Thyssenkrupp predicts higher profits as it attempts to rebuild reputation
Thyssenkrupp forecast higher profits next year as it reported a fall in income and sales during a gruelling 2018 fiscal year for the company.
The figures
Profit after tax and costs were down to €60m (£53.4m) from €270m the previous year.
Earnings before interest, tax, depreciation and amortization fell to €1.55bn from €1.72bn the year before.
The group’s order intake remained level at €42.8bn.
Sales were up three per cent to €42.7bn.
Free cash flow before the M&A improved year on year but remained negative at €134m.
Net debt rose from €2bn to €2.4bn.
Equity fell year-on-year from €3.4bn to €3.3bn.
Why it’s interesting
The results come at the end of a challenging fiscal year for Thyssenkrupp, which is facing a probe amid allegations it was involved in a steel cartel.
The steep fall in income reflects two profit warnings issued earlier this year. However, the earnings of €1.55bn were lower than the €1.6bn figure forecast in a profit warning this month.
But the German conglomerate was “cautiously optimistic” about its expectations for the 2019 full year as it prepares for a 50/50 European joint venture with Tata Steel.
The company said it aims to achieve adjusted profit of over €1bn, compared to €706m in 2017-2018. It also expects net income to increase “significantly”.
In addition, Thyssenkrupp outlined its plan for the separation of the group, which will see its elevators and car parts operations spun off into one division. It hopes to have the plan approved in January 2020.
Thyssenkrupp’s share price initially rose two per cent following the announcement, but has since fallen to below its opening price.
Jordan Hiscott, chief trader at Ayondo Markets, said: “There are some positives to take from Thyssenkrupp's latest earnings, particularly the lower net debt coming in at €2.4bn.
“However, the cynic in me points to a cleverly worded statement from the company focusing overly on the virtues, which is quite remarkable given the previous revision.”
What Thyssenkrupp said
Chief executive Guido Kerkhoff said: “The past fiscal year was a turbulent and challenging one for Thyssenkrupp.
“We initiated one of the biggest realignments in the history of the company. At the same time we identified potential for further improvements in all businesses which we are now systematically addressing.
“We are fully committed to our performance targets. Measures to achieve them have been agreed with the business areas. This will raise the performance of Thyssenkrupp as a whole.”