Thyssenkrupp Shares: Falling Value & Predicted Losses

Thyssenkrupp shares fall and big losses predicted

German industrial giant Thyssenkrupp saw its shares fall sharply on Tuesday as the company forecast heavy losses for the coming financial year. By 1:30 p.m. Frankfurt time, the stock had fallen 8.85%, mirroring an even steeper decline seen earlier in the day. The alarming development comes as Thyssenkrupp is deep into restructuring as it tries to shore up its finances, which have been hit hard by high energy costs and fierce competition from cheaper producers.

Financial forecasts and future challenges

The steel manufacturing and engineering company expects negative free cash flow of €300 million to €600 million in its financial year ending September 30, 2026. This estimate does not include potential mergers and acquisitions. In addition, Thyssenkrupp predicts that losses will reach 400 to 800 million euros this financial year. The financial director of the company Dr. Axel Hamann explained:

“Our forecast takes into account persistently challenging market conditions and efficiency and restructuring measures across our segments. Committed implementation of our efficiency and cost reduction programs across all segments is critical to our earnings development.”

Last year’s results and restructuring costs

Despite the challenges, Hamann added that the company met its financial goals for the year just ended. Thyssenkrupp generated positive free cash flow of 363 million euros in the period, well above the previous year’s loss of 110 million euros. Sales came in at €32.8 billion, in line with expectations but marking a 6% year-over-year decline. Next year, the company expects restructuring costs of 350 million euros, trying to increase its long-term profitability. This strategy is necessary for both the company and Germany’s manufacturing sector as a whole, which is emblematic of the country’s industrial woes, to recover from a sharp jump in energy prices in Europe and strong competition from Asia.

Job cuts and strategic decisions

Last week, Thyssenkrupp’s steel division announced the start of job cuts following a long-awaited agreement with unions. The terms of the agreement call for the elimination of 11,000 jobs in the steel mills, which make up about 40% of the workforce in the sector. Steel production will be reduced by about 2.8 million tons, a drop of about 25%. These drastic measures are necessary to adapt to changing market conditions, exacerbated by weak demand trends associated with lackluster growth in post-pandemic Europe. It has also affected profit margins, especially as car manufacturers cut purchases of steel and auto parts. The once powerful conglomerate, with diversified divisions ranging from engineering to elevators and defense, is now trying to spin off its less successful industries into separate companies.

Adoption and environmental sustainability

Indian company Jindal Steel is currently exploring the possibility of taking over Thyssenkrupp’s steel unit, replacing earlier bidder Daniel Křetínski. The Czech billionaire earlier backed out of a potential deal earlier this year, giving up the 20% stake he had bought in the steel division and scrapping plans to increase his stake to 50%. One of the main priorities of the steel division is *decarbonisation* and Thyssenkrupp is already actively investing in the development of low-carbon production methods. Thyssenkrupp also successfully sold its marine technology division to TKMS earlier this year, listing it on the Frankfurt Stock Exchange, taking a step further down the restructuring path.