Investors cheered by ThyssenKrupp turnaround hopes

The tottering state of the German economy with its automotive industry in crisis has contributed to revenues and profits tumbling at ThyssenKrupp.
But hopes that one of the Continent’s leading engineering and steel companies is successfully pulling off a turnaround sent ThyssenKrupp’s shares into a rare foray into positive territory on Tuesday. It reported a 7 per cent slide in revenues to €35 billion with underlying operating profits down nearly one fifth at €567 million in the year to the end of September.
At the bottom line it was another year of heavy losses: €1.4 billion in the red following a deficit of €2 billion in the prior year, as it wrote down the value of its steel business by a further €1 billion.
ThyssenKrupp was formed out of the 1999 merger of Thyssen and Krupp, two companies which were powerhouses of European industry for a century.
The company blamed the losses on “significantly weaker demand from key customer industries like the automotive industry, engineering and construction”, subdued market momentum, a declining order book down 11 per cent at €32.8 billion and weaker demand and lower prices in its core operations like steelmaking, automotive and decarbonisation technologies.
Other factors cited were “structural changes in the steel industry” with the competition from China; and the wider troubles in the industries assembling cars and manufacturing construction machinery.
However, Miguel López, chief executive for the last 18 months after two decades at Siemens, another German industrial group, called the numbers “a respectable result … despite the very challenging market conditions.”
He said the transformation programme that he has instituted had “made key progress”.
That alongside better cashflows than expected in the final quarter and a continued payment of dividends, helped the shares rise 12 per cent albeit from a low base. At €3.81 a share that the stock was trading at on Tuesday, ThyssenKrupp has nearly halved over the last 12 months and is down nearly 85 per cent on its pre-pandemic highs.
Of the immediate future, López said: “The current fiscal year is a year of transition even in a challenging environment.” He expected operating margins of between 4 per cent to 6 per cent, positive free cashflows and a renewed push to divest itself of its European steel operations and its marine systems business to “better leverage the opportunities presented by the green transformation”.