* Scraps dividend, posts 4.7 bln euro loss
* Steel Americas written down by half to 3.9 bln euros
* Shares up 6.7 pct
By Maria Sheahan
ESSEN, Germany, Dec 11 ThyssenKrupp's
chief executive Heinrich Hiesinger vowed to fix problems at
Germany's biggest steelmaker, after a disastrous overseas foray
and corruption allegations that led him to oust half its
The former Siemens manager, who last year became
the first Thyssen boss from outside the steel industry, has
faced an uphill battle to turn the sprawling steel giant into a
leaner company focused less on slabs and more on technology,
plant parts and elevators.
He told investors on Tuesday a "great deal" had gone wrong
at Thyssen, which has been hampered by a downturn in Europe and
ballooning losses at its plants in Brazil and the United States.
The ill-fated Steel Americas project cost the company
billions of euros and will be sold in the next year, the company
said, as it continues to shift investment into higher margin
products like elevators, plant components and submarines.
"If we now just continue with business as usual, we will be
making a great mistake," Hiesinger said on Tuesday, the day
after reporting a 4.7 billion euro ($6.08 billion) full-year
loss mainly due to a hefty writedown on the U.S. and Brazilian
steel mills, its second in two years.
It was also forced to scrap its full-year dividend for the
first time in its history.
Thyssen shares fell at the open then bounced back, trading
6.9 percent higher at 17.4 euros by 1430 GMT and making them the
biggest gainer on Germany's blue-chip DAX index.
"Although the initial reaction may be negative, our
conviction is that this will be the entrance into a new era,"
Westend Brokers analyst Eerik Budarz said.
Others were less positive, doubting Thyssen's pledge to save
2 billion euros over three years.
"For years, strategic mistakes were made at ThyssenKrupp,
and now there are consequences," Henning Gebhardt, head of DWS's
European equity fund business. "There are a number of corporate
governance issues that we pointed out time and again. Now the
company has its back to the wall."
Thyssen said it had sufficient finances for the coming years
but was "close to the line" in terms of a credit rating
downgrade to junk.
SHIFTING TO ELEVATORS
Pleasing investors, Thyssen said it would complete the
long-awaited disposal of its U.S. and Brazilian steel mills in
the coming financial year, with a sale possible by May.
The Steel Americas project, which cost Hiesinger's
predecessor Ekkehard Schulz and the company's steel chief Edwin
Eichler their jobs, had been meant to carve out new markets.
But it was blighted by cost overruns, poor project
management and demand which fell short of expectations.
"The disaster with Steel Americas shows that our leadership
culture has failed in many areas of the company," Hiesinger
said, adding "old boys' networks" and blind loyalty were more
important to management in the past than business success.
Thyssen wrote down the value of the mills, which lost about
1 billion euros in the financial year ended September 2012, by
almost half to 3.9 billion euros.
Analysts said the move brought the book value of the mills,
bundled into the Steel Americas business, closer to a more
realistic figure. Cash from the sale will be used to slash
Thyssen's 5.9 billion euro debt burden and invest in growth
businesses like elevators.
Thyssen said last week that three management board members
would step down, citing the losses at Steel Americas, corruption
allegations and a cartel probe.
None of the three executives has been linked personally to
the corruption and cartel allegations, which relate to areas of
business they oversaw.
Thyssen's finance chief Guido Kerkhoff said there were still
"more than a handful" of bidders for Steel Americas and said
there were offers for the individual mills as well as the
business as a whole.