German industrial group Thyssenkrupp hailed a successful turnround as it almost broke even after years of boardroom turmoil and weakening profits.
The Essen-based group’s earnings beat market expectations in the 12 months to the end of September. In the prior, pandemic-hit year, it had fallen to a multibillion-euro loss, and pledged to “stop the bleeding”.
Shares rose 4 per cent to €10.60 in morning trade in Frankfurt.
Once the country’s mightiest conglomerate, Thyssenkrupp has been rapidly shrinking. It sold its lucrative lifts and escalators division to private equity groups in 2019 for €17bn, and has since closed or sold several smaller units, including mining and carbon components divisions.
These divestments, combined with a modest revival of its historic steel business, helped the German group post a net loss of €19m, down from a €5.5bn loss in the 2019-20 fiscal period.
“After two years of intensive transformation work, we can now say that the turnround is evident and Thyssenkrupp is heading in the right direction,” chief executive Martina Merz said. “However, enormous challenges remain.”
In particular, Thyssenkrupp is still weighing up options for its vast steel unit, which operates Europe’s largest steel plant in Duisburg.
A high-profile attempt to merge with Tata Steel was blocked by Brussels in 2019, and a subsequent bid for the unit by British tycoon Sanjeev Gupta’s Liberty Steel fell apart in February after failing to find financing.
The company is now considering a spin-off of the steel division, which posted pre-tax profits of €116m for the fiscal year, after falling to a loss of €820m last year, as the sector continues to benefit from a strong rise in demand, and a favourable pricing environment.
“We’re still convinced that a standalone solution offers the best future prospects for the steel business,” Merz said.
But while she welcomed the “present market trend”, which has seen imports of cheap steel from China fall sharply, and demand from automakers for lightweight premium steel rise, she warned that Thyssenkrupp needed a “regulatory framework that offers planning certainty, especially with a view to the green transformation”.
Although the company is exploring using hydrogen to power its blast furnaces, Thyssenkrupp still emits 25m tonnes of CO2 per year, largely from its steel unit.
Separately, the group confirmed it was exploring an initial public offering for its small hydrogen business, and said it had managed to axe about 8,000 of the almost 13,000 jobs it intends to cut in its latest restructuring drive. Thyssenkrupp still employs more than 100,000 people worldwide.
The company, whose two largest shareholders are the Krupp Foundation and activist investor Cevian, also confirmed it would not pay a dividend for the third year in a row.
