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Investing.com -- Thyssenkrupp (ETR:TKAG) shares sank roughly 10% Thursday after the company posted second-quarter results that fell well short of expectations, with earnings hit by weak demand and ongoing economic uncertainty.
Adjusted EBIT—a key performance metric—slumped 90% to €19 million, sharply missing the €146 million forecast from a company-compiled analyst consensus. Thyssenkrupp said the quarter was weighed down by subdued market conditions and persistent macroeconomic headwinds, as anticipated.
Revenue declined 5% year-on-year to €8.58 billion, while order intake dropped 6% to €8.08 billion, with lower volumes reported across all divisions except Marine Systems.
The company said it has been focused on boosting productivity and cutting costs through ongoing internal initiatives.
Despite the weak quarter, Thyssenkrupp maintained its full-year guidance but cautioned that the business environment is expected to remain difficult in the near term, with a potential recovery seen in the second half.
Net profit came in at €155 million, reversing a loss of €78 million in the same period last year.
Commenting on the report, Morgan Stanley (NYSE:MS) analysts said Thyssenkrupp’s Q2 results mark a "substantial miss," mainly driven by Steel Europe. The company maintained its guidance on adjusted EBIT and free cash flow (FCF) before M&A, "requiring a sharp acceleration ahead," the analysts added.
Thyssenkrupp reaffirmed its FY24/25 adjusted EBIT guidance of €0.6–1 billion, suggesting a sharp increase in earnings in the second half of the year. This compares with company consensus of €807 million.
"This leaves substantial work to be done for the remainder for the year given the scale of the earnings miss during Q2," the analysts noted.
The company also maintained its free cash flow before M&A outlook at €0 to €300 million, supported by higher prepayments from the Marine Systems division.
Separately, Barclays (LON:BARC) analysts said the bottom end of EBIT guidance "looks achievable" due to "windfall gains" expected from Thyssenkrupp’s Steel Europe and Materials Services divisions in the second half of the year, supported by better spot prices. However, they noted that Auto Tech remains a risk.