Rising steel prices boost Thyssenkrupp amid supply chain strains | Investment News
By Christoph Steitz and Tom Käckenhoff
FRANKFURT (Reuters) – Thyssenkrupp said on Thursday its operating profit rose nearly fivefold in the first quarter as its two largest divisions – steel and materials trading – benefited from significantly higher steel prices.
Archrival ArcelorMittal also pointed to tailwinds from higher selling prices thanks to the recovery in the global economy and increased demand for steel.
Thyssenkrupp’s adjusted profit before interest and tax (EBIT) was 378 million euros ($432 million) in the October-December period, the first three months of the group’s fiscal year, compared to 78 million a year earlier.
Free cash flow before mergers and acquisitions, however, was negative at 858 million euros due to an increase in working capital linked to “persistent bottlenecks in the supply chain with the resulting delays in the customer calls,” the company said.
“We had a good first quarter,” said chief financial officer Klaus Keysberg. “But we are still not where we want to be, which is why we are not giving up and continuing to work full speed ahead on implementing our plan.”
The group, which makes everything from auto parts to submarines, continues to expect adjusted EBIT of 1.5 to 1.8 billion euros for the full year and cash- free flow before balanced M&A.
Shares of the company fell 3%, abandoning earlier gains as supply chain fears and worries about negative free cash flow outweighed positive results.
Adjusted EBIT of the group’s steel division, which could be spun off at some point but not this year, rose six-fold to 124 million euros as higher selling prices offset a sharp rise in costs raw materials and energy.
Meanwhile, Thyssenkrupp’s automotive technology unit struggled with a continued shortage of semiconductors, causing operating profit to fall by two-thirds in the period.
(Reporting by Christoph Steitz and Tom Kaeckenhoff; Additional reporting by Anika Ross; Editing by Arun Koyyur and Mark Potter)
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