Thyssenkrupp Cuts Net Profit Outlook on Steel Unit Woes

SEATTLE (Scrap Monster): Thyssenkrupp cut its annual sales and net profit forecasts on Wednesday, blaming softening demand and prices at its steel division, where fresh impairment losses underscored the challenges facing the sector.

The disclosure drove the embattled conglomerate's shares to their lowest level in more than 15 months, laying bare the structural challenges of a business that is battling with high raw materials and energy costs, cheaper Asian rivals and weak demand from the automotive sector.

The group's stock fell as much as 10.3% following the news, which came alongside weaker-than-expected first-quarter results, the lowest level since Nov. 7, 2022.

Thyssenkrupp said its steel business, half of which it is trying to sell to Czech billionaire Daniel Kretinsky, was the main contributing factor behind the 200 million euros ($214 million) in impairment losses.

CEO Miguel Lopez said "ongoing weakness of the global economy and geopolitical conflicts" showed that the group's ambitious APEX performance programme, which aims to lift adjusted operating profit by 2 billion euros, was necessary.

The impairments triggered a first-quarter net loss of 314 million euros, compared with an LSEG estimate for a 33 million profit. Sales fell 9% to 8.18 billion euros, also below the 8.64 LSEG forecast.

Thyssenkrupp now expects to break even on a net profit basis in fiscal 2023/24, having previously forecast a low-to-mid triple digit million euro profit. Analysts on average expect net profit of 472 million euros, according to LSEG data.

The company, which is trying to divest its marine divisions, also cut its sales outlook. It now expects revenue to be at last year's level of 37.5 billion euros after initially forecasting a slight increase.

The company confirmed its outlook for free cash flow before mergers and acquisitions, a key gauge for the group's ability to earn money, saying it still expects a low three-digit million euro sum.

 Courtesy: www.reuters.com