Bloomberg News

ThyssenKrupp Posts First-Quarter Loss After Americas Delays

February 15, 2012

(Updates with closing share price in eighth paragraph.)

Feb. 14 (Bloomberg) -- ThyssenKrupp AG, Germany’s largest steelmaker, posted a first-quarter loss after project delays and cost overruns in Brazil and the U.S., and said it was unable to give a “reliable” outlook given the sovereign debt crisis.

The loss before tax and interest from continuing operations was 33 million euros ($43 million) after a profit of 261 million euros a year earlier, the company said in a statement today.

“Our performance in 2011-2012 will be shaped to a very large extent by the impact of the sovereign debt crisis on our core markets in Europe” and the North American Free Trade Agreement, Essen-based ThyssenKrupp said. “For this reason we are unable to provide a reliable full-year forecast.”

Steelmakers are struggling to escape the industry’s worst slump in 60 years as weakening growth in China and Europe saps demand for steel and pushes prices lower. ArcelorMittal, the biggest producer, had its lowest quarterly profit in two years last week, while Japan’s Nippon Steel Corp. reported a loss last month and forecast declining use of the metal.

ThyssenKrupp, which is divesting assets making up about a quarter of annual revenue including its stainless-steel business, is also grappling with the cost of building plants in Brazil and the U.S. ThyssenKrupp’s Americas unit reported a 288 million euro loss before tax and interest. The steelmaker forecast lower losses at the unit in the second quarter on higher volumes.

‘Encouraging Signs’

The company will only remain committed to the division if it adds value to the company and provides a return on capital, Chief Executive Officer Heinrich Hiesinger said on a conference call with analysts today. Hiesinger had been asked whether the company would consider splitting its European and Americas steel businesses.

“While Thyssen has seen some encouraging signs of late, the second-quarter guidance is still tainted by issues in the U.S., low contract prices in Europe and a disappointing flat quarter-on-quarter guidance for the technology division,” Tim Cahill, an analyst at J&E Davy Holdings, said in a note today.

ThyssenKrupp fell 3.8 percent to 21.07 euros by the close of Frankfurt trading, the lowest in three weeks.

Prices for hot-rolled steel coil, a benchmark product used in vehicles and buildings, have fallen for three straight quarters and slumped to the lowest in 13 months in December, according to Steel Business Briefing’s global price index.

“Subdued economic activity in our core markets significantly impacted the performance of the group in the first quarter,” ThyssenKrupp said. The steelmaker and Siemens AG yesterday denied a magazine report they are seeking cooperation that may lead to an exchange of assets or an outright merger.

--Editors: John Viljoen, Stephen Cunningham

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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