Thyssenkrupp is entangled in a restructuring process as it seeks to shore up its finances, hit by high energy costs and cheap competition.
German manufacturer Thyssenkrupp saw its share price slide on Tuesday as it predicted a heavy loss for the current financial year.
As of around 1.30pm Frankfurt, shares had dropped 8.85%, paring more dramatic losses seen earlier in the day.
The steelmaker and engineering firm said it expects negative free cash flow between €300mn and €600mn in its fiscal year that ends on 30 September 2026. That’s before mergers and acquisitions.
Thyssenkrupp also said it expects to make a loss of between €400mn and €800mn in the current fiscal year.
“Our forecast takes account of the persistently challenging market conditions and of the efficiency and restructuring measures in our segments,” said Dr. Axel Hamann, chief financial officer of Thyssenkrupp.
“The determined implementation of our efficiency and cost-cutting programs in all segments is crucial for our earnings development.”
Hamann added that the company had met its financial targets for the year just ended, despite challenging market conditions.
Thyssenkrupp generated positive free cash flow of €363mn during this period, significantly above the prior year’s loss of €110mn. Sales came to €32.8bn, in line with expectations but marking a 6% year-on-year drop.
In the year ahead, Thyssenkrupp predicts restructuring costs at €350mn as it seeks to boost its long-term profitability.
Last week, Thyssenkrupp’s steel unit said it would start implementing job cuts after agreeing a long-awaited deal with unions. Under the terms of the agreement, the firm will eliminate 11,000 posts at its steel plants, amounting to 40% of the workforce there. Steel production will be cut by as much as 2.8 mn tonnes, a roughly 25% drop.
Thyssenkrupp has become a symbol of Germany’s ailing manufacturing industry, hit by Europe’s energy price spike and competition from cheaper Asian competitors. Lacklustre market demand, linked to weak post-pandemic growth in Europe, has also shrunk margins — with carmakers notably reducing their purchases of steel and automotive parts.
Once a powerhouse with divisions spanning from engineering to elevators and defence, Thyssenkrupp is now looking to spin off its flailing arms into separate businesses.
Indian group Jindal Steel is currently mulling a takeover of Thyssenkrupp’s steel unit, replacing contender Daniel Křetínský — a Czech billionaire who stepped back from a potential deal earlier this year. Křetínský returned the 20% stake in the steel unit he had already bought and abandoned plans to raise the holding to 50%. One key priority for the steel unit is decarbonisation, with Thyssenkrupp already investing in low-carbon manufacturing methods.
Thyssenkrupp also managed to offload its marine division TKMS earlier this year, listing it on the Frankfurt Stock Exchange.
