Thyssenkrupp takes $1 bln impairment on steel unit as outlook worsens
2023/24 net loss at 1.5 bln eur
EPCG can step back from steel deal if 50:50 JV fails
Free cash flow before M&A positive at 110 mln eur
Adds context in paragraph 4, details on steel JV in paragraph 6, shares in paragraph 9
By Christoph Steitz and Tom Käckenhoff
ESSEN, Germany, Nov 19 (Reuters) -Thyssenkrupp TKAG.DE on Tuesday said it took a fresh 1 billion euro ($1.06 billion) impairment on its struggling steel division, citing the sector's deteriorating outlook as well as future investments needed to decarbonise production.
The latest impairment on steel is the second in as many years and comes as talks with Czech billionaire Daniel Kretinsky, who already owns 20% in the division, continue over the question whether that stake could be raised to 50%.
Like its German industrial peers, Thyssenkrupp 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.
"In respect of our main strategic issues, the current fiscal year will be a year of decisions – especially for Steel Europe and Marine Systems," CEO Miguel Lopez 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 depended on a new business plan for the unit which is currently being drawn up.
While Thyssenkrupp's net loss came in at 1.5 billion euros in 2024, the group turned an unexpected positive free cash flow before mergers and acquisitions of 110 million euros thanks to prepayments by customers of its Marine Systems division.
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.
Thyssenkrupp's shares were indicated to open 1.5% higher.
($1 = 0.9438 euros)
Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Friederike Heine and Saad Sayeed
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