in Duisburg and the reversing balance similar in Bochum, do you think your downstream investment plan will be done? And then we focused only on the upstream? Or do you think there's still more modernization to be done?

So from -- coming from the decarbonization agenda, there is no further need to invest due to the green products. So that is really only DR only -- that's a massive investment, but it's DR and submerge arc furnace. And that is another very important point, no needed investment on the steel mill and downstream. For green, not. But in the strategy 2030, we have EUR 800 million investments in our downstream areas and also in the steel mill, which has nothing to do with the green side and we are building a new hot strip mill in one of our -- in the steaming #1 in Duisburg and 2 new casters. And then further downstream, you have seen the hot-dip galvanizing line number 10, we have another chromium coating line in Andernach for the packaging steel business. We will do a double reversing cold rolling mill for electric steel in Bochum as well. as a continuous coating and annealing line also for electric and steel in Bochum. These are the portfolio of investments we have right now under power.

Right. But most of those, as I understand, should be done by sort of 2025, 2026 at the latest, right? So out of 2030, beyond that, you wouldn't expect significant downstream investments. It's really more the upstream stuff?

No, I think when we have finalized the programs we have under fire right now, we have a very, very competitive setup. And then it's, of course, depending on what are markets doing. So it might be that electric steel demand is higher than we have expected, and we think how to grow and increase the share in our portfolio. But this is standard business, normally business year-by-year looking if we need to increase capacity, decrease capacities, but there is no further planning on big moves down the road.

Thanks, Tom. So next, there are Bastian Synagowitz, Christian Obst and Dominic O'Kane. Yes, Bastian, please go ahead.

I will follow up just briefly on your previous points regarding the investments that at least sounded like a pretty long list. I just want to make sure, is this all covered by the EUR 800 million budget, which you've been putting out, I think, a year ago for your strategic investments, just being conscious that I think just the HDG line is, I think, EUR 250 million to EUR 300 million or so. So can you just confirm that EUR 800 million is still the current budget for this?

I can confirm that the EUR 800 million is still the current budget for it. But your question to explain. For EUR 800 million, you do not get all the stuff I have mentioned, but we have partly of it, it was part of our basic investment, which were anyhow planned in the business, but there is what we have told you last year and this year, the EUR 800 million is covering the rest. Of course, inside the green transformation.

And could you at least broadly guide us towards like a CapEx run rate, which basically goes over this year into the next, say, 2 to 3 years, just to get a rough understanding?

Yes, that is, clearly, if we take out the transformation, which I think is fair to understand it, what we have as a guideline that it's basically a 3-digit amount midsize that we would need the year-by-year. And clearly, we have then the pattern for our EUR 800 million program where a good portion has been cashed out already. So it will be let's say, around that figure. So the guidance that has been given to you is still valid.

So mid-3-digit CapEx before decarbonization and then before funding support, there would be another mid-3-digit low to mid-3-digit number coming on top of that. Is that fair to assume?

I think on the green side, we still have to bring all bits and pieces together, specifically the funding side. And so there, I still would ask you for a little bit patient.

Okay. Then my next question is just on -- actually also on decarbonization and the partnerships you talked about earlier. You said that you had final negotiations with some of your partners for the supply of green hydrogen as a new energy vector. Could you maybe help us to understand how the pricing mechanism for these contracts may look like if you're close to signing here. Are these fixed price agreements? Are these price agreements, which are linked to indices? I imagine that must be difficult in the market, which is still developing and the cost level for green hydrogen is obviously still unknown. But maybe you can just talk through that real brief.

So that's -- all what you mentioned would be possible scenarios, but that is exactly what we are negotiating together now with the partners, what might be the right solution to our demand and to our target to have a balanced and risk-mitigated portfolio. And then, of course, you have some also ideas how to do that. And this is right now under negotiations.

Right. Next, we have Christian Obst. Christian, welcome back.

Thank you for taking these questions. Good afternoon. I have 3 again. First of all, as we are quite optimistic looking into the future, you have a CapEx plan, you have a positive view for the future. And you have then afterwards, a very state-of-the-art production facility, shouldn't be still Europe be a core of the entire group and not out for an IPO or for sale or for a split or whatsoever?

That is -- I think that is a question maybe for later when we are all together on the stage, but let me answer. I think the independence and steel model in the market is a clear strategy, and it is also a very good thing to follow up in the market. So that is my position on that.

Okay. Then I have one on the capital employed. Capital employed rose by approximately 40%, EUR 1.6 billion from last year to 6 years or this year. Can you give us some kind of a split between working capital investments and so on? So what is a major part, what has driven these capital employed increase? And how much you can release going forward?

Major part is caused by net working capital and within the net working capital, clearly, the inventory position. And the reason for that is that we have seen all of us raw material prices moving up. So that is really the main factor. And we will have a good portion of that being set free. So basically, the cash flow target will be secured by the release of net working capital going forward, in particular next calendar year, then all the way down to September 30, '23.

Okay. And last but not least, so you like to transform the 11 million to 12 million production capacity, right? Was there any kind of discussion that you might reduce your production capacity or entire footstep and saying, okay, we leave approximately 3 million, 4 million tons as some kind of a cash cow and we only transfer 6 million to 7 million tons on this green steel journey, could be a possible plan or not? And why are you not doing that?

There's, of course, always, and that is absolutely okay, a lot of discussion what is the right way when it comes to decarbonization and transformation for the future. Look, the good thing is there is no need to take the one big decision today. There is no need to do that because transformation means step-by-step, blast furnace by blast furnace to transfer the technology. And one thing is very important. The green transformation, it's not a technology transformation. That is one part, a difficult one, but it's a business model transformation for sure. Everything, market, customer, pricing and so on. So we are fully aware of the dimension of this transformation. And of course, we are permanently looking what is the right way to guide us through this may be challenging, but also ocean full of chances. And we will answer that question by doing it step by step. But of course, you're absolutely right. Everybody thinks what is the right way to do it. And what is the right numbers at the end of the game. And it's depending for many, many things. For example, the new normal energy price in Europe would be interesting to know.

And maybe one additional one. Where are you using the HKM volume for so far? And for what do you need it the most?

So HKM is just simply part of our plan. It's nothing extra. It's -- you know that we are a 50% owner of HKM. So it is part of our transformation again. And today, the most important share of HKM production is going to Hechtel in Limburg to the median risk hot strip line, especially for the cold rolling industry.

Thank you, Christian. Then we have Patrick (sic) [ Dominic ] O' Kane. He's already here. Welcome back.

It's Dominic. The -- so my main question was very similar to one of the previous questions. I'll ask you in a slightly different way. And I think you commented that you'll maybe come back to it later in the presentation. But I was quite intrigued by your comments at the start of the presentation that the businesses across the group will become more self-reliant and accountable for their own performance. So I'm quite intrigued by that statement in the context of Steel Europe heading into more challenging market conditions in 2023. How will you and the market be assessing the self-reliance and the accountability of Steel Europe against the targets that you've laid out? So I think you'll maybe come back to that quick question. But my other question in terms of technicals, is there any risk looking forward around the working capital release on inventory revaluation, particularly given the quite severe changes in pricing we've seen over the last 2 months.

Maybe for the first part of your question, of course, we are in a difficult market environment. So no doubt we have our plans, we have our figures, and we expect 2 things. First, I think we have shown that the strategy 2030 is delivering quite good numbers. And we, of course, think that we also in this fiscal year will deliver quite good numbers coming from there. As a counterpart to, let's say, falling market conditions. And we have set up on top of this an action plan for the next 3 years to deliver further EUR 100 million per year, also as a counter reaction and to be prepared for whatever is coming down the horizon. And the second question is...

Yes, I will take that. So in our cost accounting system, we basically run it on an average basis. So whenever inventory is with higher or lower volume, we have it in our period results, and that has been proved to work out so far. So there was no particular impact in Q4. We don't see it for Q1. So basically, it should be fine.

Good. Thank you very much. Bernhard, Carsten, thank you very much. Yes, Martina is coming up. And yes, this is the next point here on the agenda. It's the wrap-up of Martina. And the wrap-up will be followed by the Q&A session, having all the participants here on stage. Between this wrap-up and the final Q&A session, we need one minute of your patients because we have to equip the stage a bit more. And with that, please?

Thank you very much, Claus. So as you heard from our leadership teams in this segment and what you know of all the time you spent with thyssenkrupp, that this last 2.5 years, has put us into a severe test. COVID-19 supply chain bottlenecks, the Russian war in the Ukraine with all its consequences for the people there and also for us. This development demand a lot from us. Entrepreneurial thinking is challenged more than ever, and it requires the ability to anticipate changes. That's why it is so essential to maintain our ability to act, remain adaptable and flexible, prepare for headwinds and at the same time, not to lose sight of our opportunities and our potential. The change process thyssenkrupp started 3 years ago before the exogenous disruptions had occurred. At the same time, we began to position ourselves as a corporate group with plenty of entrepreneurial freedom in the businesses to strengthen creativity and decisive independent action. In addition to the resilience we have gained through our portfolio and our performance measures, we have also positioned ourselves in such a way that we have promoted this decisiveness, the determination of our teams and speed. The entire leadership team is deeply of the conviction that this will enable us, on the one hand, to respond appropriately and precisely to challenges and on the other hand, to adapt well to the opportunities that exist for our technologies. Because I'm firmly convinced that current developments will accelerate the green transformation. And we, thyssenkrupp have the relevant technologies and competencies for this in our portfolio. You have just seen that. Honestly, we are nowhere near where we want to be. But the improvement in all the last years despite all the adversities prove the effectiveness of our concept for the transformation. We will continue to build on this with rigorous cost control, with further tough performance measures, with a firm eye on the opportunities that lie ahead with the green transformation. Having said that, first of all, thanks for your attention. My colleagues and me are now ready to take your questions. Thanks again.

Yes. Thank you, Martina. And now one minute because we will bring tables here on the stage. Thank you. [Break]

Now we are ready for the final Q&A session. And I can see that at the moment on next -- we don't have questions yet. Maybe then I ask a question, one of these that we are getting very frequently, maybe I'll begin with nucera. It's about opportunities from digitization. This is something, yes, can you explain a bit what you're making in terms of this topic here?

So as I have mentioned, in particular, the service business is a key pillar of our business, and there are numerous, really numerous opportunities actually in terms of digitalization in the service businesses, of course. We are pretty aware of that, and we are working heavily actually also to digitalize our service to the maximum extent, which is certainly to the benefit to our customers, but also certainly also helping us to be more efficient actually with our own service organizations. So that's very important. Apart from that, there's certainly also many digitalization opportunities also in the building in the design phase and in the building actually of our systems. So like digital twins, for example. So those are also things that we are currently developing and actually certainly want to use in the future to be even more effective and efficient.

Thank you very much. And another question here, this goes out to Steel. It's about electrification or the trend to e-mobility and what this might mean or will mean going forward for your business?

For us, it's a very good trend. And let's say, let's start with the electrification of the mobility. And it's a good trend for us because it first of all, will increase the weight -- the steel weight of a car, and that is, of course, for us a very, very important thing. And secondly, we are among the market leaders in that product in Germany and as well in Europe. So that is a very good growth path we see down the road. And certainly, it's part of our strategy. So 2 very important investments in our strategy is fully dedicated to the electrification of cars as well as to wind energy. So for us, the development is quite a good one because it's just emphasizing that we have taken the right decisions 3 years ago.

Okay. Well, and this goes out now to the attendees participants. [Operator Instructions] Another question is going out now to nucera. It's about your cooperation with IDN. And could you elaborate a bit more on that? Also, how it contributes to your asset-light business model and also IP, how the IP of your business is split between the 2 partners?

So in general, this is a very long-standing corporation. So we're working together since decades, actually, which is good because we know each other, we know how to work with each other. As said, Industrie De Nora is an expert in electrodes and coatings of electrodes, which is for us an essential element in our technologies and in our systems, which is also how we basically split in terms of IP and know-how. Everything which is coating and electrodes is the know-how and the expertise of Industrie De Nora. And everything actually, which is actually coming on top of that when it comes to design of sales, when it comes to design of the system, process, et cetera, actually is our know-how, our expertise in our IP. And this is getting -- this is going along quite some time already, and it's a well-established, very well structured corporation and its yielding obviously also a lot of success, and we will certainly be more than happy to continue that.

Okay. Great. Thank you. Now let me see whether questions have arrived in the meantime. I'm seeing my colleague here writing. Yes. Here now, we have got Ingo Schachel here also on the screen. Ingo, please go ahead.

My first question would be to Martina on corporate culture. I think ever since Martina, who joined 3 years ago, it was really dominated by challenges, very difficult environment, big job cut numbers. Just wondering whether you could give us a sense for how you see currently the corporate culture and how you think thyssenkrupp's culture can evolve further in the next years as maybe growth is moving more into focus, where do you think from a corporate culture perspective, you are at a good standpoint and where do you see evolution potential?

Thank you very much, Ingo. Great question. Thank you for this. Actually, when I joined thyssenkrupp, it was from the beginning to me, and I say this now as a passionate engineer. It is fully clear that at thyssenkrupp we can capitalize on our advantages. There is no doubt that we have outstanding technical capabilities with which we can differentiate ourselves within our relevant ecosystem. So we are really good engineers, not only good engineers in terms of technologies. We are very reliable suppliers to our customers. So that's, I would say, already an outstanding positive point in our company's culture and I have no doubt that, that is one of the main areas where we can capitalize on. On the other hand, I think there is significant new sources of value to be captured within our group of companies. And what we try to get across today is that we actually do that, too. So we streamline, as you heard, Ingo, we streamlined our portfolio on one hand. But on the other hand, we developed these sources of so-called new values, which, of course, at the point in time, we might be able then to crystallize this value. But now coming to the corporate culture, I do feel that, of course, thyssenkrupp became somewhat in the long years of its history, it became a less entrepreneurial mindset in the individual businesses. And I feel that as you saw it today, our more decentralized structure, of course, gives much more entrepreneurial freedom, and I do see the changes already in our P&L. So I think that's already visible that advantage of more entrepreneurial freedom combined with good management teams that, that pays off. So I would say, still we drive in the organization focus on capitalizing on, as I said at the beginning, on capitalizing disadvantages. And of course, you cannot say such a change in structure is already at this end after 3 years. So I would say we have still huge untapped potential in this company, and that is why I'm deeply convinced that with this more decentralized structure, we can capture this advantage.

Okay. If I may ask a quick one on ESG. You said that ESG has been made a priority for every single business area. And I think many areas we see progress, green steel, green bearings, nucera, can you give us a quick comment on Marine Systems and on their divisional level, what kind of targets you're setting there also what your general point is on how -- what Marine Systems needs to do in order to be ESG enough to be part of thyssenkrupp's portfolio?

So I think I do not release any news because we said it, we had already 2 years, 3 years ago in our first portfolio review, we at that time said clearly that we prepare for a stand-alone capability of the Marine business. And we confirm this already since some time. And I think recent market developments supporting this very much. I have to say. This is why the team at Marine Systems and you read it possibly in some of their announcements, they are on what they call the road to independents. And of course, I do believe that in an ESG environment with the current taxonomy, of course, it would be difficult to maintain a setup with mostly defense-oriented business within an industrial group as we are. But what I have to say our team at Marine Systems using their technical capabilities they have in the marine environment. They are also focusing on nondefense business. So it's not only -- and we are actually just working on a contract to develop a business. So it's not only defense business. So we are building a second pillar too, it was in that business.

All right. The next questions come from Alain Gabriel.

Martina, 2 questions from my side. The first one is that the CMD has been focused by design on steel, on material services and nucera, does it mean that the Autotech and industrial components, now obviously discussed just now Marine Systems are now taking the back seat of the group and should we interpret this as a strategic refocus of the organization towards these 3 new pillars? That's my first question.

No, Alain, I have to say this is mostly driven the decision to focus on these 3 segments, on these 3 business areas is driven by our experience that you, as our investors, our analysts, that this seems to be the areas where we get most of the questions too. And we felt it's better than capture -- than covering everything at the surface. It's better to go deeper in certain areas in order to allow you to get more insights than in -- I would say, than in the usual quarterly call. This is why we call it capital markets update. So this is not a sign to whatever portfolio activity you might imagine is behind the selection. It's just simply because we feel that this are the areas of interest. This is where you want to know from us what we are doing, and we decided to allow a certain depth in the discussion, and this is why we selected these 3 teams and these 3 segments.

That's very clear. And my second question is on Multi Tracks. Can you remind us what is left there ex nucera and how patient are you going to be with the losses from that division?

First, patience is not one of my strengths. I have to say that. I think everybody who knows myself, patience is definitely not one of my strengths. So first, without going into detail, Alain, we consider in Multi Tracks, there are areas where we have definitely decided and we still work on that to say there, we do not consider ourselves, thyssenkrupp being the best owner of the business. Yes, we took the foot from the pedal a bit from the last months because we saw these high uncertainties and low visibility in capital markets. And fortunately, the time is over where thyssenkrupp has tried to do it because without doing it, we would get in existential issues. So we try to, of course, with -- at the end of the day, even for these businesses where we do not consider ourselves the best owner. We are not in a hurry. We are working on it again. But I think we and you, everybody deserves that we capitalize on what's in the business. So that's on the one side, but we have not changed our views on where we believe we are not the best owners. On the other side, in Multi Tracks and that is, I think, where all management teams at thyssenkrupp can be proud of, we saw these pockets of value. You probably -- you know thyssenkrupp for a long time. You know that we had this kind of planned technologies Industrial Solutions. And at the point in time, we told you that we are considering to sell this off. Actually, at that time, we learned that all the offers did not see this value in the business, especially by carving it out and giving it focus like Uhde today, like, for example, nucera. And we find we are good portfolio developers too. A good company like thyssenkrupp is a good portfolio manager, too. Of course, our operations and our operational skills are very strong. But what I try to convince you of forget this picture that thyssenkrupp is just only a company selling off assets. We consider us being a good asset managers, we develop assets. We make assets better, and we feel that we are not the best owner in whatever way. Then we say, okay, we crystallize on the value, which we've developed. I try to change this. And I think a good -- to this perception. And a good example is definitely for sure. I have to say, are the examples you saw today, it's sometimes in an industrial group it's not an overnight. It's not an overnight change because we have technology which needs really time in order to develop and to provide the return expected. But as said, I think Multi Tracks was a good decision because with the Multi Tracks decision 3 years ago, we made it crystal clear to everyone at that time. What -- where we feel, thyssenkrupp being the best owner where we feel. We are probably not the best owner alone and where we are definitely not the best owner. And these areas was definitely not the best owner even in that area. We developed significant value, what you saw today. So I think this is a proof point of a combination of outstanding technical capabilities combined with active portfolio management and relentless drive for operational capabilities, operational cost reduction and a constant, of course, a constant will and fight for improvement.

So the next one, Bastian back here.

I only have one quick one left. Actually, also in Uhde, so related to the topic you just talked about. That obviously sits within Multi Tracks, but there are -- there's probably still a lot of good IP sitting in that business, and that's also proven by the large ammonia order which you've just won and that obviously will be a growth market similar to hydrogen over the next couple of years. But there certainly were some execution issues in the past and that, I think, keeps being an overhang. From what you just said, you're still aiming to sell it, but there are still some remaining ties to nucera as well. So how will Uhde interact with nucera if you were to find a new owner here?

Bastian, thank you very much. It's a great question. First, I have to say that, of course, Multi Tracks and when we founded Multi Tracks years ago, some people ask me, why don't you call it bad banks incorporate. So it is why not being honest and say this is a bad bank. This never was a bad bank. This is a capability to develop value within a portfolio with, I would say, with capabilities and technical skills for execution, which goes beyond running a company, you know what I mean. We -- it was clear in Multi Tracks we need a combination of operational capability, technical capability, but also execution skills on the more I would say, on more transformational capabilities. This is why we call it Multi Tracks. We allowed ourselves to learn as we go. And we saw the green transformation coming. This is why we immediately stopped the selling off of the plant technologies as a whole after we got the first bit. And Uhde, as you raised the question now specifically for Uhde, you probably know that we are focusing Uhde on green technologies that there is today more than only green technologies, but we have decided to more or less executing same what we did somewhere else. You saw today the example. So we're focusing Uhde on-grid technologies and you saw that we just recently won the biggest ammonia plant and that we will receive the first order for Germany for an ammonia cracker. So Uhde Fertilizer Technology is allowing them to focus on green technologies, and we will refocus and we are working on it focusing Uhde on green technologies. And there is no decision. We are just now developing that business. We are focusing it. And then yet, of course, the question remains then what is the 5 years, 10 years outlook. But the first thing is we are convinced that we are -- that we can develop the value of that business by focusing it on its capabilities for the green transformation.

Well, with that, we have come to the end of our capital market update. Finally, I would like to briefly thank first here, the leadership team on stage and your teams for the support of Investor Relations. I would like to thank all the participants out there for your interest, for attending and of course, for your great questions. And last but not least, definitely to my team, which has done again an outstanding job. Well done. And yes, well, that's it from my side. We look forward to staying in touch with you and wish you also a nice weekend in a couple of hours. Bye-bye.