Thyssenkrupp cuts profit forecast as steel demand wanes
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By Christoph Steitz and Tom Käckenhoff
FRANKFURT (Reuters) -German conglomerate Thyssenkrupp cut its annual forecasts for sales and net profit for the second time in three months, blaming lower demand and prices at its steel unit, half of which is to be sold to Czech billionaire Daniel Kretinsky.
The scaled-back guidance underscores a challenging environment for companies focused on capital goods, which need to tackle elevated inflation, raw materials price swings and cooling global demand.
It comes less than three weeks after Thyssenkrupp announced a deal to sell 20% of its steel business to Kretinsky’s EPCG, a process that has led to a rift with powerful workers that accuse the group’s CEO Miguel Lopez of not keeping them in the loop.
Thyssenkrupp’s supervisory board will meet on May 23 to vote on the deal. Labour representatives hold half the seats but can be outvoted by Chairman Siegfried Russwurm, whose vote will count twice in case of a stalemate.
“Mr Lopez should not feel too secure. He has strong opponents,” Germany’s top union IG Metall said in a statement on Wednesday, calling for an action day at Thyssenkrupp’s headquarters on the day of the board meeting.
Tensions run high also because cheap Asian steel imports have been a major problem for European steelmakers, including Thyssenkrupp, and the hope is that a deal with EPCG will make the business more competitive.
Thyssenkrupp is in talks with Brussels about tightening import conditions to support the local steel sector, Lopez said, amid a cloudy global environment in which tariffs have become more frequent.
Highlighting a “gloomy market environment”, Lopez said the company had made progress with its turnaround since the start of the year, singling out steps to spin off its marine divisions, which may be sold to private equity firm Carlyle.
Thyssenkrupp, which makes submarines, car parts and bearings for the wind industry, now expects an annual net loss in the low triple-digit millions of euros for the fiscal year to September, it said on Wednesday, having previously forecast breaking even.
According to LSEG data, analysts on average expect a net profit of 203 million euros ($220 million) in the year to September. The company had already cut its outlook when it released first-quarter results in February.
Thyssenkrupp kept its outlook for adjusted operation profit and free cash flow before mergers and acquisitions.
Weakening demand led to impairments at its materials trading division, the company said, with outgoing finance chief Klaus Keysberg quantifying it as a mid double-digit million euro sum.
Thyssenkrupp shares were 2.2% lower. Additional headwinds came from lower-than-expected quarterly results at Thyssenkrupp Nucera, in which Thyssenkrupp owns a majority, shares in which were down 7%.
($1 = 0.9245 euros)
(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Mark Potter, Rachel More, Muralikumar Anantharaman and Bernadette Baum)