DUESSELDORF, Germany (Reuters) -Thyssenkrupp is reviewing its spending plans, it said on Thursday after warning that it expects business to be hit by the far-reaching macroeconomic and geopolitical consequences of Russia’s military invasion of Ukraine.
“In view of the war, we have taken countermeasures across the group,” Chief Executive Martina Merz said in a staff memo seen by Reuters on Thursday.
While the group’s sales in Russia and Ukraine are negligible at less than 1% of total sales, Thyssenkrupp said late on Wednesday it was suspending its 2021/22 forecast for free cash flow before mergers and acquisitions and that it was unclear whether it would still be able to spin off its steel division.
The news sent its shares down by about 10% on Thursday.
“Cash is a highly emotive topic for Thyssenkrupp, given its chequered past in achieving sustained positive cash generation,” JP Morgan analysts said, adding that cumulative free cash flow before mergers and acquisitions is minus 8 billion euros ($8.8 billion) over the past five years.
Last month Thyssenkrupp had said it expected free cash flow before M&A to break even for 2021/22.
Merz said in the staff memo that Thyssenkrupp may need to shorten workers’ hours in some parts of the business and that, where possible, it will pass on price increases to customers.
“Nevertheless, we are now all the more challenged to continue working systematically on our performance in all areas,” she added.
($1 = 0.9057 euros)
(Reporting by Tom KackenhoffWriting by Maria SheahanEditing by Miranda Murray and David Goodman)
