(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.
Thyssenkrupp (DE:TKAG) AG’s earnings plunged as Germany’s economic slowdown took a toll on the engineering company that’s been engulfed in turmoil over the past year.
The company cited a long list of problems during the past six months, everything from weak demand from the auto industry, falling steel prices, higher labor costs and even the low water levels of the Rhine river. The poor results will reinforce criticism from Thyssenkrupp’s top investors that the company has been poorly managed and needs a dramatic action.
Chief Executive Officer Guido Kerkhoff will likely face sharp questions on why the company has kept spiraling downward. The executive stunned the market on Friday by announcing a U-turn in his corporate strategy, abandoning plans to split into two and giving up on a joint venture with Tata Steel Ltd. The company is still reeling from a chaotic 2018, when the top leadership resigned and activist investors mounted a fight to overhaul the business.
It’s time “to hit the reset button,” Kerkhoff said on Friday.
Adjusted earnings before interest and tax fell almost 30% to 685 million euros ($769 million) for the six months ending March 31, Thyssenkrupp said in a statement on Tuesday. Even earnings at the elevator division, the crown jewel asset that the company plans to take public, were lower than last year.
Other red flags include figures that show the company is burning through cash and debt levels have soared.
For the German business industry as a whole, Thyssenkrupp is another example of how escalating trade tensions are hurting the country’s export-led economy. The European Commission last week cut its growth forecasts for Germany and BMW AG said that the economic backdrop is “increasingly challenging” and business conditions are expected to remain volatile.