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Thyssenkrupp raises sales forecast, cuts free cash flow outlook
Global Banking & Finance Review®
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FRANKFURT (Reuters) – German conglomerate Thyssenkrupp on Wednesday raised its outlook for sales and operating profit for 2022 but cut its free cash flow forecast, reflecting a rise in both selling prices and commodity costs.
FRANKFURT (Reuters) – German conglomerate Thyssenkrupp on Wednesday raised its outlook for sales and operating profit for 2022 but cut its free cash flow forecast, reflecting a rise in both selling prices and commodity costs.
The submarines-to-car parts group expects its free cash flow before mergers and acquisitions to be in negative triple-digit million euros, compared with its previous forecast for a break-even.
“The dynamic movements in commodity and materials prices are weighing on our cash flow at present. However, we expect that there will be sequential improvements for us in the subsequent quarters,” Chief Financial Officer Klaus Keysberg said.
The group said it aims to return to paying dividends and generate positive cash flows, adding Russia’s invasion of Ukraine made “it more difficult to predict when precisely we will achieve these goals”.
The company, however, benefited from higher selling prices for steel and materials, it said, adding it now expected sales to rise in low double-digit percentage, compared with a mid single-digit percentage increase expected previously.
Shares in the company were indicated to open 7.3% higher in premarket trade.
Adjusted earnings before interest and tax (EBIT) are now forecast to grow to at least 2.0 billion euros ($2.1 billion), Thyssenkrupp said. It previously expected adjusted EBIT of 1.5 billion to 1.8 billion euros.
In the second quarter, adjusted EBIT nearly quadrupled to 802 million euros, while sales increased by nearly a quarter to 10.6 billion as order intake jumped 57%.
($1 = 0.9491 euros)
(Reporting by Christoph Steitz; Editing by Jane Merriman and Vinay Dwivedi)
Free cash flow is the cash generated by a company after accounting for capital expenditures. It indicates the amount of cash available for distribution to investors or reinvestment in the business.
Operating profit is the profit a company makes from its core business operations, excluding deductions of interest and taxes. It reflects the efficiency of a company's operations.
Commodity costs refer to the expenses associated with purchasing raw materials or goods that are traded in bulk, such as metals, oil, or agricultural products.
Adjusted EBIT (Earnings Before Interest and Taxes) is a measure of a company's profitability that excludes certain non-recurring items, providing a clearer view of operational performance.
Dividends are payments made by a corporation to its shareholders, typically from profits. They can be issued in cash or additional shares and represent a return on investment.
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