Stock crashes
Thyssenkrupp is slipping into the red
February 14, 2024, 1:56 p.m
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After just three months of the current financial year, Thyssenkrupp is reducing its expectations. High costs, lower prices and sluggish demand are weighing on the steel business. Investors often pull the ripcord and throw the securities out of their portfolios.
The industrial group Thyssenkrupp has lowered its sales and profit forecast after losses in the steel business, sending its shares plummeting. The price temporarily fell by more than ten percent and fell to its lowest level since November 2022. In the first quarter of the 2023/24 financial year, the Ruhr group recorded a net loss of 314 million. The reasons were, among other things, weaker results and depreciation in the steel division.
For the year as a whole, the company only expects its annual net income to increase to the point of break-even. Until now, Thyssenkrupp had forecast growth to a positive value in the low to mid three-digit million euro range. “In view of the ongoing global economic weakness and geopolitical conflicts, Thyssenkrupp developed comparatively robustly in the first quarter and in line with our expectations,” explained CEO Miguel Lopez, who has been in office since June last year.
The “APEX” performance program he initiated is bearing its first fruits. He wants to contribute up to two billion euros to the adjusted operating result (EBIT) by the 2024/2025 financial year. CFO Klaus Keysberg did not want to give an interim status when asked.
No result yet on steel joint venture
The steel division is suffering from high raw material and energy costs while steel prices have fallen at the same time. The most important customers in Germany and Europe are the large automobile manufacturers. However, they are holding back on orders. CFO Keysberg explained that no particular momentum is expected in the coming months.
Thyssenkrupp has been looking for a solution for the economically vulnerable steel business for years. Negotiations on a steel joint venture with Czech billionaire Daniel Kretinsky’s energy company EPH would continue, Keysberg said. “We are in constructive discussions with the potential buyer.” It is unclear how or when there will be results.
In the first quarter, the adjusted EBIT of the entire group shrank to 84 million euros, half as high as in the same period last year. For the year as a whole, Thyssenkrupp continues to expect an increase to a value in the high three-digit million euro range, after 703 million a year ago. In terms of sales, management now expects earnings to be at the previous year’s level instead of a slight increase.