Thyssenkrupp Steps Up: A Resurgence with Steel Division Restructuring
Thyssenkrupp Regains Profit Status - Ongoing Steel Division Struggles Persist - Steel giant, Thyssenkrupp, reports a comeback to profitability; the steel industry, however, continues to grapple with uncertainty.
In an encouraging turn of events, Thyssenkrupp has bounced back to profitability after six consecutive quarters in the red. The primary catalyst for this reversal is the €270 million post-tax profit accrued from the sale of Thyssenkrupp Electrical Steel India @1@4. While the company reaffirmed its guidance for an operating profit between €600 million and €1 billion, the Q2 figure dropped significantly to €19 million, a stark decrease from the €184 million of the previous year @2. This decline can be attributed to weaker earnings and lower production utilization. Additionally, revenue decreased to €8.6 billion, down from €9.1 billion the previous year @2.
The steel division, however, continued to struggle, posting a loss of €23 million compared to the €68 million operating profit seen in the previous year @2. Thyssenkrupp is actively pushing ahead with restructuring its steel division, with plans to cut 11,000 jobs and up to 30% stake acquisition by the EP Group, owned by Czech businessman Daniel Kretinsky @1.
CEO Miguel López stated, "We are progressing as previously forecast: a year of decisive action, financially a transitional year." López expects a more stable market environment in the second half of the year, along with positive effects from implemented measures @2.
Restructuring on the Horizon for Thyssenkrupp Steel
Despite the current challenge, Thyssenkrupp Steel Division is actively repositioning itself to be more competitive and adaptable. The key elements and timeline of this restructuring include:
- Agreements with IG Metall Union: Thyssenkrupp Steel and the powerful metalworkers' union IG Metall have reached an agreement in principle, focusing on social consensus, voluntary separations, early retirements, and internal reassignments. Final negotiations are expected to conclude by summer 2025 @1@4.
- Production Capacity Reduction: Thyssenkrupp plans to reduce steel production capacity from the current 11.5 million metric tonnes to between 8.7 and 9 million metric tonnes annually. This move aligns output with weaker demand and targets improved cost efficiency @3.
- Plant Optimization: Potential plant-level changes are being considered, with the Kreuztal-Eichen facility in western Germany under consideration for closure. The iconic Duisburg plant is under review for possible external partnerships or exits from certain operations to optimize the location footprint @3.
- Ending Economic Link with HKM: ThyssenKrupp Steel AG has initiated the termination of the supply contract with Hüttenwerke Krupp Mannesmann (HKM). This strategic move aims to decouple economically from HKM @1.
- Sale of Electrical Steel Business in India: Completed at the end of January 2025, the sale of Thyssenkrupp's electrical steel business in India marks a step forward in streamlining the portfolio @1.
- Direct Reduction Plant Project in Duisburg: Infrastructure work for the modernization project's new direct reduction plant is already underway, signaling progress @1.
The restructuring process is an integral part of Thyssenkrupp's broader company transformation, extending beyond the steel division to involve automotive technology and materials services @1. Thyssenkrupp Steel Division remains resilient and focused on securing a sustainable and competitive future through its restructuring initiatives.
Looking Ahead
Thyssenkrupp Steel Division is charting a course for a better tomorrow. Despite the weak European steel demand, the company remains optimistic, maintaining its full-year forecast and expecting market stabilization in the second half of 2025 @2. This restructuring marks an exciting period in the history of Thyssenkrupp Steel Division as it strives towards long-term success in an ever-evolving market.
- Thyssenkrupp Steel Division, as part of the company's broader transformation, is enhancing its competitiveness through vocational training programs within the restructuring process, aiming to equip workers with the skills necessary for future industry requirements.
- To bolster its financial position and support the restructuring initiatives, Thyssenkrupp Steel Division is exploring partnerships and acquisitions in the finance sector, with a focus on investment from business entities to ensure long-term sustainability and adaptability.
