Thyssenkrupp in the Red due to Steel Business Woes
Thyssenkrupp, Germany's industrial powerhouse, plunged into a net loss of nearly two billion euros in 2022/23, largely due to substantial write-downs on its Steel Europe subsidiary's fixed assets. Amounting to 2.1 billion euros, these adjustments were necessitated by the economic downturn and increased capital costs, as the company revealed in Essen.
Shareholder Dividends Remain Steady
Bucking the financial adversity, Thyssenkrupp continued to uphold a steadfast dividend of 0.15 euros per share for its shareholders, thanks to a substantially improved cash flow. The company had initially pledged to at least break even for the year, following a profit of 1.2 billion euros in the preceding period.
EBIT and Sales Take a Hit
Adverse effects from falling steel prices and a simultaneous surge in raw material and energy costs led to a substantial decline in earnings before interest and taxes (EBIT), adjusted for special effects. EBIT was significantly reduced from approximately 2.1 billion euros to 703 million euros. Sales saw a 9% decline, reaching 37.5 billion euros.
Thyssenkrupp Aims for Profitability in the New Financial Year
Seeking to return to profitability, Thyssenkrupp has set ambitious targets for the forthcoming fiscal year. The company anticipates a net profit within the low to mid three-digit million euro range. Despite grappling with a challenging economic environment, the management, led by CEO Miguel López, remain optimistic. Adjusted EBIT is expected to rise substantially, while Thyssenkrupp projects a marginal increase in sales.
Thyssenkrupp, a company heavily reliant on the steel sector, has weighed heavily under the burdens of write-downs on its steel operations. Faced with economic adversity, the company has managed to maintain its shareholder dividends, demonstrating financial resilience.
Insight
Thyssenkrupp's financial predicament is partially attributed to challenges presented by the global steel industry. The industry has endured severe impacts from various factors such as global economic conditions, geopolitical tensions, and soaring energy costs. Supply chain disruptions, chip shortages, inflation, and climbing energy prices have exacerbated an already volatile market.
Trade tensions between the US and China have further besieged the industry, disrupting global supply chains and affecting Thyssenkrupp's overall performance. The energy-intensive nature of steel production has been especially hard-hit by the 2022 global energy crisis, with higher costs permanently impacting the industry and consumers alike.
Although Thyssenkrupp has not explicitly detailed its profit expectations for the new fiscal year, the broader economic context suggests that the company is likely to encounter more formidable headwinds. The German economy's contraction in 2024, with a marginal decline of 0.2%, will undoubtedly affect Thyssenkrupp's financial performance. To obtain a more precise understanding of Thyssenkrupp's financial forecasts, reviewing its official financial reports or communications from its management is recommended.
