Thyssenkrupp again lowers profit forecasts for fiscal year 2023/2024

Among the reasons, in particular, the decrease in demand and prices in the steel division

German conglomerate Thyssenkrupp has cut its full-year sales and net profit forecasts for the second time in three months due to lower demand and prices in its steel division, as well as impairment of assets in its materials trading unit, Reuters reports.

Pointing to the gloomy market environment, Thyssenkrupp CEO Miguel Lopez said that since the beginning of the year, the company has made progress in transforming the business, highlighting steps to sell or spin off the steel and marine divisions.

Thyssenkrupp expects an annual net loss in the low triple digits in millions of euros for the 2023/2024 fiscal year ending in September, while previously it was projected to break even.

The downgrade underscores the challenging environment for capital goods conglomerates as they struggle with higher inflation, fluctuating commodity prices and cooling global demand for their products.

The company had already lowered its forecast when it published its first quarter results in February.

The weakening demand led to an impairment of assets in Thyssenkrupp’s materials trading division, the conglomerate said, without specifying the amount. An additional negative factor was the lower-than-expected results for the second quarter of the current fiscal year of the electrolyzer manufacturer Thyssenkrupp Nucera, which the group owns a majority stake in.

At the end of April, Thyssenkrupp announced that it had reached an agreement to sell a 20% stake in its steel division to EPCG, an energy holding company controlled by Czech billionaire Daniel Kretinsky. For the conglomerate, the deal marks a move away from the cyclical and troubled steel business, which the company has been trying to sell or spin off for a long time.

The parties are negotiating the acquisition of another 30% stake in Thyssenkrupp Steel by EPCG. Thus, the companies will create a joint venture, controlling 50% of the shares each.

As GMK Center reported earlier, in the first quarter of FY2023/2024, Thyssenkrupp Steel Europe’s orders and sales amounted to €2.4 billion compared to €3 billion in the same period of the previous fiscal year (for both indicators). As noted, this was primarily due to a strong decline in prices. Order intake fell mainly due to a drop in demand from the automotive industry.