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Thyssenkrupp, the German industrial giant, has reported mixed financial results for the first quarter of its fiscal year. The company is making progress with restructuring efforts, even as it faces weak sales. The latest financial report shows a net loss of €33 million from October to December. While this is still a loss, it is a major improvement from the €305 million loss in the same period last year.

Sales declined to €7.8 billion from €8.2 billion, affected by lower demand and falling prices. However, the company’s cost-cutting measures helped improve adjusted earnings before interest and taxes (EBIT), which rose to €191 million.

“Despite tough market conditions, we improved our performance in the first quarter,” said CFO Jens Schulte. “The rise in EBIT shows that our structural measures are working. We will continue building on these successes.”

Defense Division Supports Growth

Thyssenkrupp’s marine systems division played a key role in offsetting some financial difficulties. The division, which manufactures military ships and submarines, received major payments for a defense project, improving free cash flow before mergers and acquisitions. The loss in this category shrank to €21 million, compared to a much larger €531 million loss in the previous year.

Order intake surged by more than 50%, reaching €12.5 billion during the quarter. The company is now more optimistic about its cash flow for the full fiscal year 2024/2025. It expects positive free cash flow between €0 and €300 million, a significant shift from earlier predictions of losses ranging between €200 million and €400 million.

CEO Miguel López expressed confidence in the company’s direction. “We are strengthening our businesses, driving long-term growth, and securing employment,” he said.

Steel and Marine Restructuring in Focus

Thyssenkrupp is moving ahead with its plan to spin off its European steel division, a move that could create a more competitive and focused business. The company is also preparing a public listing for its marine systems unit, which is set to benefit from rising global defense spending.

“Geopolitical developments indicate increasing demand for defense systems,” the company said in its report. “Establishing marine systems as an independent entity will allow us to maximize its potential.” The spin-off is being accelerated to take advantage of growing opportunities in global defense markets.

Decarbonization Unit Shows Promise

Another area of growth for Thyssenkrupp is its decarbonization technologies division, which posted significant sales gains compared to last year. The company views this sector as a major opportunity for future expansion, especially as industries worldwide push for cleaner energy solutions.

For the fiscal year 2024/2025, Thyssenkrupp has revised its sales forecast, now expecting stable or slightly declining sales instead of the previously projected growth of 0% to 3%. Adjusted EBIT is forecasted between €600 million and €1 billion, while net profit is expected to range between €100 million and €500 million.

López emphasized that the company is undergoing a major transformation. “We are becoming a leaner and more agile organization to tackle market challenges. Our priority remains delivering value to shareholders while promoting sustainable innovation.”

Looking Ahead

Thyssenkrupp’s efforts to cut costs, restructure its divisions, and invest in growth areas like defense and decarbonization are beginning to show results. The significant reduction in losses and the rise in EBIT indicate that its strategy is working. However, the company must continue adapting to uncertain economic conditions and shifting global markets.

With defense spending on the rise, Thyssenkrupp’s marine division is well-positioned for future success. The company’s decarbonization efforts also hold long-term potential as industries seek to reduce emissions. Despite weaker demand in some areas, these strategic moves could help Thyssenkrupp secure a stronger financial position in the coming years.

For more in-depth financial coverage, visit Financial Mirror.