Thyssenkrupp Shares Surge 20% as Q2 Profit Beats and HKM Sale Timeline Firms

Thyssenkrupp beats Q2 estimates with €198m EBIT, sets June 2026 HKM sale to Salzgitter, weighs options for Materials Services, but auto sector drag persists.

Thyssenkrupp’s restructuring blueprint is coming into sharper focus after the industrial conglomerate delivered a stronger-than-expected operating result for its second quarter, while also locking in a concrete date for the sale of its stake in the HKM steel joint venture. Investors responded by pushing the stock roughly 20% higher over the past month, with the shares closing at €10.55 on Friday — nearly 18% above their 50-day moving average.

The group’s adjusted earnings before interest and tax (EBIT) reached €198 million in the fiscal second quarter, comfortably outpacing the €167 million analysts had pencilled in. The margin improved to 2.4%. However, a net loss of €11 million contrasted with a triple-digit profit a year earlier, a swing the company attributed to the absence of a one-off gain from the disposal of a business in India. Management nevertheless reaffirmed its full-year guidance, providing a floor under market confidence.

Steel divestment and portfolio surgery

The most tangible near-term milestone is the planned sale of Thyssenkrupp’s stake in Hüttenwerke Krupp-Mannesmann (HKM) to Salzgitter AG. A key term sheet envisions Salzgitter taking full ownership of the plant from June 1, 2026. HKM deliveries to Thyssenkrupp will continue under an existing agreement until the end of 2028. Internal committee approvals and final due diligence are still required, but the transaction marks a major step in streamlining the group’s steel operations.

Beyond HKM, Thyssenkrupp is weighing options for its Materials Services unit, which generates over €11 billion in annual revenue. Management is evaluating a spin-off, an initial public offering, a full sale, or a conversion into a KGaA structure — a move that would preserve greater control during partial divestment. Decisions are expected in the autumn.

Auto sector drag and mixed tariff relief

The market backdrop remains challenging. Salzgitter’s chief financial officer, Birgit Potrafki, warned that no turnaround is in sight for European steel demand, with infrastructure spending packages yet to translate into orders. New carbon border tariffs are providing only modest pricing support due to loopholes for imports.

The automotive industry, Thyssenkrupp’s largest customer, is under severe strain. Germany’s VDA industry association forecasts 225,000 job losses in the sector by 2035, particularly among suppliers grappling with overcapacity and shrinking margins. Consultancy Falkensteg has predicted a further rise in large-scale insolvencies in Germany this year.

At the same time, Thyssenkrupp’s Steel Europe division saw its book value climb back to €3 billion. The group is betting that tighter EU safeguard measures on steel imports will bolster profitability, though the unit remains a cash drain. Free cash flow before M&A was negative in the second quarter, and management does not expect positive cash generation from the steel segment for another two to three years.

Analyst upgrades and liquidity buffer

The earnings surprise prompted a flurry of target price increases. Citigroup raised its target to €15 from €13, with analyst Ephrem Ravi citing the strong profit momentum and upcoming portfolio decisions as further catalysts. JPMorgan lifted its target to €11.80, while Jefferies reiterated its buy recommendation with a €13 target. The broader analyst consensus stands at €12.60, with a majority still recommending the stock.

Thyssenkrupp enters the next phase of its restructuring with a solid liquidity cushion of €4.6 billion. The coming months will be pivotal as details of the HKM transaction are ironed out and the future of Materials Services is clarified — two developments that are likely to determine the near-term direction of the shares within the MDax index.