Frankfurt (Germany) (AFP) – Thyssenkrupp’s shares slumped Thursday after it reported worse-than-expected earnings and its steel business took a fresh hit, in more bad news for the struggling German industrial titan. The group said quarterly operating profits plunged about 90 percent from a year earlier to just 19 million euros ($21 million) — far worse than analyst forecasts.
In addition, the group’s European steel business took a 90-million-euro impairment in the January-March period, signalling fresh woes for a division that is in the middle of a painful restructuring. The company blamed a “gloomy” economic environment and high energy prices, a frequent complaint of power-hungry German manufacturers, for the problems in the unit. Chief financial officer Jens Schulte also told an earnings call that Thyssenkrupp had to shut down several steel production sites for modernisation in recent months. This meant “that we had basically the highest cost from that without sales benefits,” he said. Thyssenkrupp’s shares were down 13 percent in afternoon trade in Frankfurt.
The group is Germany’s biggest steelmaker, but also produces goods ranging from submarines to car parts. Once a symbol of German industrial might, Thyssenkrupp has suffered as high costs at home, falling prices for its products and fierce competition from Asian rivals hammered its traditional steel business. While the operating result fell, the group reported a positive net profit from January to March following a loss a year earlier. However, the net result was boosted by one-off factors, particularly the sale of its Indian steel unit, and investors were more focused on the operating profit, a key metric of a company’s day-to-day business.
Overall sales in the group’s second quarter slid five percent to 8.6 billion euros due to weaker demand and lower prices while orders also fell. Despite the challenging quarter, the group confirmed its full-year outlook, which forecasts a return to profit of between 100 million and 500 million euros after two years of losses. It warned, however, that US President Donald Trump’s tariff blitz — which includes 25-percent levies on steel and aluminium imports — was causing “additional pressure.”
“The introduction of universal import tariffs and individual customs tariffs for major trading partners like the EU and China are having a negative impact on global trade and destabilising international supply chains,” the group wrote in its first-half report. Thyssenkrupp has embarked on a major restructuring, announcing last year it would cut 11,000 jobs in the steel division, and is also slashing headcount at its automotive unit. It has long been seeking to spin off the steel unit.
© 2024 AFP
