By Christopher Alessi
FRANKFURT--German industrial conglomerate ThyssenKrupp AG on
Tuesday raised its outlook for the 2015 fiscal year, even as the
company posted a steep decline in net profit for the second
quarter.
The steelmaker said it now expects adjusted earnings before
interest and taxes, or EBIT, for this year to increase
"significantly" to between EUR1.6 billion ($1.79 billion) and
EUR1.7 billion, up from an earlier prediction of EUR1.5
billion.
"Our measures to improve efficiency are working and we are
moving forward with the transformation of the group," said
ThyssenKrupp Chief Executive Heinrich Hiesinger.
Since taking the helm in 2011, Mr. Hiesinger has overseen a
comprehensive restructuring and cost savings plan, as he seeks to
shift the company's focus from its traditional steel businesses and
onto capital goods.
However, net profit from continuing operations for the period
ended March 31 plummeted to EUR50 million, compared with EUR271
million during the same quarter last year, missing analyst
forecasts. Analysts had predicted a second- quarter profit of
EUR104 million, according to a recent poll by The Wall Street
Journal.
Profit was weighed down by impairment charges booked for the
recent sale of the company's alloys stainless steel business, VDM
Group. ThyssenKrupp announced last month that it plans to sell VDM
for an undisclosed sum to private-equity firm Lindsay Goldberg
Vogel GmbH.
The unit is one of two special materials businesses--along with
Italian stainless steel mill Terni--that Mr. Hiesinger had
indicated he would like to resell. ThyssenKrupp was forced to take
back both businesses from Finland's Outokumpu in 2013, when that
group faced financial difficulties.
Adjusted EBIT rose 32% in the second quarter to EUR405 million,
from EUR306 million in the same period last year, helped by the
company's cost-cutting measures.
Sales rose 7% to EUR11 billion on organic growth in the capital
goods businesses and positive currency effects. Orders were up 2%,
at EUR10.41 billion, boosted by a record number of new orders at
the company's elevator business, including high demand for new
installations in the U.S.
Adjusted EBIT at the elevators division jumped to EUR168 million
from EUR143 million in the same period last year.
The company said its steel business was squeezed by lower prices
in the first half of fiscal 2015. But ThyssenKrupp's European steel
division posted its highest adjusted EBIT for 14 quarters, at
EUR113 million, largely a result of efficiency measures, the
company said. At the same time, group free cash flow remained
negative, despite improving from last year, while net financial
debt increased to EUR4.63 billion.
Analysts largely welcomed the results. Second-quarter earnings
"should be seen relatively positively by the market," as the
company continues to "see improvements from efficiency gains," said
analysts at Davy Research. Analysts at DZ Bank said the results
showed an "ongoing solid earnings performance of capital goods
segments."
ThyssenKrupp shares were up 3%, at EUR25.6, in early morning
trading.
Write to Christopher Alessi at christopher.alessi@wsj.com
Access Investor Kit for ThyssenKrupp AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0007500001
Subscribe to WSJ: http://online.wsj.com?mod=djnwires