As of: February 14, 2024, 11:59 a.m
By: Lars-Eric Nievelstein
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Fewer orders, less sales, fewer employees.
The 2023/2024 financial year begins with a downward correction for Thyssenkrupp.
The group is reducing its expectations for the entire year.
Essen – The Essen-based industrial group thyssenkrupp has had a mixed first quarter.
Between October and December 2023, the net result was minus 314 million euros, compared to a profit of 75 million euros in the previous year.
According to the group, this is primarily due to the weakening global economy and declines in the steel industry.
China also plays a role in this.
However, Thyssenkrupp already has a plan to get out of the red.
Group management sees robust development at thyssenkrupp
“In view of the ongoing global economic weakness and geopolitical conflicts, thyssenkrupp developed comparatively robustly in the first quarter and in line with our expectations,” said Miguel López, CEO of thyssenkrupp AG.
According to him, the group has managed to stabilize earnings with measures to “increase performance”.
“The numbers confirm that the pace and intensity of our activities are correct and necessary.” The group, which specializes in steel production, wants to continue to push forward its own transformation.
The Thyssenkrupp factory in Duisburg.
The 2023/2024 financial year begins with a downward correction for thyssenkrupp.
The group is reducing its expectations for the entire year.
© IMAGO / Jochen Tack
This transformation should take place primarily in three areas: performance, portfolio and sustainability.
When it comes to performance, Thyssenkrupp is relying on the “APEX” program, which is intended to systematically increase the performance of its businesses.
The goal set: By the 2024/2025 financial year, APEX is expected to contribute 2.0 billion euros to adjusted EBIT (earnings before interest, taxes, depreciation and amortization) and mitigate market effects that have a negative impact on Thyssenkrupp's earnings.
According to López, APEX is already bearing fruit.
How China is weakening thyssenkrupp's quarterly figures
What this actually looks like depends on the respective business area.
Since the beginning of the 2023/2024 financial year, thyssenkrupp has reported in five divisions: Automotive Technology, Decarbon Technologies, Materials Services, Steel Europe and Marine Systems.
In the Automotive Technology division, for example, the group produces construction machinery and recorded a slight increase in EBIT by two million euros to 48 million euros.
Decarbon Technologies, on the other hand, deals with wind energy, among other things, and had to contend with the price pressure that the entire wind energy industry is currently exposed to.
Just like with solar energy, China is the catalyst.
Chinese wind turbines are significantly cheaper, which poses greater problems for European manufacturers.
EBIT was minus 17 million euros - a drastic drop compared to the 19 million from the previous year.
Significant decline in steel production from thyssenkrupp
The Materials Services division posted an EBIT of 26 million euros, an increase of 30 percent, with “overall declining sales and lower prices”.
According to thyssenkrupp, there were “clearly positive earnings contributions,” especially at the service centers, at aerospace and in the drop-ship business.
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Steel Europe, the steel division of Thyssenkrupp, suffered from the weak economy, rising raw material costs, high energy costs and strong competition from “non-European market participants”.
At 2.4 billion euros, incoming orders and sales were below the 3.0 billion euros from the previous year.
Instead of the 90 million euros from the previous year, the EBIT was still 69 million euros.
Most recently, Marine Systems, thyssenkrupp's response to demand in the underwater sector and marine electronics, also recorded a decline in EBIT despite higher order intake.
This was 17 million euros (from 19 million euros).
German steel industry suffers from electricity prices
The German steel industry is currently in deep crisis.
The Steel Association, one of the largest industry associations, stated in January that weak demand combined with high and “internationally uncompetitive” electricity prices were responsible for this.
These would have pushed steel production to a “historically low” level in 2023.
“The annual balance of steel production in Germany clearly shows that the situation for the steel industry – and especially the electrical steel route – is very serious,” said Kerstin Maria Rippel, General Manager of the Steel Association.
There is an urgent need for political action here.
thyssenkrupp's outlook for 2024 – workforce reductions at Decarbon Technologies
For the current financial year, thyssenkrupp expects an “overall challenging economic development”.
Significant fluctuations in raw material and energy prices are to be expected, which in turn could lead to uncertainty in sales and earnings development.
thyssenkrupp expects sales to remain at the previous year's level.
Adjusted EBIT is expected to grow in the “high three-digit million euro range”.
And the annual net profit should not increase in the low to mid three-digit million euro range, as previously announced, but rather to a balanced value.
The sale of the activities of thyssenkrupp Industries India (Decarbon Technologies) is also imminent in the third quarter.
Around 2,370 jobs will be eliminated here.