Thyssenkrupp forecasts return to profit on back of global recovery
German industrial group remains cautious as prices for raw materials remain high
Thyssenkrupp is shedding a further 12,000 jobs.
Thyssenkrupp, the ailing German industrial group, expects to swing to its first annual adjusted profit in three years, thanks to a sharp increase in demand for steel and an economic rebound led by China.
The recovery of the global auto market helped most of the Essen-based company’s major units record a rise in orders and sales, most notably at its beleaguered steel division, where they rose by 13 per cent and 8 per cent respectively.
As a result of these improvements, the company raised its annual forecasts, predicting that adjusted earnings before interest and tax would “increase significantly towards a positive result in the mid-three digit million euro range”.
At the end of the previous quarter, Thyssenkrupp said it expected to almost break even for the fiscal year, on an adjusted basis, after slumping to a further €1.8 billion adjusted loss in the year than ended in September 2020.
“On the one hand we were helped by the recovery in many of our markets,” said chief executive Martina Merz. “On the other, our performance measures are having the planned effect.”
But she added that “we also know that we still have a lot of work to do”.
Alan Spence, an analyst at Jefferies, said he believed the forecast “remains conservative despite the upgrade,” and that Thyssenkrupp was being cautious due to “continued momentum in raw materials and steel prices”.
The company, which is shedding a further 12,000 jobs as it continues to drastically shrink its operations, still expects a net loss for the year of a “mid-three digit million” amount once restructuring costs are taken into account, down from a €5.5 billion net loss in the last fiscal year.
It last made an annual net profit in the year ending September 2018.
In the three months to the end of March, Thyssenkrupp’s net losses were limited to €211 million, after losing €950 million in the same period last year, during which it closed a deal to sell its lucrative lifts business for more than €17 billion.
The former conglomerate ended talks with Sanjeev Gupta’s Liberty Steel in February over a possible sale of its Duisburg steel plant, after the British tycoon’s business failed to provide adequate financing.
Instead, Thyssenkrupp is exploring a possible spin-off of the division, which still employs 27,000 people and is one of the few remaining heavy industry businesses in Germany’s most populous state, North Rhine-Westphalia.
The state is run by Armin Laschet, who is also running to succeed Angela Merkel as chancellor later this year. – Copyright The Financial Times Limited 2021