thyssenkrupp Q2 Earnings Call Highlights

Key Points

• thyssenkrupp boosted second-quarter profitability despite softer sales, with adjusted EBIT rising to EUR 198 million even as quarterly sales fell 2% year over year to EUR 8.4 billion. Management said restructuring and cost controls were offsetting market headwinds.
• The company reaffirmed full-year guidance for adjusted EBIT, free cash flow before M&A and net income, while cutting its sales outlook to -3% to 0%. It also said capital spending is likely to stay toward the lower end of the EUR 1.4 billion to EUR 1.6 billion range.
• Steel Europe remains central to the turnaround, with management saying restructuring is progressing and that improved EU steel protection could support value creation. thyssenkrupp expects the segment to become cash positive within two to three years, while Marine Systems continues to benefit from strong defense demand and a record EUR 20 billion backlog.

thyssenkrupp ETR: TKA said restructuring measures and cost controls helped lift second-quarter adjusted earnings despite weaker reported sales and a still-challenging demand environment, while management reaffirmed key full-year targets and pointed to potential upside from a changing European steel regulatory backdrop.

On the company’s earnings call for the first half of fiscal 2025/2026, Chief Executive Officer Miguel Lopez said the group is seeing “a significant increase in performance despite continued market headwinds,” adding that restructuring benefits are becoming more visible across the business. Chief Financial Officer Dr. Axel Hamann said strict performance management and the company’s APEX measures helped more than offset lower sales in earnings terms.

Adjusted EBIT rises as sales decline

Hamann said second-quarter sales came in at EUR 8.4 billion, down 2% year over year. For the first six months, sales declined 5%. Adjusted for currency effects, however, second-quarter sales rose 1%, while the six-month decline was 2%.

Adjusted EBIT increased sharply to EUR 198 million in the quarter, up EUR 179 million from the prior-year period. First-half adjusted EBIT stood at EUR 409 million.

Net income was slightly negative in the quarter at minus EUR 11 million. For the first six months, net income was minus EUR 345 million, reflecting restructuring expenses and provisions at Steel Europe of about EUR 400 million in the first quarter.

Free cash flow before M&A was minus EUR 327 million in the second quarter and minus EUR 1.8 billion for the first half. Hamann attributed the cash flow pattern to typical first-half cyclicality and said the company expects improvement in the second half, especially in the fourth quarter. Net cash declined to EUR 2.8 billion, which Hamann described as still solid.

Guidance confirmed, with EBIT seen toward upper end

The company confirmed its guidance for adjusted EBIT, free cash flow before M&A and net income. Hamann said the unchanged adjusted EBIT guidance reflects macroeconomic uncertainty, but added that thyssenkrupp sees itself “at the upper end” of the range referenced on the call.

Sales guidance was revised to a range of minus 3% to 0% versus the prior year. Hamann said the lower range was mainly due to adjustments at Decarbon Technologies and Steel Europe, including deferred sales recognition at Decarbon Technologies and a changed product mix at Steel Europe.

Hamann also said the company remains cautious on capital spending and is oriented toward the lower end of its guided investment range of EUR 1.4 billion to EUR 1.6 billion.

Portfolio moves under ACES 2030

Lopez said thyssenkrupp is advancing its ACES 2030 strategy, including the transformation of headquarters into a financial holding structure, which is expected to be fully effective by 2030 at the latest. He said that shift is intended to strengthen segment independence, accountability and entrepreneurial freedom while lowering the group’s cost base.

At Materials Services, Lopez said the company is focused on capital market readiness and has begun early-stage marketing activities to highlight the segment’s value and growth potential. In response to an analyst question, he said the market has given positive feedback around a potential next step for the business.

Lopez also highlighted the completed March sale of Automation Engineering within Automotive Technology as an example of disciplined portfolio management. Regarding TK Elevator, he said recent news about Kone’s announcement to combine the businesses was “a proof point” for the value of thyssenkrupp’s stake. Hamann said the company expects some cash after the closing of that transaction, anticipated in about 12 to 18 months, but said there are no concrete plans yet for the potential proceeds.

Steel Europe restructuring remains central

Steel Europe remained a major focus of the call. Lopez said restructuring is progressing well and is intended to support a sustainable performance boost and ultimately an independent business in which thyssenkrupp may retain a minority stake. He also said thyssenkrupp and Jindal Steel International mutually agreed to pause talks on a potential transaction, citing an improved regulatory environment for the European steel industry and the company’s own realignment work.

In the question-and-answer session, Lopez said three developments have influenced the company’s view of Steel Europe’s value: the restructuring agreement reached with IG Metall in December, the agreement with Salzgitter on HKM in March and expected changes to European Union steel import tariffs and quotas. He said thyssenkrupp would review any alternative offers but emphasized that the priority is to execute agreed measures and create value.

Hamann said Steel Europe improved earnings in the quarter despite low price levels and weak demand in selected end markets. Shipments rose around 2% year over year, driven by higher volumes from automotive and industrial customers, while packaging steel and electrical steel remained challenged by global market pressures. The segment’s adjusted EBIT improvement was driven by more favorable raw material prices, APEX and efficiency measures, cost discipline, productivity gains and continuous improvement programs.

Hamann said Steel Europe’s business free cash flow improved despite high investment, supported mainly by a release of net working capital through inventory reduction. In response to a question, he said the company expects Steel Europe to become cash positive within a two- to three-year timeframe.

Segment performance mixed but profitability improves

Automotive Technology improved earnings year over year despite soft demand and currency headwinds. Hamann cited restructuring effects, lower personnel expenses and operational measures, including efficiency initiatives, as contributors to the improvement. He said the company expects additional restructuring benefits and some claims management effects in the second half.

Decarbon Technologies saw positive order development in the second quarter, particularly in water electrolyzers, but continued to face customer project postponements in chemical plant business. Sales declined mainly due to water electrolyzers, while adjusted EBIT fell because of higher project-related expenses that were only partly offset by a positive one-time effect in chemicals.

Materials Services reported significantly higher earnings, supported by favorable conditions in North America and contributions from Europe. Hamann said all businesses improved earnings, with North America showing the strongest uplift.

Marine Systems continued to benefit from strong demand for defense products, with its order backlog reaching a record EUR 20 billion, according to Hamann.

Lopez also pointed to progress on thyssenkrupp’s green transformation, including the launch of the European Raw Materials Alliance, Steel Europe’s planned supply of CO2-reduced bloom and steel to BMW from 2026, continued construction of a DRI plant and Uhde’s selection for a biomass-to-methanol technology integration study in Canada.

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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