Thyssenkrupp AG Reports Q1 Results and Maintains Full-Year Guidance Despite Challenging Market
German multinational conglomerate thyssenkrupp AG recently announced its first-quarter results for the fiscal year 2023/2024. Despite facing a challenging market, the company remains confident in its full-year guidance. CEO Miguel Lopez and CFO Klaus Keysberg highlighted thyssenkrupp's commitment to simplifying its portfolio, improving performance, and advancing green technologies.
Decrease in Sales and Adjusted EBIT, but Full-Year Guidance Maintained
thyssenkrupp AG reported a decrease in sales and adjusted earnings before interest and taxes (EBIT) for the first quarter. However, despite these challenges, the company maintains its full-year guidance, demonstrating confidence in its ability to navigate the current market conditions.
Focus on Green Technologies Evidenced by Sale of Thyssenkrupp Industries India
In line with its commitment to green technologies, thyssenkrupp recently announced the sale of Thyssenkrupp Industries India. This move further underscores the company's dedication to sustainability and environmentally-friendly practices.
APEX Performance Program to Drive High-Margin Sales Growth
thyssenkrupp's APEX performance program is expected to generate high-margin sales growth. Despite a decrease in adjusted EBIT in the Decarbon Technologies and Steel Europe segments due to market challenges, the company remains optimistic about its ability to achieve its midterm targets.
Strong Order Backlog and Focus on Free Cash Flow
thyssenkrupp AG currently boasts a robust order backlog of €12.7 billion. Additionally, the company aims to achieve free cash flow in the low three-digit million euro range before mergers and acquisitions (M&A). These factors further contribute to the company's confidence in meeting its midterm targets until the fiscal year 2024/2025.
Company Outlook and Challenges
While thyssenkrupp AG expects sales to remain at the prior year's level due to ongoing challenging market conditions, the company maintains its full-year guidance. thyssenkrupp anticipates an improvement in earnings before interest and taxes (EBIT) throughout the year. However, challenges such as decreased adjusted EBIT in the Decarbon Technologies segment and weak market demand in Europe for the Materials segment persist. The company mitigates these challenges through efficiency measures and favorable freight costs.
Repayment of Debt and Share Buybacks
CFO Klaus Keysberg assures stakeholders that thyssenkrupp AG has no liquidity issues and can repay the €1.5 billion debt due in February. CEO Miguel Lopez prioritizes meeting full-year guidance and improving EBIT and free cash flow over share buybacks. While share buybacks are being considered, the company places emphasis on performance improvement and addressing portfolio issues first.
Confidence in Ongoing Negotiations and New Business Plan
CEO Miguel Lopez expresses confidence in the ongoing negotiations concerning Marine Systems. Additionally, thyssenkrupp's team is developing a new business plan for Steel Europe, further highlighting the company's commitment to growth and improvement in its various segments.
Analyst comment
Positive news. Despite a challenging market, Thyssenkrupp maintains its full-year guidance, focuses on portfolio simplification and green technologies. Sales and adjusted EBIT decrease, but midterm targets are confirmed. Key highlights include a strong order backlog and dividend payment. Market is expected to improve with stable earnings in Marine Systems and potential high-margin sales growth from the APEX performance program. Despite challenges, the company remains confident in its ability to repay debt and improve EBIT and free cash flow. Share buybacks are considered but not prioritized.
