Thyssenkrupp Steel Aims to Triple Core Profit to €1.2 Billion in Mid-Term Plan

Thyssenkrupp's steel division announced an ambitious mid-term plan to at least triple its core profit, citing a strategy of capacity and workforce reductions. The company is also benefiting from trade barriers that limit cheaper steel imports from Asia.

New Financial Targets

During a capital markets day presentation, Thyssenkrupp Steel Europe outlined a goal to achieve adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of at least €1.2 billion ($1.4 billion) in the medium term. The company did not specify a target date for this objective.

This target represents a significant increase from the €400 million in adjusted EBITDA the unit expects for the current fiscal year, which concludes on September 30. The division also set related goals for the same period, including:

• An adjusted EBITDA margin of more than 11%.
• Achieving a positive free cash flow.

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Strategy and Market Context

The path to higher profitability relies on internal restructuring, including capacity and job cuts, according to the company. The steel division's CEO also noted that existing "steel safeguards," referring to trade barriers, are providing a favorable tailwind for the business by protecting it from lower-priced competition.

These strategic moves are designed to strengthen the division's financial standing as its parent company, Thyssenkrupp, prepares the unit for a potential capital market transaction. A stronger earnings profile could make the steel business more attractive to investors in a possible spin-off, sale, or initial public offering.