ThyssenKrupp Swings to Net Loss

By Christopher Alessi

FRANKFURT--German industrial conglomerate ThyssenKrupp AG reported a net loss of EUR23 million ($26.1 million) for the first quarter of fiscal year 2016, hurt in large part by weakness in the steel and materials businesses.

The net loss for the three months ended Dec. 31 compares with a year-earlier net profit of EUR54 million and significantly missed analysts' forecast for EUR40 million in net profit.

Sales declined 5% to EUR9.55 billion, weighed down by volume and price-related decreases in the steel and materials businesses.

The company's closely watched adjusted earnings before interest and taxes fell by 26% to EUR234 million due to price and margin pressure in the steel and materials businesses.

Earnings at the Materials Services business were roughly level with the year-earlier period at EUR3 million. Meanwhile, Steel Europe's adjusted EBIT fell to EUR51 million from EUR79 million, and Steel Americas posted a loss of EUR74 million.

However, the group reported continued earnings growth at its capital goods businesses.

Components Technology, which supplies the auto industry with parts such as electrical-steering systems and engine components, posted adjusted EBIT of EUR71 million, up from EUR4 million a year ago. At the Elevator Technology division adjusted EBIT rose to EUR203 million from EUR25 million.

Since taking the helm in 2011 amid corruption scandals and internal divisions, Chief Executive Heinrich Hiesinger has moved the company away from its traditional steelmaking business and transformed it into a diversified capital goods company. The backbone of the capital goods segment is the world-leading elevator and escalator business.

Mr. Hiesinger has succeeded in bringing the company back into the black in the past two fiscal years, but has acknowledged that significant challenges remain, including a high net debt. Net financial debt increased to EUR4.4 billion in the first quarter from a year-earlier EUR4.2 billion.

Thyssenkrupp's challenges have been further compounded by a shaky global economy that has weighed on steel prices.

The company reiterated its guidance for fiscal 2016, saying it still expects to achieve adjusted EBIT between EUR1.6 billion and EUR1.9 billion. However, it cautioned that the outlook is predicated on a "significant recovery" of the materials markets in the second half of the fiscal year.

Write to Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

February 12, 2016 01:15 ET (06:15 GMT)

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