Thyssenkrupp downgrades expectations for fiscal year 2023/2024 results

The German conglomerate Thyssenkrupp has lowered its forecasts for the 2023/2024 fiscal year (ending in September), Finanzen.ch reports.

The company argues that the market environment remains weak, which, among other things, leads to lower sales. Although the efficiency measures implemented last year (APEX) counteract the negative market trends, they cannot fully compensate for them.

The conglomerate expects an adjusted operating profit (EBIT) of more than €500 million in fiscal year 2023/2024, up from the previously forecasted adjusted operating result in the high triple-digit million-euro range. For the current fiscal year, the group expects sales to decline by 6-8% year-on-year.

Thyssenkrupp’s closely watched free cash flow before mergers and acquisitions (M&A), which is a key indicator for investors of the group’s operating performance, is currently expected to be negative at €100 million.

The company is currently in the process of a major reorganization. In particular, the group is looking for a solution for its struggling steel division, which is suffering from low demand and high costs, mainly for energy, while global overcapacity is putting pressure on steel prices. This is compounded by cheap imports from Asia. Thyssenkrupp also needs funds to reduce CO2 emissions from its production and switch to green steel.

The group plans to significantly reduce its steel production capacity in Duisburg, which will be accompanied by job cuts. Details are unclear as the presentation of the plans has been postponed several times. According to recent reports, the decision may be made in early August. In addition, the holding company EPCG of Czech billionaire Daniel Kretinsky is to acquire 20% of the steel division.

Thyssenkrupp Steel Europe plans to submit its first proposals for the delayed construction of a green steel plant in Duisburg in August this year. These plans are intended to allow the company to switch to direct reduction production to gradually replace the blast furnace at its facility.