Investment Thesis - Thyssenkrupp is a German holding company with significant industrial holdings, primarily in the European Steel and Materials divisions, which produce and trade steel and steel products [1] - The company has faced a decline in share value, with a 50% drop since April of the previous year, and a market cap reduction from EUR 30 billion to approximately EUR 2 billion [1][2] Financial Performance - Thyssenkrupp reported a net loss of EUR -33 million in Q3, compared to a net profit of EUR 107 million in the previous year, marking the fourth consecutive quarter of losses [4] - Free cash flow (FCF) was negative at EUR -203 million, down from a positive EUR 608 million in the previous year [4] - Sales decreased by 9% year-over-year in Q1, totaling EUR 9 billion, and by 6% in the first three quarters, totaling EUR 26 billion [4][5] - The company anticipates a revenue decrease of 6-8% for the full fiscal year, with adjusted EBIT forecasted to exceed EUR 500 million [5] Business Segments - The steel division is under significant pressure, with ongoing discussions about its future and the need for substantial investment in green transformation, which the company currently lacks [2][6] - Other business segments, including Automotive, Decarbon Technologies, Material Services, and Marine Systems, are not performing well, with only two segments showing positive FCF in the last quarter [2] Strategic Challenges - Thyssenkrupp has struggled with the strategic direction of the company, with questions about its identity as more than a holding company of loosely related businesses [2][8] - The steel division's divestment has faced challenges, including internal disputes and tensions with labor unions, complicating the path forward [6][7] - The company has significant pension obligations amounting to EUR 5.6 billion, which exceed its property, plants, and equipment value of EUR 4.85 billion [2][8] Market Outlook - The current market cap of EUR 2 billion is viewed as undervalued, but the numerous unresolved issues and strategic uncertainties suggest a lack of compelling investment opportunities at this time [8]
thyssenkrupp Is Getting Cheaper And Cheaper, But Is It A Buy?