thyssenkrupp (ETR:TKA) executives used the company’s first-quarter fiscal 2025/2026 earnings call to reiterate their transformation plan, confirm full-year guidance and outline ongoing portfolio moves ranging from the planned spin-off of Marine Systems to a potential majority sale of Steel Europe.
Strategy: portfolio reshaping and path toward a financial holding
CEO Miguel López said the group is continuing to execute its “ACES2030” transformation with the goal of establishing thyssenkrupp as a lean financial holding company. He highlighted the planned spin-off of Marine Systems (TKMS) in October as a major milestone that management believes can create shareholder value.
At thyssenkrupp Steel Europe, López said negotiations with Jindal on a majority holding are ongoing and due diligence is underway. He also pointed to a collective restructuring agreement with IG Metall reached in December.
In addition, López described a “very important historical milestone” related to Hüttenwerke Krupp Mannesmann (HKM): the company has agreed on a term sheet for a new shareholder structure under which Salzgitter plans to operate HKM as sole shareholder from June 1, 2026. He noted this would also mean slab supply to thyssenkrupp Steel Europe would end in 2028.
Quarterly results: lower sales, higher adjusted EBIT
CFO Axel Hamann reported first-quarter sales of EUR 7.2 billion, down 8% year over year, reflecting what management called a challenging market environment and weak demand in parts of Europe. Despite that, adjusted EBIT increased to EUR 211 million, up EUR 20 million from the prior-year quarter, which Hamann said demonstrated improved resilience from restructuring and performance initiatives.
Net income was -EUR 334 million, which Hamann attributed mainly to expected restructuring expenses at Steel Europe. The company reported -EUR 1.5 billion in free cash flow before M&A, which Hamann said reflected a typical seasonal pattern early in the fiscal year tied largely to working capital swings. Net cash declined to EUR 3.2 billion, which management still characterized as a solid level and expected to recover as cash flow improves later in the year.
Hamann also said workforce reduction efforts are progressing as planned, with full-time equivalents down by around 1,100 year to date.
Segment performance: mixed demand, profitability improvements in key areas
- Automotive Technology: Sales declined about 3% year over year, though Hamann said sales were roughly flat on a currency-adjusted basis. Growth in serial business was offset by declines in project business and in Springs and Stabilizers. Adjusted EBIT rose to EUR 20 million (up EUR 8 million), supported by customer volume compensation, restructuring savings and efficiency initiatives. Business cash flow was about -EUR 70 million, driven by restructuring cash-outs and working capital changes.
- Decarbon Technologies: Hamann cited a hesitant market environment and project deferrals. Sales fell 19%, particularly in water electrolyzers at thyssenkrupp nucera and in chemical new-build businesses. Adjusted EBIT declined by EUR 33 million to -EUR 16 million, also impacted by project-related additional costs at Polysius (cement). Business cash flow dropped to -EUR 162 million, driven by lower sales and negative cash profiles in the project business.
- Materials Services: Sales decreased 6% year over year, reflecting weaker direct-to-customer activity and lower shipments, while distribution and processing in North America showed growth. Adjusted EBIT was EUR 50 million, supported by strong processing performance (especially in North America) and APEX cost reduction and efficiency measures. Cash flow was lower year over year due to seasonal working capital build and higher price levels in certain commodities.
- Steel Europe: Sales fell 10% and shipments declined 4%, though Hamann noted higher volumes from automotive customers and steel service centers. Adjusted EBIT increased to EUR 216 million, driven by lower raw materials prices and efficiency measures. Business cash flow declined year over year due to seasonal working capital build, mainly in receivables and payables.
- Marine Systems (TKMS): Management said demand remains strong across defense products, with order backlog at a record EUR 18.7 billion. Hamann noted that operational details are provided in TKMS reporting and said performance is expected to develop in line with the outlook, including updated sales guidance.
Restructuring items, HKM cash outflows, and Steel questions
Hamann said the largest special item in the quarter was EUR 401 million of restructuring expenses at Steel Europe, with the remainder to be booked over the course of fiscal 2025/2026. He also referenced impairment losses at Automotive Technology tied to the signing of the sale of Automation Engineering.
Asked about the HKM term sheet, Hamann said the potential cash outflow would be a low- to mid-three-digit million euro amount, with only a minor portion expected this year and the remainder stretched over at least three years, assuming the deal closes as expected around June.
On Steel Europe, management said the quarter’s earnings lift reflected three components: raw materials prices, efficiency gains and electrical price compensation, which Hamann said was “a bit higher than last year.” When asked to quantify last year’s compensation, he described it as a “low three-digit million euro number.” Hamann also said pension provisions allocated to Steel Europe were around EUR 2.4 billion.
In the Q&A, López acknowledged improving sentiment toward European steel assets, attributing it to tariffs, quota limits and broader policy discussions. He said that positive sentiment would be an input into conversations with Jindal. He reiterated that discussions with Jindal continue to focus on selling a majority stake of the steel business.
Guidance reiterated; political measures viewed as potential upside later
Management confirmed group guidance for fiscal 2025/2026, including expected sales change of -2% to +1% versus the prior year, adjusted EBIT of EUR 500 million to EUR 900 million, and free cash flow before M&A of -EUR 600 million to -EUR 300 million. Hamann emphasized that the free cash flow outlook already includes expected restructuring cash outflows of up to EUR 350 million. For investments, he said the group is being cautious and orienting toward the lower end of its EUR 1.4 billion to EUR 1.6 billion guidance range.
On policy support, López said the company expects improved pricing after tariffs are introduced in Europe and believes CBAM actions could help, but he said the company does not expect meaningful effects in the current fiscal year. He said any impact is more likely next fiscal year, with EU tariff decisions expected around May or June.
López closed by saying “big decisions are behind us” and the focus is now on disciplined execution as thyssenkrupp works toward greater segment independence and potential capital market options over time.
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.
