ThyssenKrupp is accelerating its shift away from steel and other traditional businesses and into the higher value automotive sector.
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The German industrial giant wants to build ThyssenKrupp Automotive’s chassis, body and powertrain businesses from sales of €6.23 billion in the year to September 30, 2003 to €10 billion in the next few years.
Including the group’s steel, body-in-white and plant assembly technologies, and maintenance and logistics management services, ThyssenKrupp already has sales of €10.1 billion to the auto industry. That puts it among the top 10 automotive suppliers worldwide. Altogether, the group reported sales of €36.1 billion in the financial year to September 30.
ThyssenKrupp is optimistic about the outlook for the auto industry. It expects global production to grow 4.7% in 2004 to 62.7 million cars and trucks. Emerging market will grow from 4.28 to 5 million vehicles. That not only means China, says the supplier, but also Brazil, India and South Korea.
North America and Europe (including Turkey) are also expected to grow 3-4% next year.
Sales hit by fall in dollar
ThyssenKrupp Budd, the group’s US subsidiary, accounts for 46% of ThyssenKrupp Automotive sales, well ahead of Germany (24%) and the rest of Europe (22%).
That meant that ThyssenKrupp Automotive’s sales were hammered by the fall in the dollar. The nominal value of the division’s sales fell 0.7% in the year ending September 30, though in constant currency terms they were up by 8%, the company said.
Order intake was down by 2.2% – but up by 6.4% when adjusted for currency fluctuations.
Orders and earnings before interest and taxes improved as the year progressed. The fourth quarter showed the strongest performance on both measures (order intakes up +7.4% year-on-year and profits at 9.1% of sales).
But free cash flow for the business was still negative, although the automotive operation reduced capital expenditure by 29.4% to €319 million.
ThyssenKrupp Automotive’s return on capital employed rose from 5.1% in 2001/02 to 9.6% in 2002/03.
Acquisitions, joint venture provide boost
ThyssenKrupp Automotive made two big acquisitions in the automotive sector in 2003. Sofedit, the French structures business, was consolidated starting in July, and in November it acquired 60% of the steering systems operation Mercedes-Benz Lenkungen.
Together, the two acquisitions will result in a boost to sales of €900 million per year.
The group also made disposals in 2002/2003 in the automotive sector – selling two North American operations and mothballing or closing two other plants.
But the two acquisitions in 2002/03 will more than outweigh the effect of disposals and closures. ThyssenKrupp Automotive expects strong growth in 2003/04, helped by the start of production of new models with its content.
The company has ended talks with Opel about acquiring the GM subsidiary’s press operations in Kaiserslautern in Germany. ThyssenKrupp cited disagreements about pay levels for employees. But it is still understood to be interested in increasing its 10% stake in Valmet Automotive, the Finnish niche assembler.
ThyssenKrupp Automotive has an option on the rest of that business that runs until the end of 2004.
Despite the setback with Opel, the company is looking to grow more as OEMs choose to outsource. It also wants to expand in Asia, says ThyssenKrupp chairman Ekkehard Schulz.
ThyssenKrupp Automotive recently announced a new joint venture in China that will almost double its production of steering columns in the country.
ThyssenKrupp Presta HuiZhong is expected to produce 350,000 steering columns in 2003. By 2005, ThyssenKrupp expects to produce one million steering systems a year in China.
SupplierBusiness.com
