By Christoph Steitz and Tom Käckenhoff
FRANKFURT/ESSEN, Germany (Reuters) -German industrial group Thyssenkrupp (ETR:TKAG) on Thursday warned that sales and profit will "nosedive" next year as high inflation and energy costs are compounded by expected recession in Europe.
The warning took the shine off the group's proposal for its first dividend in four years after reporting that adjusted operating profit nearly tripled while sales grew 21% to 41.1 billion euros ($42.5 billion) in its 2021/22 financial year, buoyed by soaring steel and materials prices.
The submarines-to-car parts group, which is viewed as a bellwether for the broader economy, expects those prices to drop significantly in its current financial year as demand slumps in the expected economic downturn.
"Everyone is expecting a recession in Europe," Chief Executive Martina Merz said, citing high energy costs and concerns over competitiveness, high inflation and interest rates. "That means we are preparing for a worst-case scenario."
Merz also said that large merger projects will be put on the back-burner as the deals market goes into "hibernation", further delaying a sale, tie-up or merger of Thyssenkrupp's steel division.
The company's shares, which have fallen 43% this year, traded 1.7% down by 1213 GMT.
"Sales will probably nosedive, especially because prices at Materials Services and Steel Europe will return to normal after peaking in the previous year," Thyssenkrupp Chief Financial Officer Klaus Keysberg said, adding that an estimate of a 20% decline would be over the top.
Refinitiv forecasts an 11% decline to 36.5 billion euros.
Adjusted operating profit, meanwhile, is expected to more than halve from 2.1 billion euros in 2021/22, the company said.
The bleak outlook came as Thyssenkrupp proposed a dividend of 0.15 euros per share for 2021/22, its first since the 2017/18 financial year but lower than a Refinitiv forecast of 0.19 euros.
The Alfried Krupp von Bohlen und Halbach foundation, Thyssenkrupp's top shareholder with a 21% stake, welcomed the payout decision and said it continued to support management.
($1 = 0.9664 euros)