(Bloomberg) -- Thyssenkrupp AG said poor demand that’s pushing down sales and new orders is set to endure for now as the steelmaker’s customers across automotive technology, machinery and construction lose momentum.
For the three months through June, order intake fell almost 11% to €8.4 billion ($9.2 billion) and sales also dipped, Thyssenkrupp said Wednesday. The former German industrial stalwart has already cut its outlook three times in past months.
Shares in Thyssenkrupp, which reported a €9 billion decline in sales, dropped as much as 4.7% in Frankfurt to a record low valuation of €1.96 billion.
Since the start of the year, Thyssenkrupp has swung its predictions to a net loss as well as negative free cash flow for fiscal 2024. In Germany, the company’s biggest single market, data tracking investor confidence plummeted to its lowest level since January amid an increasingly gloomy outlook for the global economy.
The company, reporting a quarterly net loss of €33 million for the past quarter, said it doesn’t expect the market to stabilize in the short term because of persistently weak demand and high energy costs.
“To respond to the changing markets as best we can, our businesses are restructuring systematically wherever this is necessary,” Chief Financial Officer Jens Schulte said in a statement.
Thyssenkrupp said it has halted an attempt to sell its Automation Engineering unit for now to instead consider various options for the powertrain business, including “‘wider-reaching” structural measures at the site in Bremen. The manufacturer said it will make a decision by the end of the current fiscal year.
Alongside broader efficiency measures, the company plans to cut 400 positions in Germany in its unit making automotive chassis. Capacity outside of Germany will be increasing, it said.
The deteriorating outlook is adding urgency to Thyssenkrupp’s years-long efforts to restructure its loss-making steel unit. After agreeing in May to sell a 20% stake in the division to Czech billionaire Daniel Kretinsky’s EP Corporate Group, progress on plans to cut jobs and capacity have stalled.
The main obstacle is disagreement over Thyssenkrupp Steel Europe AG’s financing needs by its parent to ensure an independent future. A steel unit supervisory board meeting last week, marked by worker protests, ended without a resolution, with another meeting scheduled for later this month.
Thyssenkrupp in April announced plans to reduce steel-making capacity by about a fifth, alongside substantial job cuts among the division’s 26,000 workers. The decision, pushed through against opposition from labor representatives, formed part of the stake sale to Kretinsky’s EPCG, who is in talks to buy a further 30% of the business.
European steelmakers are on the back foot after years of weaker demand and pressure to lower emissions. Many are cutting jobs with Tata Steel Ltd. in June announcing plans to cut 2,800 jobs and close furnaces at its UK operations. Germany’s Kloeckner & Co SE is proceeding with plans to cut 10% of its workforce in its European distribution.
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