Thyssenkrupp Sees Earnings Dropping in Weakening Economy

William Wilkes, Bloomberg News

Emissions rise from chimneys at the Thyssenkrupp AG steel plant at dawn in Duisburg, Germany, on Tuesday, Oct. 20, 2020. Liberty Steel said it's made a non-binding indicative offer for Thyssenkrupp's steel unit, as the German conglomerate continues restructuring efforts to ensure its survival. Photographer: Sarah Pabst/Bloomberg , Bloomberg

(Bloomberg) -- Thyssenkrupp AG plans to pay a dividend for the first time in four years even as the firm warned earnings would fall substantially next year due to a weakening economy.

Adjusted earnings before interest and taxes are expected to fall to a mid-to-high three-digit million euro range, below the €2.1 billion ($2.2 billion) reported for the financial year ended Sept. 30, the company said Thursday. Thyssenkrupp still plans to propose its first dividend since 2018 after after its cash drain narrowed during the fourth quarter.

“The momentum of our transformation process has been dampened, but we have proven comparatively robust in the face of three external shocks -- the pandemic, the semiconductor shortage and war,” Chief Executive Officer Martina Merz said in a statement accompanying full-year earnings.

Thyssenkrupp may rise on the news of the dividend proposal, Christian Obst, an analyst at Baader Bank, said in a note. The guidance for weaker earnings are in line with rather low expectations, he said.

Merz is leading a deep restructuring of the conglomerate, which was fighting for survival even before the pandemic and European energy crisis hit. Once synonymous with German industrial prowess, Thyssenkrupp has struggled for years to staunch a cash drain as a global steel glut compounded profound structural issues across the firm.

Still, the company expects to at least stem cash outflows for its 2022/23 financial year, ending a six-year streak. The company’s cash outflow narrowed to €476 million in the financial year just ended, less than the €1.3 billion drain seen in the previous financial year.

Improvement in the company’s operating performance will allow the firm to propose a dividend of 15 cents a share to the company’s annual general meeting in February.

Thyssenkrupp said it still plans an initial public offering of shares in its Nucera hydrogen electrolysis unit, but said such a move was dependent on developments in financial markets. The company also said it was planning for a standalone solution for it steel unit, but added that it wasn’t possible to decide on what form it that plan would take due to the worsening economy.

(Updates with analyst comment on fourth paragraph)