thyssenkrupp Q3 Earnings Call Highlights

thyssenkrupp (ETR:TKA) reported improved third-quarter adjusted EBIT as restructuring measures and lower raw-material costs supported earnings, while management lowered its full-year sales outlook amid subdued demand and limited macroeconomic visibility.

For the third quarter of fiscal 2025-2026, sales rose 8% year over year to €8.8 billion. Adjusted EBIT increased by €28 million to €183 million, while net income turned positive at €34 million. For the first nine months, sales declined 1% to €24.4 billion, adjusted EBIT rose to €591 million, and net income remained negative at €311 million, reflecting restructuring provisions booked in the first quarter.

Chief Executive Officer Miguel López Borrego said execution was continuing despite an uncertain market backdrop. “Operationally, we see a further step-up in performance, also driven by restructuring benefits that are becoming more and more visible,” he said.

Guidance Updated as Demand Remains Uneven

The company lowered its full-year sales outlook, now expecting a decline of 1% to 3% from the prior year. It narrowed its adjusted EBIT guidance to a range of €600 million to €900 million, compared with its previous range of €500 million to €900 million.

thyssenkrupp confirmed its outlook for free cash flow before mergers and acquisitions of negative €600 million to negative €300 million. The company said the forecast includes restructuring cash outflows of up to €250 million and capital expenditures of €1.2 billion to €1.3 billion. Full-year net income is expected to be between negative €700 million and negative €400 million, including restructuring provisions primarily related to Steel Europe.

Chief Financial Officer Dr. Axel Hamann said the group’s financial performance reflected strict performance management, even as demand remained muted across several customer groups and regions. The company ended the quarter with net cash of about €2.6 billion.

Free cash flow before M was negative €114 million in the quarter, an improvement of €140 million from a year earlier. The nine-month figure was negative €1.9 billion, which Hamann said reflected thyssenkrupp’s usual seasonal cash-flow pattern and was expected to reverse during the final quarter.

Segment Results Show Diverging Market Conditions

Materials Services, now known as tk accelis, was a key source of growth. The business reported higher sales and significantly improved adjusted EBIT, supported by favorable market conditions in North America and Europe, higher shipments, and strong operational performance. Hamann said the improvement reflected a mix of volume growth and selling materials at higher prices.

thyssenkrupp Marine Systems also increased earnings and maintained an order backlog exceeding €20 billion. López Borrego pointed to recent multibillion-euro orders, including contracts with Germany’s Bundeswehr for service vessels and with the Canadian government for submarines.

Steel Europe posted higher third-quarter sales, aided by increased shipments to automotive and industrial customers, though pricing remained under pressure in packaging and electrical steel. Adjusted EBIT improved significantly and more than doubled over the first nine months, driven by restructuring, a hiring freeze, operational-excellence initiatives and lower raw-material costs.

Automotive Technology continued to face softer demand in its serial business. While aftermarket and forged-technologies operations grew, adjusted EBIT declined as lower volumes and higher special freight costs outweighed restructuring benefits. Hamann said the business is relying in part on claims management toward the end of the fiscal year to support its outlook.

Decarbon Technologies saw weaker order intake and declining sales, particularly in plant engineering, as customers postponed chemical-plant projects. Earnings were also affected by additional costs on legacy cement projects. Restructuring, purchasing optimization and efficiency measures provided partial offsets, according to management.

Steel Europe Restructuring and Capital Markets Day

Management said Steel Europe’s outlook reflects caution rather than an expectation of severe weakness. Hamann cited uncertainty around energy prices, low Rhine River levels and an upcoming maintenance period expected to affect operations in the fourth quarter, first quarter and into the second quarter.

The company expects lower volumes but somewhat better pricing at Steel Europe in the fourth quarter. It said steel tariffs that became effective in July were not yet fully reflected in the reported results and could provide upside, particularly in the next fiscal year.

thyssenkrupp completed its exit from Hüttenwerke Krupp Mannesmann, or HKM, in July by selling its stake to Salzgitter AG. The transaction contributed to approximately €400 million in write-ups at Steel Europe because the remaining business was viewed as having a more profitable outlook without HKM. This was partly offset by €276 million of impairment losses from classifying HKM as a disposal group. The actual deconsolidation is expected to have a negative low-three-digit-million-euro impact in the fourth quarter.

López Borrego said thyssenkrupp will hold a dedicated Steel Europe Capital Markets Day in London at the end of September. The event will address the impact of the restructuring agreement, the HKM exit, and changes to European Union tariffs and import quotas. Management did not provide a decision on whether any future Steel Europe separation would involve a minority or majority spinoff.

Portfolio Transformation Continues

The company is moving its headquarters toward a lean financial holding-company structure under its APEX 2030 program. López Borrego said the planned tk accelis spinoff remains on track following shareholder approvals at an extraordinary general meeting on Aug. 7.

The planned transaction would list a 49% minority stake in tk accelis on the Prime Standard of the Frankfurt Stock Exchange within the calendar year, while thyssenkrupp retains 51% and continues to consolidate the segment. Shareholders are expected to receive one tk accelis share for every 20 thyssenkrupp shares. The financing framework includes a €1.7 billion borrowing-base facility.

Management said it has no current plans to reduce its 51% ownership stakes in thyssenkrupp Marine Systems or tk accelis. It also said the direct-reduction plant at Steel Europe remains central to its green-steel strategy. The project carries total capital expenditure of about €3 billion, including €2 billion in public funding; thyssenkrupp said it had received about €1 billion of that funding and had incurred approximately €300 million of net costs after funding so far.

About thyssenkrupp (ETR:TKA)

thyssenkrupp AG operates as an industrial and technology company in Germany and internationally. It operates through five segments: Automotive Technology, Decarbon Technologies, Materials Services, Steel Europe, and Marine Systems. The Automotive Technology segment offers components, systems, and automation solutions for vehicle manufacturing, such as axle assembly, body in white, camshafts and electric engine components, dampers, dies, springs and stabilizers, crankshafts and conrods, steering, and undercarriages.

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