Thyssenkrupp Bounces Back with Profit - Steel Division Still Battle-Weary
Steady profit recovery singles out Thyssenkrupp, though ongoing turmoil pervades its steel sector - Steel conglomerate, Thyssenkrupp, bounces back into profitability amidst persisting turmoil in the steel sector.
Hey there! Let's dive into Thyssenkrupp's recent financial comeback, but as you may have guessed, their steel division's still facing a rough patch.
This profit marks the end of six consecutive quarters in the red. Most of this turnaround can be attributed to the sale of Thyssenkrupp Electrical Steel India, which contributed a post-tax profit of approximately 270 million euros. The company announced this sale further.
Thyssenkrupp confirmed its forecast, anticipating an operating profit of between 600 to 1 billion euros. Although the Q2 profit was 19 million euros, a substantial drop from the previous year's 184 million euros, due to weaker earnings and lower production utilization. The revenue stood at 8.6 billion euros, a decline from last year's 9.1 billion euros.
The steel division, unfortunately, has slipped into the red, reporting a loss of 23 million euros. In contrast, there was an operating profit of 68 million euros in the same division last year.
Thyssenkrupp has been pushing for reform in its steel division for some time now. Last year, the company disclosed plans to axe around 11,000 jobs[4]. The EP Group of Czech businessman Daniel Kretinsky has already acquired a 20% stake in Thyssenkrupp Steel, with another 30% on the horizon[5].
CEO Miguel López remains optimistic about the present business year: "We can see this year shaping up as predicted: strategically a year of choices, financially a transition year." López anticipates " a more favorable market environment and positive effects stemming from the measures we've implemented" for the second half of the year[5].
But let's not forget the challenges Thyssenkrupp's steel division faces: high energy costs, an uncertain European steel market, and the added complexities of restructuring and decarbonization efforts[1][3].
- Attribution: Thyssenkrupp Steel Europe division has been facing high energy costs, attributed to the Russia-Ukraine conflict and investments in decarbonizing the business[2].
- Market Conditions: Lower prices and weaker demand in the European steel market have added to the division's woes[2][3].
- Restructuring and Decarbonization Efforts: These efforts are crucial for long-term sustainability but add immediate costs and complexity[1][3].
- Job Cuts: Thyssenkrupp announced plans to cut around 11,000 jobs as part of its steel division restructuring[4].
- Ongoing Reforms and Anticipated Changes: The Czech businessman Daniel Kretinsky has already acquired a 20% stake in Thyssenkrupp Steel, with plans to own another 30%[5].
In light of Thyssenkrupp's new community policy, the company is considering vocational training programs to upskill workers and adapt to the changing business environment in various industries, including steel. Simultaneously, Thyssenkrupp aims to secure partnerships with local businesses and financial institutions to facilitate these training programs, thereby fostering economic development and sustainability.
