German industrial major Thyssenkrupp took a fresh 1-billion-euro ($1.06-billion) impairment on its struggling steel division, citing the "challenging market environment" as weak demand and Asian competition hurt its sales.
The conglomerate, whose products range from steel to submarines, booked a net loss of 1.4 billion euros in the past fiscal year, compared to 2 billion euros a year earlier, the company said on Tuesday.
Once a symbol of German industrial might Thyssenkrupp, like its domestic peers, has been struggling with a weakening global economy, rising competition from China and high costs, forcing it to seek new owners for its iconic steel business as well as its warship division.
Steelmaking, one of the most energy-intensive industries, has battled high power costs and cheaper Asian rivals for years while facing billions of euros in investment to cut emissions and produce steel via renewable sources.
Chief executive Miguel Lopez said "very challenging market conditions" had weighed on the Essen-based group but insisted that it had made "key progress" in pushing through a major restructuring.
"In respect of our main strategic issues, the current fiscal year will be a year of decisions – especially for Steel Europe and Marine Systems," he said.
Several key units – including steel, automotive, and materials – saw falling orders and sales in 2023/24, with Thyssenkrupp pointing to "significantly weaker demand" from major industries.
"Significantly weaker demand from key customer industries like the automotive industry, engineering and construction had a negative impact on the group’s key financial indicators in the past fiscal year," the group said.
Total sales for the year fell 7% to 35 billion euros.
The troubled steel division, Steel Europe, reported an 18% fall in operating profits.
The group has been seeking to spin off the unit but the process is proving difficult.
Earlier this year, it completed a key step by selling a stake to a group owned by Czech billionaire Daniel Kretinsky.
But the crisis at the division deepened in August when its boss and the head of its supervisory board quit after clashing with Lopez about the best way forward.
Thyssenkrupp had previously said it planned to cut jobs and reduce production at its key steel plant in Duisburg, though the exact number of losses has not yet been announced.
The latest impairment on steel, the second in as many years, comes as talks with Kretinsky, who owns 20% in the division, continue over whether that stake could be raised to 50%, a Reuters report said.
Kretinsky, via his energy holding EPCG, can step back from a deal with Thyssenkrupp if talks for a 50:50 stake fail, Thyssenkrupp said, adding discussions now depend on a new business plan for the unit which is currently being drawn up.
Thyssenkrupp's finance chief told Reuters in October that the company would seek talks with other steelmakers about possible partnerships and tie-ups if a deal does not materialize.
While the impairments caused a 1.5 billion euro net loss for the group in 2024, ThyssenKrupp turned an unexpected positive free cash flow before mergers and acquisitions (M&A) of 110 million euros, thanks to prepayments by customers of its Marine Systems division.
Thyssenkrupp shares, which have lost 41% year-to-date, were 8.4% higher in morning trading, the biggest gainer among German midcap stocks.
The group, which makes products as varied as submarines and car parts, had expected negative free cash flow before M&A – a gauge for investors of the conglomerate's operational health – of around 100 million euros.
Shares in Thyssenkrupp Nucera, in which Thyssenkrupp holds a majority, were also 8.2% higher after the group released an upbeat trading statement late on Monday.