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Steel conglomerate Thyssenkrupp reports a return to profit amid ongoing troubles within the steel industry.

Steel manufacturing giant, Thyssenkrupp, reports positive profits once more; however, the Steel division continues to struggle.

Demanding Labour Experience
Demanding Labour Experience

Headline: Thyssenkrupp Bounces Back with Profit, Yet Steel Division Persists in Struggle

Steel conglomerate, Thyssenkrupp, reports net profit after two years of losses; however, its steel division continues to face challenges. - Steel conglomerate Thyssenkrupp reports a return to profit amid ongoing troubles within the steel industry.

Hey there! Let's dive into the latest financial update from Thyssenkrupp.

After six consecutive quarters in the red, the German industrial conglomerate has managed to post a profit, thanks mainly to the sale of Thyssenkrupp Electrical Steel India, contributing around 270 million euros post-tax.

However, the company admitted that profits were nowhere near their expectations, with an operating profit of only 19 million euros in the second quarter – a significant drop compared to the same period last year's 184 million euros. The decline was attributed to weaker earnings and reduced production capacity utilization. Revenue also took a hit, falling to 8.6 billion euros – below last year's 9.1 billion euros.

The steel division was at the heart of these troubles, slipping into the red with a loss of 23 million euros. In contrast, last year's performance showed an operating profit of 68 million euros in the division.

Thyssenkrupp has been on a mission to restructure its steel division for some time now. As part of this process, the company announced plans to cut about 40% of its workforce in the steel division, roughly 11,000 jobs, earlier this year. The private equity firm EP Group, led by Czech businessman Daniel Kretinsky, already owns a 20 percent stake in Thyssenkrupp Steel, with another 30 percent on the way.

According to CEO Miguel López, the current business year is proceeding as planned: "We're looking at this year as a year of decisions, financially as a transition year." López expects a more stable market environment and positive effects from the restructuring measures in the second half, leading the company to modernize its production with a Direct Reduction Iron (DRI) plant powered by green hydrogen, producing CO2-free steel. This project is backed by around €2 billion in government funding.

In brief, Thyssenkrupp's steel division is grappling with various challenges, including a tough economic environment, high energy costs, and the need for investments in decarbonization. Despite job cuts and restructuring, the division aims for a sustainable and profitable future supported by new green steel production technology. The company expects the second half of 2025 to present a more stable market environment and anticipates returning to profit by year-end, though global economic uncertainties persist.

The community is closely watching Thyssenkrupp's restructuring plan, particularly focused on the steel division, as job cuts and modernization efforts are underway to address economic hardships and high energy costs, aiming for a sustainable and profitable future through the implementation of green hydrogen-powered Direct Reduction Iron (DRI) plants. In light of Thyssenkrupp's ongoing financial struggles and the steel division's move towards vocational training and upskilling programs, collaboration with industry leaders and financial institutions is essential for successful business transformation and a brighter economic outlook.

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