Thyssenkrupp’s distribution business sees more weak demand

Thyssenkrupp’s performance in the first nine months of its 2019/2020 fiscal year through September has been significantly impacted by the initial effects of the Covid-19 pandemic.

As a result of temporary plant closures at customers, production in many areas came almost to a halt at the start of the third fiscal quarter through June.

The Materials Services division (distribution), continued to feel the effects of pandemic-related weak demand and declining prices in virtually all product segments. Both order intake and sales were clearly negative in a difficult market environment, with a noticeable decline in volumes. Nine-month order intake dropped by about one third year-on-year to €2.4 billion ($2.84 billion), thyssenkrupp says in its interim report.

The situation, particularly in warehousing and distribution, the auto-related service centres and at aerospace, weighed on business and led to negative earnings effects. Accordingly, adjusted Ebit for the nine-month period was negative €62 million down from a profit in the corresponding prior-year period of €119m.

The exception was plastics, which profited from the sale of transparent plastic sheets as a form of protection against the coronavirus.

At a conference call monitored by Kallanish, thyssenkrupp AG chief executive Klaus Keysberg maintained the group intends to hold on to its materials distribution unit. Its future in the group “…will not be questioned as it has promising prospects in the long run,” he said.

Depending on the speed at which production is restarted by customers, thyssenkrupp expects the unit to stabilise or achieve slight improvement in the September quarter.