Thyssenkrupp, Germany’s largest steelmaker, has announced a €1 billion writedown of its steel division, warning of a structural decline in demand from European industries along with the cost of decarbonization said in a report by Financial Times.
The latest write-down of Thyssenkrupp’s steel business comes down with hopes that Czech billionaire Daniel Kretinsky, who currently owns a 20% stake in TKSE, will increase his ownership to 50%.
Like other German industrial giants, Thyssenkrupp is struggling with a weakening global economy, intense competition from China, and soaring costs. These challenges have forced the company to explore new ownership options for its flagship steel and warship divisions, says Reuters in its recent reports.
“In respect of our main strategic issues, the current fiscal year will be a year of decisions – especially for Steel Europe and Marine Systems,” CEO Miguel Lopez said.
In October, Thyssenkrupp’s finance chief told Reuters that the company would seek talks with other steelmakers about possible partnerships and tie-ups if a deal did not materialize.
Despite the writedown leading to an annual net loss for the group, Thyssenkrupp reported an unexpected positive free cash flow of €110 million before mergers and acquisitions. This was largely attributed to pre-payments from customers in its Marine Systems division.
Thyssenkrupp on Tuesday said it expected to make a profit next year, forecasting net income in the next fiscal year to reach from €100mn to €500mn. The company credited its extensive savings program for understanding much of the negative market impacts this year and confirmed plans to extend these cost-cutting measures further.
Thyssenkrupp shares, which have lost 41% year-to-date, were last up 10.4%, the biggest gain among German midcap stocks, Reuters reported.