Weak steel business: Thyssenkrupp continues to run down in third quarter
This region is "marked by weak economic conditions and structural challenges," Thyssenkrupp explained. Adding to this are "the lower dynamism in key customer industries such as the automotive industry, mechanical and plant engineering, and the construction industry," as well as the persistently high energy costs. One-time effects, particularly in relation to the India business, also played a role in the poor net result.
For the entire fiscal year, the company expects a six to eight percent decline in sales compared to the previous year and a loss "in the mid to high three-digit million euro range." Thyssenkrupp had already adjusted its forecast accordingly in July. "Strongly adverse market developments and one-time effects are overshadowing the progress made in the transformation of Thyssenkrupp in the third quarter," explained Chief Financial Officer Jens Schulte.
Rising energy and raw material prices, as well as foreign competition, are particularly weighing on the steel division. The Essen-based company therefore wants to reposition itself in this area and is driving a spin-off. It has already sold 20 percent to the company EPCG of Czech billionaire Daniel Kretinsky. It plans to transfer a further 30 percent to EPCG.
"With the closing of the 20 percent stake in EP Corporate Group, we have taken a significant step towards the independent positioning of the steel business," explained Schulte. In preparation for the spin-off, production at the Duisburg site is also being reduced. Thyssenkrupp Steel Europe currently employs around 27,000 people, many of whom are in the Ruhr region.
The plans are sharply criticized by the employee side. The supervisory board could not agree on the further course of action last week. First, the financial needs of the steel division will be determined by an expert opinion. Thyssenkrupp CEO Miguel López assured after the supervisory board meeting that the financing needs for the next two years are secured.
While it was reported on Wednesday that other corporate areas were doing better, "Automotive Technology, Materials Services, and Marine Systems could improve their contribution to results compared to the previous year," Thyssenkrupp explained. Nevertheless, there may be changes across the company: "To best adapt to changing markets, our businesses - where necessary - are also consistently pursuing restructuring measures: This applies not only to the steel sector but also to individual business areas of the other segments."
Despite the challenges, Thyssenkrupp's steel division reported a decline in net profit due to rising energy and raw material costs. Consequently, the company anticipated a significant loss for the fiscal year.
