Thyssenkrupp's Steel Turnaround Faces Its September Stress Test

Thyssenkrupp shares doubled since March, but investors await Sept. capital markets day to validate steel recovery and raised guidance.

The rally in Thyssenkrupp shares has been nothing short of remarkable — the stock has roughly doubled since March and touched levels not seen since 2018. Yet for all the momentum, the next fortnight carries more weight than the past month of gains. When management hosts its capital markets day for the Steel Europe division at the end of September, investors will finally get a detailed look at whether the operational recovery can justify the market's newfound enthusiasm.

The timing is telling. The stock's advance — roughly 24 percent in a single month — has been fuelled by a run of favourable headlines: analyst price-target upgrades, renegotiated funding terms for the planned direct-reduction plant, and a competitor's production halt in Duisburg. But those catalysts are now priced in. Tuesday's session offered a glimpse of what happens next: despite a fresh "buy" recommendation from Deutsche Bank, the shares slipped 2.3 percent to €15.41, barely below the 52-week high, as investors opted to bank profits rather than follow the analyst's lead. With the relative strength index hovering above 67, the pullback looked less like a verdict on the company's prospects and more like a natural pause after a steep ascent.

A Business Story Emerging From the Shadows

The share-price action, however, rests on a firmer foundation than sentiment alone. In the third quarter of fiscal 2025/26, revenue climbed 8 percent to €8.8 billion, while adjusted EBIT over the first nine months rose 18 percent to €183 million. The group also returned to a positive net result on a quarterly basis for the first time in recent memory. Management responded by lifting full-year guidance: adjusted EBIT is now expected between €600 million and €900 million, up from a previous range starting at €500 million, while the net loss forecast has narrowed to between €700 million and €400 million.

Those improvements coincide with a sweeping corporate overhaul. Just over a week ago, an extraordinary general meeting approved the spin-off of TK Accelis, with 49 percent of the new entity going to existing shareholders and 51 percent remaining under Thyssenkrupp's umbrella. The registration in the commercial register is expected by the end of October, with a Prime Standard listing in Frankfurt planned before year-end. The shares have added 8.5 percent since the green light.

In parallel, the group has sold its stake in the HKM joint venture to Salzgitter — another step in dismantling the old steel structure. The capital markets day is expected to shed light on the details of that exit, the restructuring agreement underpinning it, and how management intends to navigate the EU's tariff regime on steel imports.

Steel's Special Case in a New Trade Order

The trade backdrop has shifted in ways that cut both ways for Thyssenkrupp. The EU-US tariff deal approved by the European Parliament in June caps most EU exports to America at 15 percent through the end of 2029, offering a measure of transatlantic predictability. But steel and aluminium were carved out for separate treatment within that framework — a reminder that the sector's trade conditions remain subject to bespoke negotiations rather than blanket rules. For a company whose core division lives and dies by such terms, the ambiguity persists even as the broader environment stabilises.

The Counterweight: Submarines and Frigates

While steel undergoes its transformation, the marine systems unit TKMS — now trading as a standalone listing — provides ballast. Its order book stands at over €20 billion, bolstered in July by new contracts: Thyssenkrupp is viewed as the preferred supplier for Canada's submarine programme and secured an order for a German frigate. That diversification helps cushion the cyclical swings inherent in steel.

TKMS's own share price has not been immune to turbulence, having lost roughly a quarter of its value at one point before showing early signs of stabilisation around €84.40. But its order pipeline underscores the strategic logic of separating the group's stable, defence-driven earnings from its volatile industrial exposure.

Macro Headwinds and the Road Ahead

The broader European market offered little support on Tuesday. Rising oil prices amid US-Iran tensions and expectations of an ECB rate hike on Thursday weighed on sentiment across the continent. Cyclical industrial names like Thyssenkrupp tend to struggle in such conditions, even when the fundamental news flow is constructive.

The gap between Deutsche Bank's bullish call and the market's profit-taking illustrates how far the stock has run. The question now is whether the capital markets day can supply the next catalyst. Management will need to demonstrate that the raised guidance is credible, that the HKM exit is progressing cleanly, and that the EU trade measures can be managed. For a company whose shares have climbed a quarter in 30 days, the September presentation is less an update than an examination — the moment when the steel turnaround story must prove it has substance beyond the headlines.