(Bloomberg) -- Thyssenkrupp AG said the planned separation of its steel operations has been thrown into uncertainty by Russia's attack on Ukraine.
The German industrial conglomerate can no longer offer “a statement on the feasibility” of a standalone steel business due to economic conditions, according to a statement. Thyssenkrupp said last month that the split wouldn't happen before midyear due to regulatory and other hurdles.
“The economic consequences of the war in Ukraine for the group's business development” are influencing the spinoff plans, the company said late Wednesday. Still, Thyssenkrupp “remains convinced that the independent positioning of the steel business offers very good prospects for the future.”
The comments raise new questions for Chief Executive Officer Martina Merz's efforts to reshape the company, which was fighting for survival even before the pandemic. After successfully selling its elevator division in 2020 and winning praise for plans to list the hydrogen electrolysis unit, Thyssenkrupp is running into difficulties with other disposals, including the naval engineering operations.
Thyssenkrupp fell as much as 8.6% in Frankfurt on Thursday. The shares have declined more than 10% this year.
Read more: Thyssenkrupp Finds Steel Hardest Goodbye in Accelerating Breakup
The company also suspended its full-year forecast for free cash flow before mergers and acquisitions, citing the impact of the Ukraine upheaval on raw material prices, which primarily affect its steel and automotive supply businesses.
“Although the group's sales in Russia and Ukraine are negligible at significantly less than 1% of total sales, the executive board estimates that the group's business performance will be impacted by the far-reaching macroeconomic and geopolitical consequences of the war in Ukraine,” the company said.
Merz has made Thyssenkrupp's free cash flow into a symbol of the company's recovery from its crisis years. The decision to suspend the guidance for the measure will be seen as a disappointment, Deutsche Bank analyst Bastian Synagowitz said in a note.
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