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Investing.com -- Thyssenkrupp (ETR:TKAG) saw its shares pop 9% in European trading Thursday after the company raised its free cash flow (FCF) outlook, driven by strong performance in its warship division amid heightened security focus following the Ukraine war.
The company cited a major submarine order from the German military in December, which brought in an advance payment of 1 billion euros ($1.04 billion) during the first quarter, reflecting what it described as a "changed security policy environment" for defense firms.
With this advance payment, Thyssenkrupp now forecasts FCF before M&A—a key measure of its financial strength—between 0 and 300 million euros for 2025, improving from its previous projection of negative 200 million to 400 million euros.
Commenting on the outlook hike, Morgan Stanley (NYSE:MS) analysts said "this does not reflect any fundamental improvement in the underlying business’ FCF generation, in our view, and compares to company consensus of €+100mn."
However, the company lowered its full-year sales outlook, pointing to a "persistently very challenging market environment." Thyssenkrupp now expects flat revenue at best, with the potential for a decline of up to 3%, after previously forecasting up to 3% growth.
First-quarter adjusted operating profit more than doubled to 191 million euros, driven largely by its steel division, which benefited from lower raw material and energy costs. Order intake jumped over 50% to 12.48 billion euros, boosted by the German submarine contract.