Thyssenkrupp’s Q2 Operating Profit Beats Forecasts, Setting the Stage for a Busy Restructuring Summer

The gap between Thyssenkrupp’s near-term losses and its medium-term ambitions is narrowing, thanks to an unexpectedly strong operating performance in its second quarter that has prompted a fresh wave of analyst upgrades. Adjusted EBIT came in at €198 million, beating consensus estimates by €31 million as the margin improved to 2.4%. That advance offered cover for a net loss of €11 million — a figure that would have been far worse had it not been for a one-off gain from a division sale in India that lifted the prior-year quarter into triple-digit profit territory.

Analysts responded swiftly. Citigroup’s Ephrem Ravi lifted his price target to €15 from €13, citing the earnings beat and a trio of catalysts he expects to unlock further value: the planned separation of the Materials Services trading unit, monetisation of the company’s stake in its former elevator business, and a steel-market turnaround that is gaining traction just as restructuring efforts deepen. JPMorgan followed with an upgrade to its target, raising it to €11.80 from €10.10 while keeping a “Neutral” rating. Jefferies has held firm with a “Buy” recommendation and a €13 target.

The shares closed the week at €10.55, down nearly 2% on the day but still roughly 20% higher over the past 30 days — well above their 50-day moving average. That run-up reflects mounting confidence that Thyssenkrupp can execute on a sweeping portfolio overhaul that is set to dominate the next several months.

Materials Services and HKM Lead the Portfolio Clean-Up

The most consequential decision looms over Materials Services, the €11.4 billion-revenue trading division that employs more than 15,000 people. Management is weighing four options: a spin-off, an initial public offering, a straight sale, or a conversion into a Kommanditgesellschaft auf Aktien (KGaA) — the latter structure would allow the parent to retain control even as it sells down its stake. An IPO could take place as early as autumn, though only if the unit’s performance improves in the current quarter.

Should investors sell immediately? Or is it worth buying Thyssenkrupp?

Meanwhile, the long-awaited exit from the HKM joint venture is on track. Thyssenkrupp plans to sell its stake to partner Salzgitter AG in June, a move that chief executive Miguel López described as “an important step to make the steel business competitive.” The deal is one of several that the market will watch closely over the coming weeks.

European Steel Tariffs and a Canadian Submarine Prize

Thyssenkrupp’s steel division, which recently saw its book value recover to €3 billion, is also eyeing regulatory relief. The European Parliament has agreed to tighten steel safeguard measures by lowering the duty-free import quota to 18.3 million tonnes and slapping a 50% tariff on any volumes above that threshold. The rule could take effect from July 1, provided member states ratify it soon. That timing would come not a moment too soon for Thyssenkrupp Electrical Steel, which is suspending output at its Isbergues site in France from June to September 2026 — a direct consequence of Asian imports that now account for more than half of the EU market, often priced well below European production costs. Some 600 jobs are affected.

Beyond the steel trade, the group is also waiting on a decision from Ottawa, where a Canadian submarine order worth more than $10 billion could be awarded between May and June. A win for the TKMS marine division would provide a major long-term revenue stream.

Thyssenkrupp at a turning point? This analysis reveals what investors need to know now.

Losses Persist, but Liquidity Offers a Buffer

For the full 2024/25 financial year, management continues to forecast a net loss of between €400 million and €800 million and negative free cash flow before M&A of up to €600 million — a projection confirmed after the second-quarter showing. The cash drain is largely a function of restructuring costs, but the company has a solid liquidity cushion of €4.6 billion to absorb them. The steel segment is not expected to turn cash-flow positive for another two to three years, highlighting just how long the turnaround will take.

The next key milestones are the half-year report due in May, the EU vote on the steel tariff regulation before June 30, and the finalisation of the HKM and Materials Services deals. Each will provide another clue as to whether Thyssenkrupp can finally reshape itself from an unwieldy conglomerate into a leaner, more focused industrial player.

Ad

Thyssenkrupp Stock: New Analysis - 17 May

Fresh Thyssenkrupp information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Thyssenkrupp analysis...

en | DE0007500001 | THYSSENKRUPP’S | boerse | 69356550 |