The industrial group Thyssenkrupp continues to feel the effects of weaker demand and lower prices for steel at the start of the financial year. In the first quarter (end of December) the company was in the red. In addition to the difficult environment, further write-downs on the steel business due to increased interest rates were partly responsible. Thyssenkrupp lowered its sales and profit forecasts, but is sticking to the expected operational development.
Stock falls
The numbers were not well received on the capital market. The share listed in the MDax fell by more than nine percent in the morning and topped the list of losers. “The first quarter is not a driver for the share price. Sales and order intake declined, primarily due to price reasons,” commented analyst Christian Obst from Baader Bank. The expectations were missed.
The bottom line is that Thyssenkrupp reported a loss of 314 million euros, the company announced. Last year there was a profit of 75 million. The depreciation amounted to around 200 million euros. Falling prices and lower demand in the steel business, especially from car customers, caused earnings before interest and taxes (EBIT) adjusted for special effects to fall by half to 84 million euros.
The first positive effects emerged from the Apex efficiency program. The measures stabilized the result, as CEO Miguel López explained. The program is expected to contribute up to two billion to adjusted EBIT by 2024/25 and mitigate “countervailing market effects”.
Less sales
Sales also fell due to reduced demand and lower prices – by nine percent to almost 8.2 billion euros, which was below market experts’ expectations. Order intake fell by 13 percent.
Thyssenkrupp was more pessimistic for both sales and annual results for the 2023/24 financial year. Sales are likely to be roughly at the same level as the previous year, after the company had previously assumed slight growth. The bottom line is that due to the depreciation in the first quarter there will probably only be a balanced result. A profit in the low to mid three-digit million range was recently assumed here. In the previous year, Thyssenkrupp recorded a loss of billions due to burdens in the steel business. The forecast for adjusted EBIT was maintained.
“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,” said López, commenting on the overall business development. “We are continuing to drive forward the transformation of Thyssenkrupp.”
