* Sees sales increasing in 2013/14 after flat 2012/13
* Q1 adj EBIT down 38 pct at 229 mln eur vs f'cast 220 mln
* Net down 29 percent at 29 mln euros vs f'cast 40.8 mln
* Affirms outlook for decline in FY adj EBIT to 1 bln eur
* Says aims for cash deal on Steel Americas around May
By Maria Sheahan
FRANKFURT, Feb 12 ThyssenKrupp AG,
Germany's biggest steelmaker, warned that the coming months
would remain bleak after weak steel and car markets caused a
drop in profit, and said it did not expect a return to growth
until the next financial year.
Steel companies have been struggling to make a profit in the
rapidly shrinking European market, where austerity has cut sales
of cars and new buildings, and demand is seen declining further
"Against the background of the weak global economic
recovery, the prospects for the steel market remain subdued,"
ThyssenKrupp said on Tuesday after reporting a 38 percent slide
in first quarter core profit. Its fiscal year ends in September.
ThyssenKrupp's rival ArcelorMittal SA, the world's
No.1 steelmaker, last week reported a $3.7 billion loss for 2012
after writing down the value of its European steel business by
several billion dollars.
ThyssenKrupp expects its full-year adjusted EBIT from
continuing businesses to decline by more than half to about 1
billion euros in its fiscal year ending in September, from 2.29
billion euros last year.
Sales will remain about flat at 40 billion euros this year
before returning to growth in 2013/14, ThyssenKrupp said.
"Rising sales and structural improvements should have a
correspondingly positive impact on earnings," it said.
Chief Executive Heinrich Hiesinger, who took the helm two
years ago, is trying to reduce exposure to the volatile steel
sector and shift investments into higher-margin products and
services, such as elevators, submarines and parts for
He is nearing the end of a push to sell assets which have a
total of 10 billion euros in annual revenue, and is also cutting
costs and changing management structures in an attempt to return
the company to growth and pay down debt.
But he faces an uphill battle as the global economy remains
weak and after a series of setbacks and scandals caused him to
axe half his management board late last year.
WEAK EUROPEAN MARKET
ThyssenKrupp reported the 38 percent slide in its adjusted
earnings before interest and tax (EBIT) to 229 million euros
($306.4 million) for its fiscal first quarter through the end of
March, just above consensus expectations of 220 million in a
Reuters poll, weighed down by a 71 percent drop in profit at its
European steel business.
Net profit was down 29 percent at 29 million euros, falling
short of consensus of 40.8 million.
ThyssenKrupp said earnings would remain depressed at about
200 million euros in its fiscal second quarter, but would pick
up after that as customers started refilling their inventories.
Nonetheless, it said it saw no general economic recovery
this year as the euro zone debt crisis weighed on national
economies while emerging markets grew more slowly.
Revenue and new orders at ThyssenKrupp's Steel Europe
business were down about 11 percent in the first quarter, as
prices for flat steel fell and customers in the automotive and
construction industries drew down their inventories.
By the end of December, ThyssenKrupp's net debt eased to 5.2
billion euros from 5.8 billion three months earlier thanks to
the sale of stainless steel unit Inoxum to Finland's Outokumpu
, and the company has said that figure would decline
further once it has agreed the sale of its Steel Americas
ThyssenKrupp aims to agree a cash deal for Steel Americas,
which comprises two mills in Brazil and Alabama, around May and
complete the sale by the end of its fiscal year in September,
throwing in the towel after sinking billions of euros into the
project over recent years.
A massive writedown on the value of the project led to a 4.7
billion euro annual loss last year, forcing ThyssenKrupp to pay
no dividend for the first time since the 1999 merger of Thyssen
If it fails to divest Steel Americas by the end of
September, it will have to shoulder another loss in the hundreds
of millions of euros for the year, it said.