Thyssenkrupp’s Q2 Operating Profit Soars Tenfold, but Free Cash Flow and Nucera Losses Temper Optimism

Thyssenkrupp’s second-quarter operating profit surged to €198 million, a tenfold jump from €19 million a year earlier, as the industrial conglomerate’s restructuring efforts began to pay off. The better-than-expected result has prompted analysts at Citigroup and JPMorgan to raise their price targets, adding fresh momentum to a stock that has already climbed 14.04% over the past 30 days. On Monday, shares traded at €10.56.

Yet beneath the headline earnings beat lies a more complex picture. The group’s free cash flow before M&A is forecast to remain deeply negative this fiscal year, in a range of €300 million to €600 million, weighed down by restructuring costs of around €350 million and investments in green steel production. Management continues to guide for a full-year adjusted EBIT of €500 million to €900 million, but still expects a sizeable net loss due to the heavy transformation charges. A dividend of €0.15 per share has been proposed as a sign of continuity.

The restructuring programme is gathering pace. Thyssenkrupp is preparing a spin-off of its Materials Services division, the materials trading unit that has seen a pickup in its North American warehousing business. Other units such as Rothe Erde and Polysius are also being given greater operational autonomy as the group moves toward a pure financial-holding model. Meanwhile, the planned separation of Steel Europe remains a central plank, with potential support from tighter EU import rules on steel.

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

Not every subsidiary is contributing to the recovery. The hydrogen arm Nucera widened its net loss to €64 million in the second quarter, prompting a hiring freeze in high-cost countries and reduced working hours in Germany. Annual savings of around €25 million are expected from the 2026/2027 financial year onward. Separately, persistent weakness in the automotive sector has forced Thyssenkrupp to revise its revenue forecast for the current year, now expecting a decline of up to 3% versus an earlier expectation of stabilisation.

On the positive side, the group’s available liquidity stands at a robust €4.6 billion, providing ample buffer for the near-term cash drain. At Thyssenkrupp Marine Systems, a potential mega submarine contract from Canada worth over $10 billion remains in play, with a decision expected in the current quarter. If secured, the order would underscore the value hidden within the conglomerate’s portfolio.

The share price action reflects the tug-of-war between hope and reality. The stock’s relative strength index stands at 73, indicating overbought territory after the recent rally. Analysts at Jefferies reaffirmed their buy rating, citing the spin-offs as key catalysts, while chart watchers caution that the momentum may need a breather.

For now, the market’s focus is shifting from quarterly earnings to execution. Concrete timelines for the Materials Services spin-off and progress on the Canadian submarine order could provide the next leg of upside. Until then, Thyssenkrupp’s turnaround story remains a work in progress, buoyed by better profits but constrained by the costs of change.

Ad

Thyssenkrupp Stock: New Analysis - 18 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 | 69366826 |