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Thyssenkrupp flags new cost cuts to regain investor confidence
Published Aug 10, 2023 01:09AM ET
Updated Aug 10, 2023 07:41AM ET
© Reuters. FILE PHOTO: A logo of Thyssenkrupp AG is pictured at the company's headquarters in Essen, Germany, November 21, 2018. REUTERS/Thilo Schmuelgen
By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF (Reuters) - Thyssenkrupp (ETR:TKAG) on Thursday flagged a new cost-cutting programme to raise its performance and improve returns for shareholders, and said it now expects to hit the upper end of its profit outlook following solid third-quarter results.
The company has been making strides in its turnaround in the past few months, successfully listing its hydrogen business Nucera and getting Brussels' ok for 2 billion euros ($2.2 billion) in steel subsidies.
Details of the new cost cut plans are to be unveiled later this year and new CEO Miguel Lopez, who has been in the job a little over two months, refrained from ruling out potential layoffs when repeatedly asked by journalists.
"I think I can say that there has not been a comprehensive performance programme in recent years," he said after presenting third-quarter results that showed a better-than-expected outcome at its materials and steel businesses.
"We have to overcome our cash generation legacy and close the gap to our financial targets. This impacted our shareholders as well because the returns we generated have not been sufficient enough."
The engineering and steel production conglomerate now expects adjusted earnings before interest and tax (EBIT) in the high triple-digit million euro range, having previously forecast it to be in the mid to high triple-digit million range.
Shares in the company were 4.1% higher at 1103 GMT.
Thyssenkrupp confirmed that it was still targeting a spin-off for both its steel division as well as its defence business Thyssenkrupp Marine Systems, and that work on both projects was being done, without providing further details.
The company said third-quarter adjusted EBIT fell by two thirds, and that free cash flow before M&A, a key indicator for Thyssenkrupp's ability to generate cash, turned positive in the quarter to 347 million euros, up from a negative 412 million last year.
($1 = 0.9075 euros)
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