Thyssenkrupp Cuts Outlook as Loss Deepens on Weak Demand
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Thyssenkrupp AG lowered its annual profit and revenue guidance after posting a deeper third-quarter loss, hit by sluggish demand and falling prices.
The German steel and engineering group now expects adjusted earnings before interest and tax at the lower end of its earlier forecast of 600 million euros ($702 million) to 1 billion euros. Revenue is projected to decline by as much as 7% this year, compared with an earlier outlook for a drop of at most 3%. As a result, it’s paring back investments and pledged continued cost cuts.
The company’s shares plunged as much as 12% in early Frankfurt trading on Aug. 14. The stock has more than doubled this year as investors anticipate it will cash in on the defense boom.
Thyssenkrupp Materials NA ranks No. 98 on the Transport Topics Top 100 list of the largest private carriersin North America, andNo. 5 among manufacturing carriers.
Thyssenkrupp is grappling with subdued demand from Europe’s car industry, where volumes remain below pre-pandemic levels, and with high energy costs in the wake of Russia’s invasion of Ukraine. Once a sprawling conglomerate spanning steel, elevators and industrial services, it’s currently trying to slim down to a more focused set of businesses.
READ MORE:Thyssenkrupp Weighs Exit Options for Logistics Unit
Shareholders last week approved the company’s plan to partially spin off its Marine Systems division, which builds submarines and surface ships for defense customers. As of June 30, the business had an order backlog of 18.5 billion euros, the company said Aug. 14.
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In its fiscal third quarter, Thyssenkrupp’s net loss widened to 255 million euros, from 33 million euros in the year-earlier period, while sales declined 9% amid muted demand from automotive clients and lower prices for steel and material services. Order intake, however, rose by over a fifth amid growth at Marine Systems.
“The past quarter was characterized by enormous macroeconomic uncertainty. We are very much feeling the weak market environment in key customer industries such as the automotive, engineering and construction industries,” CEO Miguel López said in a statement.
The lower guidance leaves “more work to be done” in the fourth quarter, Morgan Stanley analysts led by Alain Gabriel said.
Written by Arno Schütze and William Wilkes
