By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF (Reuters) -Industrial conglomerate Thyssenkrupp raised its outlook for free cash flow on Thursday, citing 1 billion euros ($1.04 billion) in advance payments for a major submarine order from the German military.
The increase highlights the strength of Thyssenkrupp’s warship division, which it plans to divest, and is supported by improved prospects for defense companies as governments increase military spending amid a more complex geopolitical landscape.
Germany approved in December the purchase of four submarines manufactured from Thyssenkrupp in a deal worth 4.7 billion euros, highlighting the division’s appeal ahead of a planned spin-off.
Thyssenkrupp now expects free clash flow before M&A – a key indicator for investors on the group’s ability to earn money – between 0 and 300 million euros in 2025, having previously forecast a negative range of 200 million to 400 million euros.
Citing a “persistently very challenging market environment”, Thyssenkrupp also cut its sales outlook for the year, and now expects revenue to be flat at best while they could fall as much as 3%. It previously expected a rise of as much as 3%.
First-quarter adjusted operating profit more than doubled to 191 million euros, mainly boosted by the group’s steel division, which paid less for raw materials and energy.
Order intake rose more than half to 12.48 billion, boosted by the German submarine order.
($1 = 0.9626 euros)
(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Nick Zieminski, Rachel More and Sherry Jacob-Phillips)
