Berlin — Struggling German conglomerate Thyssenkrupp plunged into the red in its second quarter, posting a net loss of €86m on Tuesday following news that it will slash 6,000 jobs.
The plunge into loss-making at the start of 2019 contrasted with a €250m profit in early 2018, reflecting the troubled waters the Essen-based group has found itself in since mid-2018.
On Friday, Thyssenkrupp announced 6,000 job cuts worldwide, including 4,000 in Germany, as part of a structural shakeup following the collapse of a proposed merger with Indian steel firm Tata.
The German group’s operating profit fell 66%, or €283m year on year, to €145m.
“In the steel sector, the historic low ebb of the river Rhine, lower demand from the automotive industry and the new collective agreement (with workers’ representatives) had a negative impact on earnings,” Thyssenkrupp said.
However, there was some good news as group-wide sales rose slightly, adding 2% to reach €10.6bn. Performance was lifted especially by the elevators division in the US and Europe as order intake rose 1% to €10.3bn.
However, increased risk provisions related to a German anti-cartel investigation into steel prices burdened Thyssenkrupp's accounts.
On Friday, CEO Guido Kerkhoff warned “we are building a new Thyssenkrupp ... we are going to change a lot of things and it will not be an easy road”. This was reflected by the group’s forecast net loss of €1.1bn to €1.2bn for 2019.
Thyssenkrupp has abandoned a plan to split into two groups — industry and materials — but intends to list its highly profitable elevators business, valued at around €14bn by analysts, on the stock market and adopt a holding structure.