Thyssenkrupp's Net Tumbles -- WSJ
August 12 2016 - 3:03AM
Dow Jones News
German conglomerate takes hit from global slump in steel and
material prices
By Christopher Alessi
FRANKFURT -- German industrial conglomerate Thyssenkrupp AG
reported a 34% slide in net profit for the third quarter of its
fiscal 2016, weighed down by drops in global steel and material
prices from a year ago.
Net profit for the period ended June 30 was EUR130 million,
compared with EUR199 million during the same period last year,
slightly beating analysts' forecast. Analysts had predicted a net
profit of EUR128 million, according to a recent poll conducted by
The Wall Street Journal.
Sales fell 12%, to EUR9.87 billion, while the company's closely
watched adjusted earnings before interest and taxes dropped 18% to
EUR441 million, both a result of weakness in the materials
markets.
Adjusted EBIT at the company's European steel operations was
down 45% year-over-year, at EUR91 million.
However, Thyssenkrupp's capital goods businesses overall
continued to post steady growth. Adjusted EBIT at the Components
Technology unit, which supplies the auto industry with parts such
as electrical engineering systems, was up nearly 10%, at EUR100
million. At the company's lucrative elevator division, adjusted
EBIT rose 6.6%, to EUR225 million.
The elevator business -- one of the global top four -- is
central to Chief Executive Heinrich Hiesinger's strategy to
transform the company into a leaner capital goods business, less
reliant on its traditional steel operations.
Thyssenkrupp confirmed last month it is in talks with India's
Tata Steel Ltd. and other steel groups about a potential tie-up,
amid ongoing consolidation in the European steel sector.
In 2014, Mr. Hiesinger sold the company's troubled Alabama steel
plant and he has indicated a desire to completely shed its steel
operations in the Americas by selling its Brazilian plant.
However, Thyssenkrupp's third-quarter results were a significant
improvement over with the previous quarter, reflecting relatively
higher global steel prices and more stable raw materials
markets.
Based on those macroeconomic developments, Thyssenkrupp
reiterated its guidance for the full fiscal year, saying it expects
adjusted EBIT to be "at least" EUR1.4 billion.
The company's net financial debt, a major focus of Mr.
Hiesinger's ongoing restructuring and cost-cutting efforts, rose 9%
year-over-year, to EUR4.8 billion.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
August 12, 2016 02:48 ET (06:48 GMT)
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