Thyssenkrupp may cut working hours, reviews spending due to Ukraine crisis

By Tom Käckenhoff

DUESSELDORF (Reuters) -Submarines-to-steel group Thyssenkrupp is reviewing its spending plans and could cut working hours to soften the blow to its business as Russia's invasion of Ukraine disrupts supply chains and causes raw material prices to spike.

"In view of the war, we have taken countermeasures across the group," Thyssenkrupp Chief Executive Martina Merz said in a staff memo seen by Reuters on Thursday.

"Supply chains are disrupted, plants at our customers have halted production, raw materials and energy prices are going through the roof. We will feel the effects above all in steel, but also in the automotive business," she said.

Merz said that Thyssenkrupp may need to shorten workers' hours in some parts of the business and that, where possible, it will pass on price increases to customers.

Apart from building fertiliser plants and making bearings, the sprawling conglomerate also supplies the automotive industry, trades materials and engineers electrolysers that are needed to make hydrogen.

While sales in Russia and Ukraine are negligible at less than 1% of total sales, Thyssenkrupp said late on Wednesday it was suspending its 2021/22 forecast for free cash flow before mergers and acquisitions (M&A).

Thyssenkrupp's ability to generate cash is closely watched by investors as an indicator of the group's financial health on its path to a smaller and more focused company.

The company also said that it was currently not possible to spin off its steel division, Europe's second-largest, a setback for one of the key strategic moves Merz has been plotting to rid the group of a volatile business.

Thyssenkrupp's shares were down 9.5% by 1311 GMT.

"Cash is a highly emotive topic for Thyssenkrupp, given its chequered past in achieving sustained positive cash generation," JP Morgan analysts said, adding that cumulative free cash flow before M&A is minus 8 billion euros ($8.8 billion) over the past five years.

Last month Thyssenkrupp had said it expected free cash flow before M&A to break even in 2021/22.

($1 = 0.9057 euros)

(Reporting by Tom Kackenhoff; Writing by Maria Sheahan and Christoph Steitz; Editing by David Goodman and Elaine Hardcastle)