By Jan Hromadko
FRANKFURT--Industrial conglomerate ThyssenKrupp AG (TKA.XE) Friday reiterated its full-year guidance as third-quarter earnings beat expectations though Germany's largest steelmaker by output warned that the weak European economy remains challenging.
The company--whose products include steel, elevators, industrial plants and naval vessels--said it expects adjusted earnings before interest and taxes to amount to a "medium three-digit million euro sum" in fiscal 2012, ending Sept. 30. even as incoming orders fell over 21% in the three months to June.
"The weak economic situation and in particular the general uncertainty resulting from the unresolved sovereign debt crisis [in the euro-zone] are increasingly impacting our markets," said Chief Executive Heinrich Hiesinger.
ThyssenKrupp has already responded to the challenging market environment by introducing shorter working hours for some staff at its European steel business as of the beginning of August, Hiesinger said. The company has said it expects reduced working hours to remain in place through the end of the year due to muted demand, echoing comments made by other steel makers in recent weeks.
Steel titan ArcelorMittal (MT) late last month said it wouldn't rule out further temporary or permanent idling of European blast furnaces as it realigns its production capacity to match poor demand in the weak European economy. In total, ArcelorMittal has already idled nine of its 25 blast furnaces in Europe.
ThyssenKrupp's net profit in the quarter ending June 30 was 212 million euros ($262.3 million), up from EUR109 million as gains on a disposal and a robust capital goods business helped offset poor pricing and demand in the European steel business. Excluding the stainless-steel business Inoxum that will be sold to Finland's Outokumpu Oyi (OUT1V.HE), profit was EUR238 million, up 16% from EUR205 million in the same period a year earlier. The figure considerably exceeded the net loss of EUR121 million that 13 analysts forecast on average in a Dow Jones Newswires poll, which the company attributed to gains on the recent sale of its U.S. iron casting business Waupaca.
ThyssenKrupp's closely-watched adjusted earnings before interest and taxes from continued operations fell over 78% on the year to EUR122 million, above forecasts, from EUR570 million a year earlier. Third-quarter revenue from continuing operations was EUR10.71 billion, down 6.9% from the EUR11.51 billion due to low demand and prices for its steel products as well as asset disposals. Analysts had forecast EUR10.86 billion.
ThyssenKrupp's shares Thursday closed at EUR15.65, valuing the company at around EUR8.2 billion.
Write to Jan Hromadko at firstname.lastname@example.org
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