Financial Performance Amid Market Headwinds

ThyssenKrupp's second quarter of fiscal year 2024/2025 reflected the persistent challenges of weak markets and macroeconomic uncertainty affecting most customer segments and regions. The industrial giant reported order intake of €8.1 billion ($8.7 billion), down from €8.6 billion in the prior-year quarter, while group sales declined to €8.6 billion ($9.3 billion) from €9.1 billion, primarily due to falling prices and weakened demand. Adjusted EBIT remained positive but decreased significantly to €19 million ($20.5 million), compared to €184 million in the same period last year. Despite these operational challenges, the company achieved a notable improvement in net income, which rose to €167 million ($180.4 million) from a net loss of €72 million in the prior-year quarter. This turnaround was largely driven by one-time gains, including approximately €270 million net from the sale of ThyssenKrupp Electrical Steel India and a €105 million reversal of impairment losses related to the Elevator investment. These positive factors were partially offset by impairment losses of around €90 million at Steel Europe resulting from the difficult economic environment, high energy costs, and planned decarbonization investments. Earnings per share improved to €0.25, compared to a loss of €0.13 in the previous year's quarter. Free cash flow before M&A declined to €(569) million ($(614.5) million) from €(197) million, primarily due to planned cash outflows at Marine Systems.

Strategic Transformation and Debt Reduction

A significant milestone in ThyssenKrupp's financial restructuring was achieved during the quarter with the repayment of its last outstanding bond of €0.6 billion ($648 million), rendering the group almost entirely free from bank and capital market debt. This accomplishment marks a remarkable turnaround for a formerly heavily indebted industrial conglomerate. The company maintained a strong liquidity position with cash and cash equivalents and undrawn committed credit lines totaling €5.9 billion ($6.4 billion). Net financial assets stood at €4.0 billion ($4.3 billion) as of March 31, 2025, slightly down from €4.3 billion at the end of December 2024. This figure includes proceeds of approximately €400 million net from the January 2025 sale of ThyssenKrupp Electrical Steel India. The group's equity amounted to €10.6 billion ($11.4 billion), with the equity ratio remaining stable at a comfortable level of nearly 37%. CFO Jens Schulte emphasized the significance of this debt reduction milestone while acknowledging the ongoing need to improve operational performance across the group's businesses, particularly at Steel Europe. The company's focus remains on enhancing the operating performance of each segment to ensure they can independently finance necessary future investments, a goal that requires continued effort according to the second-quarter results.

Segment Performance and Market Challenges

The performance across ThyssenKrupp's business segments reflected varying degrees of market pressure and strategic progress. The Marine Systems segment registered an increase in orders, primarily driven by submarine and service businesses. Similarly, the Decarbon Technologies segment outperformed the prior year when adjusted for the sale of subsidiary ThyssenKrupp Industries India, with significant growth in the high-pressure segment of chemical plant engineering and increased activity at ThyssenKrupp nucera. Sales in this segment benefited from growth in water electrolysis, wind power, and service businesses. Conversely, the Automotive Technology segment continued to experience declining customer demand, while Steel Europe and Materials Services faced decreases due to both demand and price effects. Adjusted EBIT declined year-on-year primarily due to lower sales and shipments, along with reduced capacity utilization at Steel Europe resulting from planned shutdowns for conversion work. The difficult market situation also impacted the Automotive Technology and Materials Services segments. However, both Decarbon Technologies and Marine Systems managed to grow their earnings contributions compared to the previous year. The APEX efficiency program delivered positive effects across all segments, partially offsetting market-related challenges. Corporate Headquarters experienced negative impacts from higher provisions for long-term compensation due to positive share price trends since the beginning of the year.

Strategic Initiatives and Portfolio Restructuring

ThyssenKrupp CEO Miguel López characterized fiscal year 2024/2025 as "a year for making decisions strategically and a year of transition financially," highlighting the company's progress on portfolio restructuring. The Marine Systems business is advancing rapidly toward a standalone solution, with preparations underway for the spin-off of a minority interest to ThyssenKrupp AG shareholders. This new holding company is expected to be admitted to trading on the Frankfurt Stock Exchange, potentially before the end of the calendar year. The segment has excellent market prospects following the modernization of the Kiel shipyard and is now focusing on modifying the newly acquired site in Wismar to accommodate its product portfolio. In the Steel Europe segment, ThyssenKrupp reached an agreement in principle with IG Metall in early May regarding the necessary restructuring, with negotiations expected to lead to a collective bargaining agreement by summer 2025. The segment successfully completed the sale of its electrical steel business in India and made progress on its direct reduction plant project in Duisburg, including site preparation and strengthening of the adjacent quay. Additionally, ThyssenKrupp Steel initiated the process of breaking its economic link with Hüttenwerke Krupp Mannesmann by terminating the supply contract, which will expire by December 31, 2032, though selling its shares in HKM remains the preferred option.

APEX Performance Program and Efficiency Measures

The APEX 2.0 performance program continues to deliver positive earnings effects across all segments, helping to mitigate the impact of challenging market conditions. In response to the persistently difficult market environment, the Automotive Technology segment has implemented a global efficiency program aimed at reducing costs by more than €150 million. Measures include a recruitment freeze, optimized inventory management to reduce net working capital, adjustments to indirect personnel costs, and approximately 1,800 job reductions. The segment is also pursuing portfolio adjustments and business restructuring, including the gradual dismantling of the Springs & Stabilizers production site in Hagen while continuing negotiations for its sale. Car body specialist ThyssenKrupp Automotive Body Solutions is undergoing restructuring to enhance its competitiveness and profitability, and targeted profitability improvement measures have been initiated at Italian subsidiary Berco, a manufacturer of crawler drive components for construction machinery. Despite these cost-cutting initiatives, the segment continues to invest strategically in order-related projects, such as electric power-assisted steering systems in the Steering business unit and production of rotor and camshaft modules in the Dynamic Components business unit.

Innovation and Sustainability Initiatives

Despite financial challenges, ThyssenKrupp continues to advance innovation and sustainability initiatives across its businesses. The Decarbon Technologies segment is transforming its business models toward modularized and standardized products, with its Uhde business unit developing intelligent and efficient plant concepts to reduce the carbon footprint of the chemical industry. This focus led to several significant contract wins during the quarter, including a pioneering order to construct one of India's largest nitric acid plants equipped with EnviNOx® technology to cut greenhouse gas emissions. Uhde is also supplying MOPCO, Egypt's largest nitrogen fertilizer complex, with innovative carbon capture and low-emission ammonia production solutions for three existing ammonia and urea plants. Additionally, the business unit was selected by Elyse Energy in France for a biomass-to-SAF (sustainable aviation fuel) project utilizing PRENFLO® gasification technology. The Materials Services segment is expanding its portfolio of metal and plastics service centers with a new site in Santa Teresa, New Mexico, strengthening its position in the North American market. The segment is also broadening its range of sustainability products in response to increasing demand for climate-friendly materials, as evidenced by a collaboration with Hydnum Steel to source decarbonized flat steel for an initial seven-year period.

Outlook and Full-Year Forecast

Despite the challenging second-quarter results, ThyssenKrupp has confirmed its full-year forecast for fiscal 2024/2025, anticipating an improved yet still challenging market environment in the second half of the year. The company expects global economic growth to remain uncertain, necessitating the broad ranges in its performance indicator projections. For the full fiscal year, ThyssenKrupp continues to forecast a year-on-year change in sales between -3% and 0%, with adjusted EBIT expected to range from €600 million ($648 million) to €1 billion ($1.08 billion). Free cash flow before M&A is projected to be between €0 and €300 million ($324 million), while net income is expected to improve to between €100 million ($108 million) and €500 million ($540 million), marking a return to profitability. This outlook reflects management's confidence that the strategic measures being implemented, including the APEX efficiency program and portfolio restructuring initiatives, will begin to yield more substantial results in the latter half of the fiscal year. The company anticipates that a more stable market environment, combined with the positive effects of these initiatives, will support the achievement of its full-year targets despite the headwinds experienced in the first half.

Key Takeaways:

• ThyssenKrupp has repaid its last outstanding bond of €0.6 billion ($648 million), making the formerly highly indebted industrial conglomerate almost entirely free from bank and capital market debt while maintaining a strong liquidity position of €5.9 billion ($6.4 billion).

• Despite challenging market conditions that led to a 90% decline in adjusted EBIT to €19 million ($20.5 million), the company achieved a significant improvement in net income to €167 million ($180.4 million), primarily due to one-time gains from the sale of ThyssenKrupp Electrical Steel India and reversal of impairment losses related to the Elevator investment.

• The company is making substantial progress on its strategic transformation, including preparations for a standalone solution for Marine Systems with a potential stock market listing before year-end, restructuring negotiations for Steel Europe, and implementation of the APEX efficiency program that is delivering positive earnings effects across all segments.