Thyssen Group is sliding deeper into the crisis: Shares in the Essen-based conglomerate plummeted on Friday morning after the management, led by CEO Miguel Lopez, who has been in office for over a year, cut its forecast again the previous evening.

Thyssenkrupp now anticipates a slump in sales of between six and eight percent for the 2023/24 financial year compared to the previous year, the company announced. Previously, Thyssenkrupp had only stated that it expected sales to be below the previous year. Thyssenkrupp also lowered its forecasts for adjusted operating earnings and the much-noticed free cash flow before M&A - i.e. the inflow of liquid funds adjusted for acquisitions and disposals. In May, Lopez and his Executive Board had already lowered their forecasts for the second time within a few months.

Shares in Thyssenkrupp fell 9.4 percent to 3.51 euros at the peak on Friday morning, their lowest level since March 2020. The development at Thyssenkrupp remains sobering, said a trader. Investors were in danger of losing their remaining confidence.

The development comes at an inopportune time for Thyssenkrupp. The traditional group's steel division is facing cuts in personnel and production. The subsidiary's Supervisory Board is expected to discuss corresponding plans at the beginning of August. Head of Steel Bernhard Osburg is working on a business plan for the division, which has around 27,000 employees. It has a production capacity of around 11.5 million tons per year. However, actual sales have recently been closer to 9.5 million tons. Group CEO Miguel Lopez wants to transfer the steel business into a 50:50 joint venture with the energy holding company of Czech billionaire Daniel Kretinsky.

At the same time, the steel industry is doing anything but well. Competitor Salzgitter recently reported declining sales and profits. The steel industry is still lacking urgently needed demand stimuli from the important steel processing sectors, according to the German Steel Federation.

In its announcement, thyssenkrupp referred to a "persistently challenging market environment", which, among other things, led to a significant decline in sales. "A short-term stabilization of the market in the current financial year is currently not foreseeable," the Essen-based company conceded. Programs to increase efficiency could not fully offset the development. In addition to the significant decline in sales, thyssenkrupp now expects adjusted earnings (EBIT) to be above 500 million euros. Previously, a figure in the high three-digit million euro range had been expected. Free cash flow (before M&A) will now be in the region of minus 100 million euros, after previously forecasting a positive figure in the low three-digit million euro range.

According to preliminary figures, sales in the third quarter amounted to around nine billion euros, EBIT to around 150 million euros and cash flow (before M&A) to minus 250 million euros. The Essen-based company plans to present full figures on August 14.

(Report by Ralf Bode and Matthias Inverardi, with assistance from Daniela Pegna, edited by Olaf Brenner. If you have any queries, please contact our editorial team at frankfurt.newsroom@thomsonreuters.com)