Thyssenkrupp Shares Sink as Group Warns of Deep Cash Outflows and Losses

Key Moments

Market Reaction to New Outlook

German industrial group Thyssenkrupp saw its stock slump on Tuesday after issuing guidance pointing to significant losses and cash outflows over the coming years. By around 1:30 p.m. in Frankfurt, the shares were down 8.85%, trimming even steeper declines registered earlier in the session.

Guidance Points to Heavy Losses and Cash Drain

The steel and engineering conglomerate projected negative free cash flow in a range of €300mn to €600mn for its fiscal year ending on 30 September 2026, excluding the impact of mergers and acquisitions. For the current fiscal year, Thyssenkrupp expects to post a loss of between €400mn and €800mn.

Commenting on the outlook, Dr. Axel Hamann, chief financial officer of Thyssenkrupp, said:
“Our forecast takes account of the persistently challenging market conditions and of the efficiency and restructuring measures in our segments.”

Hamann emphasized the importance of ongoing internal measures, stating:
“The determined implementation of our efficiency and cost-cutting programs in all segments is crucial for our earnings development.”

Recent Performance and Cash Flow Improvement

Despite the challenging environment, Hamann noted that the company achieved its financial objectives for the fiscal year just completed. During that period, Thyssenkrupp generated positive free cash flow of €363mn, a marked turnaround from the prior year’s negative free cash flow of €110mn.

Sales for the year totaled €32.8bn, which the company described as in line with expectations, although this represented a 6% decline compared with the previous year.

Restructuring Charges and Cost Programs

Looking ahead, Thyssenkrupp anticipates restructuring expenses of €350mn in the coming year as it steps up efforts to enhance long-term profitability. These measures are intended to reinforce the broader efficiency and cost-cutting initiatives underway across its business segments.

Steel Unit Job Cuts and Capacity Reduction

Restructuring is already advancing in the group’s steel division. The steel unit announced last week that it would begin implementing job reductions following the conclusion of a long-discussed agreement with labor unions. Under that deal, the company plans to eliminate 11,000 positions at its steel plants, equivalent to 40% of the workforce in that division.

As part of the restructuring, steel output will be scaled back by up to 2.8 mn tonnes, which the company said represents roughly a 25% reduction in production capacity.

Structural Challenges and Portfolio Overhaul

Thyssenkrupp has come to embody the difficulties facing Germany’s manufacturing base, contending with higher energy prices in Europe and pressure from lower-cost producers in Asia. Softer demand, tied to muted post-pandemic growth in Europe, has weighed on margins, with automakers in particular cutting orders for steel and components.

A group that once spanned engineering, elevators, and defense, Thyssenkrupp is now working to separate underperforming units into stand-alone businesses.

Potential Steel Unit Deal and Strategic Moves

Within this portfolio reshaping, the future of the steel business remains a focal point. Indian company Jindal Steel is currently considering an acquisition of Thyssenkrupp’s steel unit, taking the place of previous suitor Daniel Křetínský. The Czech investor withdrew from a possible transaction earlier this year, returning the 20% stake in the steel unit he had acquired and scrapping plans to raise that holding to 50%.

One of the steel unit’s main strategic goals is decarbonisation, and Thyssenkrupp has already begun investing in lower-carbon production technologies.

Divestment of Marine Business

In another step to streamline its portfolio, Thyssenkrupp successfully divested its marine division TKMS earlier this year, listing the business on the Frankfurt Stock Exchange.