ThyssenKrupp beats earnings forecast despite net loss | Business| Economy and finance news from a German perspective | DW | 23.11.2017
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ThyssenKrupp beats earnings forecast despite net loss

Better than expected business in its material services and elevators unit have helped the German steelmaker beat full-year earnings forecasts, despite a net loss related to the sale of a steel mill in Brazil.

German steel and capital goods producer, ThyssenKrupp released full-year results on Thursday showing that the group's adjusted earnings before interest and taxes (Ebit) rose 30 percent to €1.91 billion ($1.40 billion), easily outpacing analysts' forecasts of €1.73 billion. Sales rose 9 percent to €43 billion in the company's fiscal year ended September.

On a net basis, however, the group still posted a loss of €591 million, due mainly to a one-off charge related to the sale of Brazilian steel mill CSA in the second quarter.

Chief executive Heinrich Hiesinger said the group had achieved "important milestones" for the restructuring strategy he set out in 2011 upon taking control of the group. "The sale of the Brazilian steel mill CSA and the memorandum of understanding on a joint venture of our European steel activities with Tata Steel created strategic clarity," he said in a statement.

Restructuring efforts

ThyssenKrupp, which makes products ranging from submarines to car parts to elevators, reported earnings in its material services unit more than doubled over the year to €312 million, thanks to a recovery in material prices. Its components technology unit saw earnings rise 12 percent to €377 million, while earnings at its elevator technology division grew 7 percent to €922 million.

By contrast, its industrial solutions unit reported a 69 percent drop in earnings to €111 million as ThyssenKrupp is aiming to transform itself from being a traditional steelmaker to a company focusing on goods and services.

As a result, ThyssenKrupp sold its CSA plant in Brazil and seeks to spin off its European steel unit by merging it with the European operations of India's Tata Steel. The two steel giants have agreed to join forces in the hopes of boosting their resilience against a flood of subsidized Chinese steel that has roiled western markets.

Controversial merger

The tie-up, announced end-September to form Europe's second biggest steel works after ArcelorMittal, has sparked fears for 4,000 jobs in production and administration that hang in the balance. On Thursday, thousands of workers, some holding up signs saying "We are the future", answered a call by metalworking union IG Metall to protest at the group's Andernach site in western Germany.

But CEO Hiesinger defended the merger saying that ThyssenKrupp would cut thousands of jobs, but at the same time secure tens of thousands of jobs with the merger.

"The problem of overcapacity in Europe's steel product remains unsolved, and we are convinced that this merger plan is the best solution to provide the means to become the number two in steel in Europe, and to generate synergies that we would not have been able to achieve on our own," he said.

Read more: ThyssenKrupp and Tata forge new steel industry giant

The merged holding company will be headquartered in the Netherlands and the deal should be completed by the end of 2018, added the German group.

uhe/tr (Reuters, dpa, AFP)

 

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