A single company can never represent the entire industry. But what happens to a great company can reveal a lot about the big picture. Thyssenkrupp is now reporting figures for the final quarter of 2021 that seem like two sides of the same coin.
It is true that Germany’s largest steel manufacturer earns more money in its steel mills and the materials trade because steel prices have risen significantly. On the other hand, ThyssenKrupp painfully feels the higher material prices in the further processing into car or wind turbine parts. And the auto industry – as Thyssenkrupp’s largest customer group – has been needing fewer components and sheet metal for months, since semiconductors for new vehicles are scarce worldwide.
Welcome to the economy of scarcity, one might almost say. So reported the Ifo Institutethat the industry in Germany has so many orders in stock that the companies can produce through production for an average of four and a half months. “It has never happened since we first asked this question in 1969,” says Ifo researcher Timo Wollmershäuser.
According to the Munich Institute, many companies were simply unable to process orders from previous months because they lack important preliminary products. The order lists in the automotive and mechanical engineering sectors are particularly long.
Thyssenkrupp is stocking up on supplies at high prices, and the stock market is skeptical
The lack of computer chips, for example, arose during the Corona crisis, when demand for electronics, cars or household appliances rose rapidly – but the chip industry had previously reduced production capacities and cannot quickly build new factories. The pandemic also temporarily paralyzed other industries and interrupted international trade routes – for example when ports had to close.
Companies like Thyssenkrupp are now buying in preliminary products at high prices – in the hope of profitable business deals in the future. “We have thus prepared for stronger demand in the following quarters,” says Chief Financial Officer Klaus Keysberg. This outflow of money was initially not well received on the stock exchange, where Thyssenkrupp temporarily lost three percent in value on Thursday. But overall, the Essen-based company expects increasing profits in this financial year, which always begins in September for them.
For the future, the group is considering spinning off its particularly crisis-prone steelworks with 26,000 employees in the Rhine and Ruhr regions into an independent company. Thyssenkrupp itself would then focus on materials trading and components. But even in the spring you won’t be able to decide that, says Keysberg. “We take the time that is necessary for this.”