Thyssenkrupp’s operating profit in Q1 went down because customers cut orders and metal prices went down.
(Reuters) – Frankfurt/DuesseldorfThyssenkrupp’s (ETR:TKAG) operating profit dropped by a third in the first quarter. The German company, which makes parts for everything from warships to cars, said on Tuesday that its customers placed fewer orders and that the falling price of metals hurt its wholesale business.
Fears of an upcoming recession in the U.S. and the war in Ukraine have caused steel prices to drop and customers to clear out their stockpiles.
This has hurt the materials trading division of Thyssenkrupp, where profits dropped by 91%.
The company in Essen blamed destocking at automotive clients, which are the group’s biggest single customer base.
In a statement, Chief Financial Officer Klaus Keysberg said, “It is hard to see how the economy will change in the future.”
In the period from October to December, the company’s adjusted earnings before interest and taxes, or EBIT, came in at 254 million euros ($272 million), and sales stayed the same at 9.02 billion euros.
Its steel business, which is Europe’s second-largest after ArcelorMittal (NYSE:MT), was affected less than expected because of long-term contracts that lock in prices and only show price drops after several quarters have passed.
($1 = 0.9328 euros)
