Earnings increased despite weaker sales, thanks to the German firm’s efficiency drive. Meanwhile, Thyssenkrupp’s military-related units expect a boost from greater defence spending.
German manufacturer Thyssenkrupp gave a mixed financial update on Thursday as it highlighted rocky market conditions but underlined some areas of improvement.
The group posted a net loss of €33 million from October to December, following a loss of €305m in the same quarter a year earlier.
Group sales, meanwhile, dropped to €7.8 billion from €8.2bn last year, linked to lacklustre demand and lower prices.
“Despite the challenging market environment, we improved our performance in the 1st quarter,” CFO of Thyssenkrupp, Jens Schulte, said in a statement.
Adjusted earnings before interest and tax (EBIT) notably rose to €191m in the first fiscal quarter ending on 31 December, thanks to the firm’s focus on cost efficiencies.
“The increase in EBIT especially is evidence that our structural measures to improve efficiency and reduce costs are delivering initial successes,” said Schulte. “We will continue to work systematically on these measures in the future.”
Boost from marine project
Free cash flow before mergers and acquisitions also came to a loss of €21m in the quarter.
That’s compared to a loss of €531m a year earlier, with the recent total bolstered by advanced payments for a major marine project.
Overall order intake increased by more than 50% year-on-year, reaching €12.5bn between October and December.
For the full fiscal year 2024/2025, Thyssenkrupp expects a positive cash flow figure ranging from €0 to €300m.
Previously a loss ranging from €200m to €400m was expected.
Restructuring underway
Thyssenkrupp’s CEO Miguel López added in the financial update that the manufacturer was pushing ahead with restructuring efforts.
The transformation is driven, he added, by “the ambition of strengthening the competitiveness of our businesses, generating sustainable growth and thus safeguarding jobs in the long term”.
Thyssenkrupp said it was continuing with plans to spin off its European steel business, and the group also intends to publicly list its marine unit.
Concerning the latter division, which makes military ships and submarines, Thyssenkrupp said it was mindful of the large order backlog.
Separating the unit while retaining a stake could allow the manufacturer to benefit from rising military spending.
“Due to geostrategic developments, the segment expects that demand will keep on rising in the future,” said Thursday’s statement.
“The stand-alone solution being sought will make it possible to optimally leverage this potential. To this end, the announced spin-off of marine systems is being pursued at a fast pace.”
Forecasts for the year ahead
Sales in Thyssenkrupp’s decarbon technologies unit were significantly higher than the prior year, and the firm added that this division holds “enormous” growth potential.
For the full fiscal year 2024/2025, the manufacturer expects sales to decrease by up to 3% or remain stable, compared to a previous growth estimate between 0 and 3%.
Thyssenkrupp expects to make a profit, estimated between €100m to €500m, while adjusted EBIT is forecasted in the range of €600m to €1bn.
