Dear ladies and gentlemen, welcome to the webcast of thyssenkrupp. At our customer's request, this conference will be recorded. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. I now hand you over to Claus Ehrenbeck, who will lead you through this conference. Please go ahead.
Yeah. Thank you very much, operator. Hello, everybody. This is Claus Ehrenbeck from the Investor Relations team. Also on behalf of the entire team, I would like to wish you a very warm welcome to our conference call on Q1 numbers today. All the documents for this call have already been released this morning, and you can find them on the IR section on our website. The documents do not yet contain the numbers for nucera. Those will be released tomorrow at around 3:00 P.M. This is for process reasons. With that, I would like to hand over to Klaus Keysberg, our CFO, who will lead you through the slides for today before we then go into the Q&A session. Klaus, please.
Yeah. Thank you. Hello and also warm welcome from my side to our conference call on TK's Q1 figures. As you've seen today, thyssenkrupp has made a good start in the new fiscal year 2021-2022 and continued the positive trend of its business performance. Before I comment on the Q1 figures, allow me to briefly summarize where we currently stand on our transformation path. Considering our ambitious prospects and our performance targets to break even at free cash flow, the current fiscal year 2021-2022 can be considered as a financial milestone year. With the progress clearly visible in our financial ratios, we are at the apex of the line U, where we are getting closer and closer to the scale phase.
To describe the way ahead on our transformation curve, we published the medium term targets of the segments and the group at our Capital Market Day in December. Beyond the performance milestones, we have set further strategic deliverables where we are well on track. For our strategic realignment as a group of companies, we have our target portfolio defined. In addition, we have taken action for our hydrogen business, nucera, by preparing an IPO as a preferred option for value crystallization. For Steel Europe, we are assessing a stand-alone option. Well, as the CFO, I am pleased to state that our transformation plan is backed by a very strong balance sheet with an equity ratio of 30% and a net cash position of roughly EUR 3.6 billion as of the end of last fiscal year.
That will further strengthen with the financial effects from portfolio streamlining and more important operational progress in 2021, 2022. Furthermore, we run our largest restructuring program in the history with additional efficiency and cost reduction programs initiated. Our portfolio streamlining is well on track with more than half of the planned M&A activities within this, the MT segment signed or exited. On that basis alone, we expect positive high three-digit million euro effects on net cash and pensions for the current fiscal year. Furthermore, we emphasize ESG topics in our strategy and thus made sustainability and transparency a CEO priority. We have a clearly defined roadmap to carbon neutrality by 2050 and have set ourselves ambitious climate targets, which are assessed by the SBTi and fully in line with the 2015 Paris Agreement.
All of the deliverables give you a perspective of where we are standing currently. As a major part of the future viability, it is important to us to mention that our businesses are well positioned to benefit from major transformational trends. Let me give you some examples on the next slide. First, advanced mobility. In advanced mobility, we are at the forefront of the topics. E-mobility and automated driving, where TK takes leading positions within the segments of Automotive Technology and Steel Europe in important areas such as autonomous driving and materials for e-engines. For lightweight solutions, particularly high-strength steel, our colleagues in Duisburg build up capacities for steel that is making car bodies more energy efficient while not compromising on safety. In green energy, the TK Group is standing out in the technologies for hydrogen electrolysis, green ammonia, and renewable energy.
nucera is market leader in industrial scale plants for alkaline water electrolysis, while Uhde is market and technology leader for green ammonia plants that are essential for hydrogen and energy carrier, as well as fertilizer production. The bearing business of Industrial Components has a leading position in its field, for example, wind turbines. For decarbonization, Steel Europe is currently preparing the largest transformation in its history to a green steel producer with a clear roadmap defined to becoming a climate neutral steel location by 2045. Also at Materials Services. It takes part in decarbonization with being a first mover in supplying CO2 reduced materials and CO2 optimized supply chains. Digitization obviously takes place in all of our businesses.
Particularly emphasized should be the digital services. With the state-of-the-art digital offerings for resilient supply chain solutions and the in-house expertise at Automotive Technology, since software-assisted mechanical functions are becoming increasingly important. Here to mention the Electric Power Steering and the fully active damper for vehicle motion control, as illustrated already on the Capital Market Day. Overall, this shows that our businesses keep up with the forefront of the development in some of the most promising transformational trends. This also reflects our heritage of relentless ambition to capitalize on our long-standing expertise in engineering and technology. With that having said, and before I guide you through our Q1 financials, I would like to show you this slide from our Capital Market Day that summarizes the midterm targets for our segments and the group. I mean, being conscious of time, I will not go too in detail now.
I mean, you know this already and you have read it. However, let me state that the resumption of dividend payments is a clear target for us, and this is already, let's say, due for the current fiscal year. Let us now briefly take a look at the highlights of what we have accomplished during the first quarter. Across all segments, order intake has grown significantly year-on-year by 33%, driven by Materials Services, Marine Systems, and Multi Tracks. For the latter, particularly to mention nucera, with more than EUR 4.8 billion in the hydrogen businesses with winning two landmark projects.
Simultaneously, we have been able to lift the EBIT adjusted by EUR 300 million year-on-year to EUR 378 million, and the margin significantly from 1.1% to 4.2%, mainly due to strong improvements at the segment's Materials Services, Steel Europe and MT Multi Tracks. We expect an acceleration of EBIT adjusted in the following quarters, particularly driven by Steel Europe due to higher spread, also from renewed steel sales contracts and higher shipments following seasonality as well as continuing stabilization of supply shortage at auto producers. As anticipated in our plan for Q1 and already flagged last November and at our Capital Market Day, free cash flow before MOD is significantly negative and below the prior year.
This is driven by temporary increases in net working capital with high inventories at high material prices that came on top of the seasonal pattern, mainly due to slow customer call-offs as a result of the aforementioned supply shortage. We expect, however, a significant release of net working capital going forward, leading to significantly positive free cash flow in Q3 and Q4. The next slide depicts and summarizes where we stand with the restructuring plans of our businesses. We extend our restructuring initiatives to a total reduction of more than 12,700 FTEs so far. In the last two years, we already achieved roughly 2/3, which means in absolute terms, roughly 8,400 FTEs.
As part of the restructuring, we expect for the group a cash-out on a prior year level of fiscal year 2021/22 for the fiscal year 2021/22, while the remaining expense will be significantly lower due to the provisions already made in previous years. Based on these restructuring efforts, we have realized from headcount reduction already sustainable savings in a low- to mid-three-digit million euro range during the past fiscal years, and expect them to climb to a sustainable high-three-digit million euro number in the midterm. Let's take a look at our operational performance on the overview on the next slide. As evidenced by the graphs and figures, we see a significantly improved performance in Q1 year-on-year, with all segments contributing with a positive EBIT adjusted, with MT being the sole exception.
Year-on-year, we see significant positive contribution with strong effects from Materials Services, Steel Europe, and MT. At Materials Services, mainly due to significantly higher product prices. At Steel Europe, with significant increase in average selling prices, however, partly offset by material and supply bottlenecks in many customer industries, especially auto. At Multi Tracks, significantly reduced losses, mainly by the positive contribution of AST and improved project execution and plant engineering. The positive effects from the operational side is supported through the stringent execution of headcount reduction that I already illustrated. The structural improvements are partly offset by effects from the aforementioned supply shortages and higher factor costs, particularly relevant for our Automotive Technology and Industrial Components segments. Let me now walk you through each of our business segments and briefly highlight some major developments of Q1 in the following, starting with Materials Services.
We have seen slightly lower shipments year-on-year due to material shortages, mainly in Europe. However, sales clearly benefited from the favorable trading conditions with an increase of 39% year-on-year due to higher prices in all product groups, partly offset by lower warehousing shipments. Simultaneously, EBIT adjusted continued to be strong with a total of EUR 290 million in Q1, which is an improvement of EUR 250 million year-on-year by favorable price dynamics, clearly supporting margins as well as productivity gains achieved inter alia via continued FTE reduction with the closure of two additional sites in this quarter. These developments broadly reflect the overall market picture with continued recovery in Europe and North America. Moving on to Industrial Components.
In case of bearings, we observed a decline in order intakes and sales, mainly due to temporary decline in demand in China, especially in wind energy applications and industrial applications with heterogeneous performance. Bearings for construction equipment and general engineering were higher year-on-year, while excavators were weaker year-on-year and crane construction mainly on the level of prior year. Forged Technologies achieved significant increases in order intake and sales performance by strong demand for its components, mainly driven by growth in industrial business and continued high level of powertrain components for trucks, slightly supported by expansion of the product range and development of new markets and business areas. EBIT adjusted has declined year-on-year in both businesses and was impacted by increased factor costs at bearings. This was mainly driven by declining sales, of course, and significantly higher cost of materials.
The negative effect was partly counteracted by efficiency enhanced measures due to restructuring efforts. At Forged Technologies, the decline is based on rising steel prices as well as significantly increased energy and freight costs, which of course we are working on to pass them through. Continued cost-cutting measures with the associated optimization of the personnel expense ratio were able to partially also offset the increased costs. Next to Automotive Technology, which has been challenged with ongoing supply chain bottlenecks, mainly at their customers and thus volatile call off and weakening demand in China. Thereof, Automotive Technology is lower in order intake and sales. However, we see signs of stabilization in customer demand quarter-on-quarter. Simultaneously, EBIT adjusted is substantially down year-on-year due to lower capacity utilization and increased factor costs.
Partially compensated by price and performance measures, including sustainable reduction of personal costs and cost savings related to higher production efficiencies and restructuring. Looking at Steel Europe, we had slightly lower volumes, particularly from auto customers, again related to the supply chain shortage situation. However, Steel Europe is slightly up quarter-on-quarter after the plant relining of Blast Furnace 1 in Q4. Sales are significantly up with 39% year-on-year, driven by high price levels and a better product mix. This was partly offset by lower shipments and higher raw material costs. EBIT adjusted increased strongly year-on-year by EUR 104 million. Additionally, positive effects were achieved from the ongoing restructuring measures and the performance program.
Looking forward with the upcoming adjustment on long-term contracts to actual market conditions, a significant improvement in the relevant financial ratios will become apparent progressively in the quarters to come. Moving on to Marine Systems, the stable sales growth and earnings improvement process is as planned. Order intake was up 85% year-on-year based on maintenance, service and marine electronics, as well as the extension of existing surface vessel contracts. EBIT adjusted is slightly higher year-on-year, backed by measures taken under the performance program to stabilize old low margin legacy orders taking effect. Furthermore, Marine Systems managed to further optimize its administrative costs. Last but not least, Multi Tracks could again significantly improve across all KPIs. Order intake grew by 80% year-on-year due to the aforementioned water electrolysis contracts of thyssenkrupp nucera and demand increases at plant engineering as well as AST.
Sales have been boosted by 28% year-on-year. The major driver was AST with higher volumes and higher prices. In addition, we saw positive developments at our cement plants business and at the more automotive related businesses. Also nucera with its chlor-alkali service businesses develops positively. EBIT adjusted has significantly improved from previously -EUR 100 million in Q1 2021/22 to a loss of only EUR 1 million over the same time frame in fiscal year 2021/22. Mainly driven by improvements at AST as well as plant engineering on the back of better project execution.
For our holistic outlook on the fiscal year 2021, 2022, we believe that an optimistic yet cautious view is appropriate based on the structural improvements in our business, favorable economic forecasts for GDP growth in Europe, the U.S. and China, and also considering uncertainties stemming from supply chain constraints, effects from the recent sharp increase in input factor costs, and not least, the ongoing course of the pandemic. The development in Q1 and what we already see going forward is very confirming for our targets for the fiscal year. Sales growth for 2021, 2022 is expected to be in the mid-single-digit percentage range year-on-year and adjusted EBIT to significantly improve to a figure between EUR 1.5 billion and EUR 1.8 billion. Looking at cash flow, very important, we are expecting a significant increase in free cash flow before M&A to break even.
Let me make it very clear. We clearly confirm this milestone. This is most likely the most important message regarding our guidance here. The improvement will come primarily from the increasing earnings and will also depend on changes in net working capital, also including effects from payment profiles at project businesses, payouts for the restructuring plan that are currently estimated in the low- to mid-three-digit million range, as well as the level of capital spending. Investment or CapEx will be higher at Steel Europe in conjunction with Strategy 20-30 and the other businesses investments will stay high in order to strengthen competitiveness and targeted growth. It is important to note, investments will be approved on a restrictive basis, depending on business performance and cash generation.
For our net cash position, we anticipate an increase of a high three-digit million number, mainly driven by M&A closings of AST and mining. With regards to our outlook on the upcoming quarters Q2 to Q4, we expect Steel Europe with a further step up in performance, in particular on the back of better spreads from better prices and higher volumes, as well as Strategy 20-30 and positive effects also on the other auto-related businesses from continuing stabilization of supply shortages. At the same time, uncertainties stemming from the development of factor costs have to be monitored. For Q2, in particular, we aim to a further quarter-on-quarter increase in EBIT adjusted, while free cash flow before M&A, as anticipated in our plan, will be negative by effects from net working capital related to the strong demand. Here we especially talking about receivables.
For the second half of the fiscal year, we expect significant net working capital release and both Q3 and Q4 generating substantial positive free cash flow before M&A, also driven by a strong earnings development. To conclude, our quarterly figures clearly show that the measures of our transformation program are taking effect. Our goal to build a powerful group of companies with strong independent businesses is getting closer. We clearly confirm our guidance for the current fiscal year with at least break-even free cash flow before M&A. We are reaching another milestone in our transformation. This is a major and important step towards the midterm targets we announced in December 2021. We made strong progress on our portfolio streamlining with value crystallization underway. For our steel business, we will continue diligently evaluating a stand-alone option, and we continue to pursue M&A opportunities for our Multi Tracks businesses.
For thyssenkrupp nucera , an IPO as a preferred option is currently in preparation. A further important step is rewarding the trust of our shareholder. Therefore, we have set the clear target of the resumption of reliable dividend payments. Last but not least, it should be emphasized that sustainability is a core component for TK strategy and thus management priority. Our most recent rating results from CDP, for example, we are ranked for the sixth time in a row on the Climate A List, are already a further reward for our efforts, which we will continue driving forward. Furthermore, we are improving transparency for our stakeholders by publishing important information according to frameworks like most recently the Sustainability Accounting Standards Board's report. Having said that, thank you for the attention and I'm now ready to answer your questions.
Yeah. Thank you very much, Klaus. We can now hand over to the operator for moderating the Q&A session. Before we do that, just, if you could do us a favor and also your colleagues a favor, if you would only ask two questions at a time. This would give everybody who is waiting in line here to ask questions, a chance to ask these questions. Thank you very much for this. Now, operator, please take over.
We will now begin the question and answer session. If you have a question for our speaker, please dial zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask the question. Please only ask a maximum of two questions. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please for the first question. The first question is from Seth Rosenfeld of BNP Paribas. Your line is now open.
Good afternoon. Thanks for taking our questions today. I have two questions with regards to steel and also on the auto side, please. I'll start off with regards to what you're seeing from your automotive customers. Can you just give a bit more color on to what extent you might already be witnessing an improvement in auto offtake over recent weeks? I think your guidance is pointing to relative stability in Q2, fiscal Q2, with a pickup only second half of the year. We've heard from several of your peers who've been more optimistic, noting they've already witnessed an inflection. What could be driving that disparate guidance? I'll start there, please.
Let me now get to-
As we already, I think, mentioned last time, if you look at this development in the auto industry and the semiconductor shortage, we saw huge effects on this in our Q1. We had this call off, which were not stable and things like this. We also said that we consider this Q1 as the worst point. What we actually see is that we saw a normalization on a low level in call off from automotive customers. We think it's going to increase during the next quarter. We clearly think that this semiconductor issue, we will see till summer, at least till summer. Within, let's say, ongoing normalization.
We already saw a normalization on low levels, but we are now seeing slightly increasing momentum here in this issue.
Okay. Thank you. The second question please with regard to the Steel Europe performance. Last year it was quite challenging to understand to what extent your lagging margins were due to cost headwinds versus the challenge of low price contracts. Now we're seeing a very sharp recovery in profitability, but again, it's challenging to know to what extent that's because restructuring has been successful or just 'cause the contracts are surging. What would you point to if we wanna have more confidence with the fact that your internal operation directly performing better, stripping out the tailwind on the contract side? Thank you.
No, the question was hard to understand, but if I understood the question right, what can we, let's say, explain regarding the contracts and how is the restructuring running? I think the restructuring is at the moment running clearly on plan. You know that we had this restructuring target of making people redundant. Then here we are fully in plan. On the cost side, we saw improvements here really according to plan. On the other thing, the contracts. We were quite successful to transform the spot price development into our long-term contracts, as we already mentioned last year.
If you look at the performance in the first quarter, we were able to increase our performance to an EBIT per ton, roughly, I think it's 87 or something like this. It is clearly the right direction, but this is not enough. If we know that we want to increase our EBIT numbers in the Steel, last time we said we want to increase our EBIT by EUR 1 billion compared to previous year, and this is still our goal. If we talk about this, you know that our performance has to be even much higher than EUR 87 EBITDA per ton. We are increasing this, and of course this will be, let's say, understood.
This will be supported by of course, the better spreads we could achieve because of the contracts here. Of course we see increasing volumes over the year.
Can you break out in that billion how much is simply because of prices versus how much is due to cost improvement?
This is a number very much in detail. I mean, you can make your own calculations on this, you know that, you know how many people we made redundant. These are more or less more than 2,300 or more than 2,400 already. This will also increase during the year. You know, the sensitivities of the prices here so you can make your calculation because we are not providing that kind of details, information here.
Okay. Thank you very much.
The next question is from Faisal Khurshid of Jefferies. Your line is now open.
Hi, it's Faisal Khurshid from Jefferies. Maybe just to look at Seth's question from a different angle. Some of your peers have reported that automotive supply chains have largely passed or are over. Could you perhaps highlight to us when you expect the Industrial Components and Automotive Technology businesses to return to historical profitability levels?
Yeah. If you look at our businesses here, if you look at Automotive Technology business, there are two effects. Of course, we see lower volumes and, for instance, than previous year quarter, and we see higher factor costs. Two issues on this here. We will see, let's say improving volumes, especially if you look at our Q3 and Q4. Yeah. We are in the phase that volumes are coming up and we see especially a dynamic in Q3 and Q4. This is the one thing. Regarding this factor costs, I mean, this is something the industry is working on it. We of course are working against this increase of factor costs.
There are several ways to do so, to pass it on and to other programs to reduce the effects here. With this, we think that we come to quite, let's say, numbers where we are satisfied with at the end of the day. This is where we stand here. If you look at the Automotive Technology, the margin in the first quarter was roughly three point something, if I recall right. Of course we will increase this margin. If you look at our Industrial Components business, I mean, there are also two effects. In the bearings business, we have clearly lower volumes because of this well-known development in the wind industry in China.
Last year we saw so much subsidies and now we have, let's say, more normalization of the demand in this industry. We see lower volumes in the bearings business, especially here, which we, by the way, see coming up in the following years. This is very clear. We do not have any doubt in the future of this growth perspectives in this business here, but we see it in this year in a dip. Of course we see also increasing factor cost here. If you look at the margin of the Industrial Components business in the first quarter, I think we've achieved between 9% and 10%.
This is something, well, yeah, we have been higher and we will get higher during the year, but this is something, from our point of view, which is not a disaster. We are clearly working on measures to work against this. We will see a bit upcoming volumes, but we will also see more measures to work against this factor cost.
Okay, thank you. Maybe secondly, you mentioned that you're going to generate a significant amount of working capital release in the second half. What's driving that? Maybe just in brief. Thank you.
Good question.
What is driving the?
Yeah.
Working capital release?
The working capital is. If you look at the normal development of working capital through a year. If you look at the materials business and also some automotive business. You always see a lift up in working capital to be prepared for the, let's say, strong months, January to July. This is the normal seasonal pattern we always see. In this year, we saw two additional effects. The first one is that we, of course, saw price increases in our, let's say, inventories here, which is of course something which is driving up the net working capital.
By the way, this was clearly a three-digit million numbers and more, yeah, which were price affected on the net working capital. We at the end of the day, we have to sell this inventory to higher prices, and this is something we will do successfully. This is the one thing. The other thing is what we saw is that the call-offs from the auto industry in the first quarter were lower than we expected. This is also something which increased the net working capital. Clearly, we have to manage, and we will manage that we can, let's say, sell off to relevant prices our inventories through the next quarters. But it's also very clear we increased our inventories quite normally.
The two effects I just explained quite normally in the first quarter. In the second quarter we will see higher receivables. That's the reason why our net working capital is not directly driving down in the next quarter. Inventories will go down, but receivables not. We will see in the normal course of the business with the upcoming volumes and the upcoming sales numbers, we will see decreasing net working capital numbers.
Okay. Thank you very much.
The next question is from Bastian Synagowitz of Deutsche Bank. Your line is now open.
Yes, good afternoon, and thanks for taking my questions as well. I have a quick follow-up on costs as well, I guess. You've been cutting your guidance in Automotive Technology, and I understand also auto cost has been one of the reasons for this year. Could you maybe quantify the cost inflation, which you're seeing in both AT and IC for us? And, as I understood that you're working on passing this on, what would be the timeframe for that? That would be my first question.
Yeah. Can you hear us?
Yeah. I can hear you now.
Yeah. Well, to give you a precise number is very difficult at the moment. The first thing I can tell you, if you look at energy costs, it is a question where you are. If you look at the energy cost development in Europe and especially South Europe, you will see higher increases than the rest of the world. I mean, this is very clear. We are working with measures against it, but it is also very clear that these numbers do hit us. At the end of the day, we will see increasing numbers, but it's too early to say that we really can give you, provide you correct numbers here.
This is something we cannot really predict for the rest of the year. The thing I can tell you is, if we consider the energy prices where we are at the moment, yeah, then of course we will have an increase in numbers, a reasonable amount of increase in energy costs during the year. The good thing is that they are already implemented in our guidance.
Thanks for that. Maybe if I can follow up on that. I appreciate it's obviously difficult to quantify, but at the same time, obviously, that's, I guess a cost inflation which you are facing. I guess most of your competition will be producing a similar product with a similar structure when it comes to these input factors. Is there a structured approach within that business on how you basically aim to pass that inflation on to customers, or is it just very difficult to do because of the competition? I guess your competition would probably try the same. Yeah.
This is something, of course, the whole industry is doing. It is very, let's say, different from business to business. It's what kind of contracts do you have, yeah. If you have longer-term contracts anyway, in what kind of business. If you have long-term contracts, you normally have this contract where you can adjust this factor costs. This is easier to do. If you have short-term contracts, you normally do not have these issues, or you have them in a lower amount. The simple structure is that everybody is fighting to, let's say, get into the contracts and to pass them on.
This is a structural approach, but everybody is fighting for this, and everybody will do it in their respective businesses and in their respective industries. It will be a fight.
Okay. Okay, thanks. That clarifies this. My second question is just on the AST disposal again. What are the terms for the 15% retained stake which you are having in AST, and how are you able to extract value from that? Will you receive a dividend or do you have even some optionality to sell at a later point? Maybe you can give us some quick color here as well.
Yeah, I mean, we have this minority stake already, and this is the ratio of course that, you know, we in a certain perspective of time, of course, we will see whether we will have still this minority stake. You have to mention or you have to bear in mind that there are still business development between thyssenkrupp and between AST independent from the new shareholder. This is of course something which is helping and therefore it makes sense to have this minority stake. I mean, we can do what we want with the stake, and we are free to do so whenever we want to do something. This is the only thing I can say.
I can't give you an outlook when or what are we going to do with this. I can only say we are free to do whenever we want to do something.
Okay, thank you. Is there, I don't know, like a put clause in the framework, or is this just up to new negotiation with your JV partner?
You mean, do we have to-
Would allow you to sell it at a certain price.
Yeah. We do have some clauses which we think are in favor for us, but we are not commenting in detail on this, so you have to understand this.
Yeah.
Again, we are very flexible with this.
Okay, perfect. Thank you.
The next question is from Christian Georges of Société Générale. Your line is now open.
Thank you very much. I'd have one more go at it, 'cause you mentioned in your statement that you're remaining cautious on maintaining your EUR 1.5 billion-EUR 1.8 billion target or range. I mean, first, yesterday was obviously a bit more positive on the outlook for automotive, and we've seen China has been reinvesting into infrastructure in you know in recent two weeks, so perhaps good for the windmill you know industry. If you were as cautious, which of those divisions that you're looking at would maybe have more leverage on this caution, more steel or more your industrial side?
I mean, if I got your question right, you said that the guidance we gave between 1.5% and 1.8% are conservative. Is this what you're saying? Or is this-
Yeah, that's what your statement says, right? Company remains cautious. I'm just thinking. Is there where less caution, would you see perhaps more leverage on that caution in IC or AT or more in Steel Europe?
You know, we always said that why we do this in this range, because we clearly see still uncertainties in the market environment. As we said before, we see this Corona issue, we see supply chain constraints, but we see them improving and but there are some uncertainties in the world. That's the reason why we said this. If you ask me, where we see upside, I think it can come from every kind of business. So there is no really. I would not say that steel is or the industrial business is the one who is coming up at the end of the day more than we expect. No, I can't give you this information. Sorry for that. We are-
Right. I mean.
Of course, there is obviously secure world here.
If you were following what have been optimism on auto with automotive technologies potentially improve your own year or is it something you're pretty sure will be lower your own year?
I didn't get the question. Can you repeat?
I'm saying you're guiding for EBIT this year below last year in Automotive Technology. I mean, if you were more optimistic, like voestalpine is, do you think that possibility would be that you would at least match last year a bit?
Well, this is a very detailed question and we did our guidance for a reason, yeah. I mean, at the moment we see some volume issues, and we see some factor cost issues. It depends very much on the development in Q3 and Q4. We are quite optimistic that Q3 and Q4 are going to improve. Our estimation is it is going to improve and the outcome is our guidance at the moment. If it's coming more, we will see. But at the moment, our estimation is like it is.
Okay. On free cash flow, just to clarify what you were saying earlier, you're saying that you're pretty convinced you should be able to achieve neutral free cash flow, but you're not ruling out a positive free cash flow. Is that a fair statement?
Yes, this is a fair statement. Because you have to bear in mind our structural issues. We still want to invest more than depreciation, much more than depreciation. We do this by intention because we want to really enable increase the performance of the business, and we still have cash out for restructuring. If we would not have the structural effects, we will not be talking about a breakeven. We will clearly talk about a positive free cash flow. This structural effects we see in this area, in this year, and therefore, we're talking about a breakeven free cash flow.
That's great. Thank you very much. That's very kind of you.
Yeah.
The next question is from Carsten Riek of Credit Suisse. Your line is now open.
Thank you very much. My two questions, the first one, we have seen recently an increase in raw materials. Could that hamper your fiscal year 2021-2022 targets? What are the assumptions you have actually in for iron ore and coking coal for fiscal year 2021-2022, if you could share that? That's the first one. Thank you.
We are not sharing the detailed numbers, but I can give you the raw material price increases, yes. You know also that selling prices we had some assumptions here. If we take the selling price development and the raw material price development, so let's call the spread into account, we clearly see that the assumption in our planning is fulfilled. No risk about this at this point of time as far as we can see.
Perfect. The second question I have is on Industrial Components. When you expect to push through the price increases to customers, because you mentioned the performance was hampered here a little bit by those kind of factors. Is anything hindering you to actually increase the prices here or is it just a matter of time when we actually get this improvement through?
Yeah, I mean, this is always the question which I fully understand, but you also know how the business works. What is hindering us is that we are passing on the factor cost. This is clearly our customer. We have contracts. We have contracts in some, as I said before, especially also in the bearings business, we have some long-term contracts where it's more easy, some short-term contracts where it's not so easy, but we are fighting on this. Clearly, we can push through. We think we can push through a big portion of this, but of course also with a timeframe. This is not going to be one-on-one. That is where we are going for.
This is a clear focus and priority of us to work on this, clearly. It is too early to say when we will be successful and to what amount. It's high priority. Very clear.
Thank you very much. I will be back in the queue. Cheers.
Yeah.
The next question is from Luke Nelson of JP Morgan. Your line is now open.
Hi, good afternoon. Thanks for taking my questions. Firstly, just on the potential sales or IPO processes that are happening. Just a point of clarification on my side. I saw obviously the headlines this morning around Steel Europe likely being delayed. Can you maybe just talk through what is happening with regards to the Steel Europe process? Maybe if you can give us some more detail around the path to a resolution around that. Also, obviously, nucera. Just if you can confirm the timing. I think previously at the sort of Capital Market Day or late last year, it was sort of indicating a June quarter. It looks like that has maybe slipped. Maybe again, just give a bit of an indication on the timing around potential IPO of nucera.
That's my first question.
Yeah. Do you want to go on with the second, or shall I first answer? I'm answering the first question. Regarding Steel Europe, of course, it's a long way. I also saw these headlines in the newspaper, and I know why they are there. If you go back, we always said that, let's say a spin-off or separation of the steel business is the preferred strategic option for us. Therefore, we started to process in diligently go into details and work for the requirements to do so. In this process we are. We never, at least from our perception, we never said that we have a clear point of time where we can give you now, this will be the time of decision.
We never said that. Tomorrow in an interview, I said we were not going to make this decision in February or March. I would stay with this decision, but we never said this. We will go on with this process. What we also said on the Capital Market Day and the general assembly is, the more clarity we have with this transformation of the steel industry or the steel plant into carbon-neutral production, the better is for the separation, clearly. We simply need more clarification for a business plan and under other necessary things. Therefore, we said we take our time, and we will review this diligently. When we are ready to talk about it, we will be ready, and we will inform you about this.
This is a story behind. Clear intention to do so. We are working on this, still on this. I cannot give you a timeline when we say this is now the timeline where we say yes. We need further, let's say, security in some issues on this. You can understand this.
Nucera?
Nucera was the one. We said that IPO is the solution we want to go for. We said, I think also on the Capital Market Day, I think we said, the most likely window of opportunity will be the first half of this calendar year, and this is still valid. Most likely, we will have this IPO in the first half of this calendar year.
Okay.
Tomorrow, this will be available?
Yeah.
Okay, that's very clear. Thank you. Just on, I suppose following up on inflation and raw material cost questions. Touch on iron ore, met coal, power, but CO2 carbon is obviously at all-time highs. Can you maybe just confirm your exposure, either at a group level or particularly in Steel Europe, your potential exposure to that or whether there's any banked allowances or hedging in place that can offset the effects going forward?
Yeah. Of course, the main issue is in the steel segment here. If you look at the CO2 things, you have to understand we have a hedging in place. This is a hedging where we do some hedging. This is, we are hedging the predictable amounts for the next year and then a certain portion for the over next year, and then a certain lower portion for the over next year. This is a hedging which is still in place. In addition to this, we of course have this free allocation of CO2 certificates. With this, with these two instruments, we have, let's say, no major impact on CO2 exposure for the next, let's say two, three years. Yeah, two or three years.
This is the first important statement. If you look further, it very much depends on how the free allocation of certificates will develop. There is something going on in the EU. You know that there are some plans to reduce this. This is not decided, but then we will see what kind of impact this will have on us. First of all, for the foreseeable time, it is valid what I explained before.
Okay, great. That's clear. Thank you.
The next question is a follow-up from Carsten Riek of Credit Suisse. Your line is now open again.
Thank you very much. Just one question on materials, on Multi Tracks, as we have seen, as you mentioned, Klaus , already before, the reduction in EBIT almost to a break even. We also know that there are still AST in there. What was actually the AST contribution to the EBIT result from Multi Tracks in the first quarter?
I mean, let's say it this way. We have not disclosed the single numbers for these companies in the Multi Tracks business. If you look, of course, into the business or the development, what can be said? I mean, nearly all businesses compared to previous year improved. This is first of all very clear. We guided for Multi Tracks a negative EBIT for the full year, and we still do so. We still do so. The positive development we saw in the quarter this fiscal year came from Plant, but also came from AST, and the biggest portion, positive portion came from AST. AST is positive and contributed positive to this.
Now, of course, the rest of the year, you know that since the end of January we closed the business. It's not going to contribute