Thyssen-Krupp achieves high operating profit and pays dividends again

Thyssen-Krupp steelworks in Duisburg

The steel division contributes by far the largest part to the profit.

(Photo: Reuters)

Dusseldorf Despite major economic uncertainties, the ailing industrial group Thyssen-Krupp can significantly increase its annual result. As the company announced on Thursday, earnings before interest and taxes increased from EUR 451 million in the previous year to EUR 1.8 billion in the fiscal year that ended in September. In terms of net income, the group was in the black at EUR 1.2 billion after a slight loss in the previous year.

For the first time in four years, Thyssen-Krupp intends to pay out a dividend of EUR 0.15. “We have built up resilience and substance and are now in a better position to react appropriately and purposefully to crises in our businesses,” said CEO Martina Merz.

The Ruhr group benefited above all from the sharp rise in steel prices in the past year, which have significantly improved the margin in both the steel division and in materials trading compared to previous years. For example, adjusted earnings before interest and taxes in the steel division rose from EUR 116 million in the previous year to EUR 1.2 billion.

Thyssen-Krupp remains a restructuring case

Revenues in materials trading developed in a similar way, increasing from EUR 587 million to EUR 837 million – while profits in the business with industrial components (EUR 234 million) and car parts (EUR 108 million) were also positive, but fell noticeably due to higher material prices.

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Even if the figures and the prospect of a dividend should make shareholders generally satisfied, Thyssen-Krupp remains a case of restructuring. Because despite the high profits, the group still burned a lot of money in the past year. The free cash flow before acquisitions and sales of parts of the company was minus 476 million euros (previous year: minus 1.3 billion euros).

However, due to the sale of several subsidiaries, Thyssen-Krupp was able to slightly improve its net financial position from 3.6 to 3.7 billion euros. The dividend is thus financed to a certain extent from the sales proceeds.

Losses in the Multi Tracks division are falling

The result of the Multi Tracks division, in which several businesses are bundled that the company intends to divest in whole or in part, shows that the board around Merz is making fundamental progress in the restructuring of the group. These include chemical and cement plant construction, but also the hydrogen electrolysis subsidiary Nucera, whose IPO was currently put on hold due to the difficult environment.

On an adjusted basis, the total loss in these businesses fell to 54 million euros from 298 million euros in the previous year. The costs of the group headquarters also decreased from 194 million euros to 154 million euros.

For the coming fiscal year, Thyssen-Krupp expects both a balanced cash flow and a balanced year-end result. Chief Financial Officer Klaus Keysberg pointed out that there were still uncertainties in the announcement. “No one can yet say how big the challenges will be or how long they will last,” said the manager.

The group is preparing for the most difficult scenario. “This also includes a restrictive and gradual release of investments – depending on how the overall economic situation develops and what progress the business is making in securing earnings and net working capital management.”

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