Thyssenkrupp’s Twin Headwinds: Naval Orders Surge as Steel Bleeds Red

The Essener conglomerate is living a tale of two industries. On one side, Brazil’s navy is preparing to order four additional frigates, a follow-on to the Tamandaré-class vessels Thyssenkrupp is already building for the South American fleet. That deal would keep the company’s shipyards humming for years and cement its standing in global surface combatant construction. On the other side, the steel division is buckling under cheap Asian imports, forcing the closure of the Isbergues plant for several months this summer after an extended period of short-time work.

The stock has taken the brunt of the pain. Shares slid to €8.72 on Friday, leaving the year-to-date loss at nearly 10%. The relative strength index has dropped to around 31, a level that typically signals oversold territory. Investors are now waiting for official details on the Brazilian frigate contract, though any rally could prove fleeting if the steel slump persists.

The quiet period ahead of the half-year results on May 12 has kept management tight-lipped, but the pressure is building behind closed doors. Revenue in the last quarter came in at roughly €8.5 billion, almost €1 billion below analyst expectations. The earnings miss compounds a broader malaise: steel imports into the European Union have tripled since 2022, squeezing margins and raising the stakes in ongoing talks with Indian rival Jindal Steel. A breakdown in those negotiations would put the entire steel division’s future in doubt.

Should investors sell immediately? Or is it worth buying Thyssenkrupp?

Thyssenkrupp’s defense business is the bright spot. In mid-April, the company deepened its partnership with Spanish shipbuilder Navantia, aiming to pool resources on new naval platforms. The plant engineering unit Uhde is also chipping in, expanding a major ammonia facility in Brunei. But the water electrolysis subsidiary Nucera has soured the mood, issuing a profit warning after unexpected retrofit costs and a cancelled contract in the US.

The biggest potential catalyst sits outside the operating businesses. Thyssenkrupp still holds just over 16% of elevator maker TK Elevator, and the majority owners are weighing an initial public offering. Five major banks are already preparing the listing. At a target valuation of up to €25 billion, the Thyssenkrupp stake would be worth roughly €4 billion. A direct sale is also on the table, though antitrust concerns over market concentration could complicate that route.

Relief for the steel division may come from Brussels. The European Parliament is set to vote by the end of June on doubling existing steel tariffs, with a decision on additional safeguard duties due on July 1. Until then, the half-year report on May 12 will provide the hard numbers on whether the group’s earnings trajectory is stabilizing or deteriorating further.