Thyssenkrupp shares plunge as future looks grim for industrial giant
Shares in Thyssenkrupp fell over 14 per cent today as the German industrial group’s new chief executive Martina Merz scrapped its dividend, warning that deeper losses were still to come.
Merz, who took over last month in an emergency move, asked investors to be patient after the company’s half year results showed net losses had widened to €304m (£260.2m) from €62m a year earlier.
Read more: German steel giant Thyssenkrupp looking to sell elevator division
Thyssenkrupp’s adjusted earnings before interest and tax tumbled 44 per cent to €802m and the company said it expected a similar level for 2019/20.
It reported negative free cash flow before mergers and acquisitions of €1.1bn and warned that the situation would get worse this financial year.
Net debt at the industrial megalith stood at $3.7bn at the end of September.
She added that the turnaround would take two to three years to take effect, saying: “We will not leave any stone unturned.”
The company’s elevator business, one of its most prized assets, is up for sale in an attempt to begin fixing the conglomerate’s finances. The division could fetch as much as €17bn, with multiple bidders expected.
Since July 2018 Thyssenkrupp has issued four profit warnings and made two failed attempts to restructure. It is also aiming to slash 6,000 jobs and spin off businesses where it is clear it cannot catch up with rivals.
The proposed job losses will not play well with labour representatives, a stakeholder group that controls half of the firm’s supervisory board.
It was the first time in six years that the company had proposed scrapping its dividend, a move that met with approval from top investor the Alfried Krupp von Bohlen und Halbach Foundation.
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Michael Muders of Union Investment, a top-10 shareholder, told Reuters: “Thyssenkrupp needs to focus on the comprehensive and sustainable restructuring of the business areas, in the interest of safeguarding the future of the company,”
Shares earlier touched an 11-week low of €11.54.
Main image credit: Getty