Thyssenkrupp has presented its balance sheet, not only for the past quarter, but also for the entire financial year that ended on September 30th.

New CEO reports billions in losses The figures that the newly appointed CEO Miguel Lopez presented to the public, leave a lot to be desired. In the past financial year, the company reported a net loss of around 2 billion euros – the industrial giant from the Ruhr area had reported a profit of more than 1 billion euros in the previous year.

Consequently, the CEO announced during the balance sheet presentation that he would take swift and comprehensive action. The company’s profitability must increase in order to secure its future viability. The steel business is particularly challenging and is largely responsible for the severe losses.

High write-offs: Steel division burdens corporate earnings The division is struggling with falling sales prices and rising raw material and energy costs. At least in the short term, this will not change: the outlook for the division is moderate, its value has now been revised downwards again. The write-offs alone amount to 2.1 billion euros here. The adjusted profit of the division was only just 320 million euros in the past financial year – after 1.2 billion euros in the previous year.

The group as a whole achieved a result of 703 million euros, only about one third of the previous year’s value. For the coming year, the Executive Board expects a return to the black figures and targets a adjusted EBIT in the high three-digit million range, and also plans a slight increase in sales.

Negotiations on joint venture with EPH In the traditional steel business of Thyssenkrupp, around 26,000 employees are employed. Lopez is toying with the idea of partially spinning off the division. Discussions are reportedly underway with the Czech holding company EPH, which is increasingly focusing its business on renewable energies and thus contributing to Thyssenkrupp’s climate-neutral transformation of the steel division.

No comprehensive details of the ongoing negotiations, such as the envisaged financial volume, were explained. For the workforce, however, little should change as a result of the possible cooperation, as existing collective agreements or location promises continue to be binding.

Thyssenkrupp share price rises by almost 8 percent Shareholders welcomed the prospect of a joint venture and were also pleased with the surprisingly high cash flow, which has now risen to 363 million euros. The fact that a dividend of 15 cents per share will be paid out despite the failed annual accounts also satisfied investors.

Originally, Thyssenkrupp had expected “at least” a balanced zero-sum game for the 2022/23 financial year, instead there is now a billion-dollar loss. However, the mentioned factors ensured that the Thyssenkrupp share price was able to gain more than 7 percentage points during trading, and at the end of trading the increase was just under 7.9 percent.

Uncertainty after Constitutional Court ruling: Thyssenkrupp seems to have been lucky This week, the budget ruling of the Federal Constitutional Court continues to be in the focus of companies and investors as an overall economic challenge. In the ruling, the constitutional judges described the reallocation of funds secured as part of the coronavirus pandemic and now to be used for other purposes as unconstitutional.

For the Federal government, this decision rips a gigantic hole of 60 billion euros in the budget planning. The far-reaching consequences of the ruling from Karlsruhe are still not fully foreseeable. However, it is already clear that many industrial companies that had set the transformation to more climate protection through state subsidies for investments are now directly affected. Due to a provisional budget freeze, the government is not allowed to make any new commitments for the time being.

Luck for Thyssenkrupp: Unlike many other companies, the group has already submitted its applications and received corresponding commitments, so at least this is legally and planning secure. However, with more than 40 competitors from the steel industry, the situation looks completely different – those who had not yet submitted any applications could now go empty-handed or at least receive significantly less money from the state than originally hoped. But even here, details are still unclear.