German industrial company Thyssenkrupp has released its latest financial update, revealing a combination of challenges and progress. The company saw weaker sales in the last quarter, but key improvements in cost savings and efficiency helped offset some losses.
The company reported a net loss of €33 million for the period between October and December. This is a significant improvement from the €305 million loss recorded during the same time last year. However, overall group sales dropped to €7.8 billion from €8.2 billion due to declining demand and lower product prices.
“Despite the challenging market environment, we improved our performance in the 1st quarter,” said Jens Schulte, Thyssenkrupp’s Chief Financial Officer. “The increase in EBIT demonstrates that our structural efforts to enhance efficiency and reduce costs are paying off. We will continue to systematically build on these measures.”
Earnings before interest and taxes (EBIT) rose to €191 million in the quarter ending December 31, mainly due to the company’s cost-saving initiatives. This marked a notable recovery compared to previous quarters, showing that Thyssenkrupp’s long-term financial strategies are yielding positive results.
Defense Sector Strengthens Marine Systems
Thyssenkrupp’s free cash flow before mergers and acquisitions remained negative at €21 million. However, this was a significant improvement from the €531 million loss recorded a year earlier. One of the key reasons for this improvement was advanced payments for a crucial marine project.
Order intake for the quarter rose by more than 50% year-on-year, reaching €12.5 billion. This surge in orders reflects strong demand in Thyssenkrupp’s defense sector, particularly for its naval and submarine-building division.
For the fiscal year 2024/2025, the company now projects a free cash flow of between €0 to €300 million. This is a sharp revision from its earlier forecast, which predicted a negative cash flow of between €200 million to €400 million.
Strategic Restructuring Gains Momentum
CEO Miguel López reiterated the company’s commitment to a major restructuring plan aimed at increasing competitiveness, sustaining growth, and securing long-term employment.
“Our mission is to boost the competitiveness of our businesses, drive sustainable growth, and secure long-term employment,” said López.
Thyssenkrupp is actively working on spinning off its European steel division while preparing for a public listing of its marine systems unit. The marine division, responsible for manufacturing military ships and submarines, is set to benefit from rising global defense budgets.
“Geopolitical developments point to continued demand growth,” the company stated. “Establishing the marine systems as a standalone entity will help us fully capitalize on this potential.” The spin-off process is being accelerated to ensure the company takes full advantage of these market opportunities.
Focus on Decarbonization and Future Growth
Thyssenkrupp’s decarbonization technologies unit has reported a significant increase in sales compared to the previous year. The company believes this sector holds “enormous” growth potential, particularly as industries seek cleaner energy solutions and sustainable production methods.
For the full fiscal year 2024/2025, Thyssenkrupp expects sales to either remain stable or decrease by up to 3%. This represents a downward revision from its earlier projection of 0% to 3% growth. Adjusted EBIT is now forecasted to range between €600 million and €1 billion, with net profit expected to land between €100 million and €500 million.
“We are building a leaner, more flexible organization to address current market challenges,” López said. “Our focus remains on delivering value to shareholders while fostering sustainable innovation.”
Thyssenkrupp’s management is confident that its ongoing restructuring efforts, cost-saving initiatives, and expansion in key sectors such as defense and decarbonization will position the company for long-term success.
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