Thyssenkrupp's Operational Rebound Gives Teeth to Restructuring Agenda

Thyssenkrupp's Q2 profit jumps tenfold to €198M; shares up 28% but overbought. Submarine backlog €20B, potential Materials Services spin-off boost turnaround.

A sharp improvement in second-quarter earnings has put Thyssenkrupp's turnaround narrative on firmer ground, even as its shares trade at technically overbought levels. The industrial conglomerate reported an adjusted EBIT of €198 million for the three months through March — a tenfold jump from the €19 million booked a year earlier. Revenue slipped slightly to €8.4 billion, but the margin improvement reflects early traction from the in-house APEX performance programme, which lifted results across all divisions except Decarbon Technologies.

The stock has responded in kind, rising 4.5% on Monday to €11.33 and extending a 30-day rally of 28%. Yet with the relative strength index at 88.7, the shares are firmly in overbought territory. The 52-week high of €13.24, set last October, remains about 14% out of reach, suggesting room for caution despite the upbeat momentum.

Much of the recent enthusiasm, however, is tied to structural catalysts beyond the quarterly numbers. The naval subsidiary TKMS reported an order backlog of over €20 billion as of the end of March — enough to secure shipyard capacity for years. That pipeline is bolstered by Canada's plan to build up to twelve new submarines, for which TKMS has been listed as a qualified supplier. The company has already woven a dense network of local partnerships, teaming up with CAE for training systems, EllisDon for infrastructure, Seaspan Shipyards for maintenance and Magellan Aerospace for torpedo development.

Alongside the submarine bonanza, Thyssenkrupp is pushing ahead with a corporate simplification that could unlock further value. The board has discussed spinning off the Materials Services division, which employs more than 15,000 people and accounts for over a third of group revenue. An extraordinary general meeting is being lined up for late July or early August, with invitations potentially going out as early as June. A successful demerger would reduce the conglomerate discount and make the underlying worth of each business segment more visible to the market.

The hydrogen subsidiary Nucera is also generating headlines, though profitability remains elusive. Second-quarter order intake hit €316 million — well above expectations — driven by a 300-megawatt electrolyser project in Spain. The total backlog climbed to €732 million. Still, revenue for the quarter was just €50 million and EBIT came in at minus €65 million, weighed down by one-off items.

For the full year, management has left its adjusted EBIT guidance unchanged at between €500 million and €900 million, while now forecasting an organic revenue decline of up to 3%. The net loss is expected to land in a range of €400 million to €800 million. External tailwinds are also blowing in the company's favour: falling oil prices, with Brent crude dropping around 6% to under $98 a barrel amid hopes of de-escalation in the Middle East, directly lower energy costs for the steel-to-submarine group. Whether the coming quarters can sustain the operational momentum will determine if the current rally has legs — or if the overbought signal is a warning that the market has already priced in the recovery.