Thyssenkrupp AG Faces Cash Losses Amid Restructuring Challenges in Germany’s Industrial Sector

Thyssenkrupp Faces Financial Challenges Amid Restructuring Efforts

Thyssenkrupp AG predicts cash losses in the coming fiscal year due to rising costs linked to restructuring and investments. This news comes as Germany’s industrial economy struggles.

The company estimates a free cash outflow between €200 million and €400 million ($212 million to $424 million) for the fiscal year ending next September. This forecast occurs despite an expected increase in demand for its industrial products later next year.

Thyssenkrupp is investing significantly to revamp its struggling steel division while preparing its naval engineering unit for a planned initial public offering (IPO). CEO Miguel López described the year as critical for decision-making, particularly for the Steel Europe and Marine Systems sectors.

The company recorded a €1.4 billion net loss for the fiscal year ending September 30. However, it reported a positive free cash flow of €110 million before considering mergers and acquisitions. Thyssenkrupp anticipates earnings before interest and taxes to rise between €600 million and €1 billion this year, up from €567 million previously.

In April, Thyssenkrupp announced it would cut steel production capacity by about 20% and reduce jobs in its steel division, which employs 26,000 people. This decision, made against labor opposition, is part of a strategy to sell a stake in the division to Czech billionaire Daniel Kretinsky’s EP Corporate Group.

Thyssenkrupp also aims to initiate an IPO for its naval shipbuilding unit, which produces submarines and surface vessels. Previous plans to sell a majority stake to Carlyle Group Inc. did not succeed last month.