Thyssenkrupp’s Brazilian Bonanza Can’t Mask the Steel Stalemate

Thyssenkrupp signs MoU for four more Brazilian frigates, bolstering TKMS spin-off prospects, while steel restructuring stalls and shares remain volatile.

The ink was barely dry on Brazil’s letter of intent for four more frigates when the market’s attention snapped back to Thyssenkrupp’s other headache: steel. On April 27, Thyssenkrupp Marine Systems (TKMS), Embraer, and the Brazilian defence ministry signed a memorandum of understanding for additional Tamandaré-class vessels, just three days after the Brazilian navy commissioned the first frigate of the series in Rio de Janeiro. The timing was deliberate — a show of force for a partnership that dates back to 2017.

For TKMS, the expansion comes at a pivotal moment. The naval division is already sitting on a record order backlog, with long-term relationships in Brazil and Singapore bolstering its standing in the global maritime defence market. But for the parent company, the Brazilian deal carries a second, equally important weight. Thyssenkrupp is pushing hard to spin off TKMS — either through a sale or an initial public offering — and a full pipeline of orders improves the bargaining position for either outcome.

Yet the rest of the conglomerate remains under siege. The steel division is mired in restructuring, and the talks with Jindal Steel International over a partial sale of Steel Europe have stalled. A near-term resolution looks increasingly unlikely, leaving the group’s future structure in limbo. The restructuring costs are piling up too: analysts estimate special charges of around €800 million this year alone. Meanwhile, the exit from Hüttenwerke Krupp-Mannesmann (HKM) is grinding forward, with a target completion date of June 2026.

The market is pricing in the uncertainty. Thyssenkrupp shares closed at €8.94 on Monday, up 1.34 percent on the day but still down nearly eight percent since the start of the year. The stock trades just below its 50-day moving average of €9.02. It has rallied roughly 25 percent from the 52-week low of €7.15 hit in late March, but remains more than 30 percent below the year’s high of €13.24.

Analysts are split on the outlook. Barclays trimmed its price target to €9.00 at the end of April and kept an “Underweight” rating, arguing that operational wins at TKMS alone won’t move the needle until the divestments in marine and steel are completed. Only then, the bank contends, can the true value of each division be assessed.

Jefferies took a slightly different view. The house trimmed its EBIT forecast for the current financial year to €830 million — still comfortably above the market consensus of €794 million — citing geopolitical tensions and the persistent weakness in steel. But it raised its estimates for 2027 and maintained a €13 price target with a buy recommendation, suggesting the long-term transformation story remains intact, even if the near-term path is rocky.

Adding to the headwinds, Thyssenkrupp Nucera, the hydrogen subsidiary, took a hit. Deutsche Bank downgraded the stock to “Hold” and cut its price target to €10, pointing to a weak order pipeline and the aftermath of a spring profit warning. Nucera shares slid more than three percent, and the weakness is spilling over into sentiment toward the parent.

Chief executive Miguel López has insisted the group won’t sell its steel business at a discount, despite the tough market environment. Restructuring tariff agreements and EU protective duties have helped stabilise valuations, he argues. The company is also pressing ahead with its multibillion-euro DRI project for hydrogen-based steel production in Duisburg, with roughly 70 percent of the costs covered by public subsidies.

For now, the stock lacks a fundamental catalyst. The Brazilian frigate order is a clear positive for TKMS, but the steel impasse remains the dominant force weighing on the share price. Until the Jindal talks regain momentum or the HKM exit takes concrete shape by mid-2026, Thyssenkrupp’s transformation story will remain a tale of two very different divisions pulling in opposite directions.