Thyssenkrupp Boosts Cash Flow Outlook on Submarine Order
Industrial conglomerate Thyssenkrupp has revised upwards its cash flow projections, citing advance payments for a major submarine contract from the German military. The deal, worth 1 billion euros, showcases the strength of Thyssenkrupp's warship division, which is slated for divestment.
The improved cash flow forecast reflects the growing demand for defense equipment amid a shifting geopolitical landscape. This has prompted governments to increase military spending, benefiting companies like Thyssenkrupp with capabilities in this sector.
In December 2023, Germany approved the acquisition of four submarines from Thyssenkrupp, worth 4.7 billion euros. This highlights the appeal of the group's warship division ahead of its planned spin-off.
Thyssenkrupp now anticipates free cash flow before mergers and acquisitions (M&A) in the range of 0 to 300 million euros by 2025. This contrasts with its previous projection of -200 million to -400 million euros.
Despite the bullish outlook, Thyssenkrupp has also adjusted its sales forecasts for the year due to a "persistently challenging market environment." The group now expects revenue to remain flat or potentially decline by up to 3%, compared to its earlier forecast of a 3% gain.
In the first quarter of 2023, Thyssenkrupp recorded a more than twofold increase in adjusted operating profit to 191 million euros, primarily driven by its steel division, which benefited from lower raw material and energy costs. Additionally, order intake surged over 50% to 12.48 billion euros, with the German submarine order contributing significantly.