German steel giant ThyssenKrupp won't see a profit from its new overseas operations this year, company CEO Heinrich Hiesinger has told shareholders. Reports say a sell-off of the loss-makers could be imminent.
ThyssenKrupp AG, Germany's biggest steelmaker, announced on Friday it did not expect positive revenues from its plants in Brazil and the United States"in the foreseeable future."
"The earnings and financial situation of our projects in the Americas cannot be turned around in the short term," ThyssenKrupp's Chief Executive, Heinrich Hiesinger, told the company's annual shareholders' conference in Bochum.
Hiesinger said that precise company figures wouldn't be available before February, adding, however, that first-quarter earnings before interest and tax would be "significantly lower compared with last year."
Last year, the steelmaker already posted a net loss of 1.78 billion euros ($2.29 billion), blaming weak markets in the US and Europe, and higher costs at its new plant in Brazil, operated by Steel Americas.
"These difficulties make it impossible to give a profit outlook for 2012," Hiesinger said.
Deep in the red
ThyssenKrupp AG, is saddled with debts to the tune of 3.6 billion euros ($ 4.6 billion). The company, which is active in steel, elevators, submarines and car parts, saw its credit rating lowered to junk bond status, BB+, last year.
Notably, the company's Steel Americas operations in Brazil have been dogged by cost overruns and start-up delays since it was built in 2007, accounting for a 2.9-billion-euro write-down in 2011.
Non-core assets for sale
Hiesinger reiterated a plan to divest from the stainless steel business - based in the US and called Inoxum - by the end of 2012. The sell-off is part of his strategy to expand non-steel businesses and reduce debt.
"All options - float, spin-off or sale - remain," he told shareholders.
Meanwhile, the German business newspaper "Manager Magazin" reported that the steelmaker's loss-making plant in Brazil might also be up for grabs. Citing a source from within ThyssenKrupp, the newspaper wrote on Thursday that "a deal was likely by the end of the year", and named Brazil's mining company Vale as interested in buying the plant.
Author: Uwe Hessler (dpa, Reuters)
Editor: Andrew Bowen