Thyssenkrupp Profit Pressured by Steel Sector Woes -- Update
November 24 2016 - 4:01AM
Dow Jones News
By Christopher Alessi
ESSEN, Germany-- Thyssenkrupp said Thursday that its full-year
net profit fell as the German industrial conglomerate battled a
continuing malaise in the steel industry.
Net profit for the fiscal year ended Sept. 30 fell 4% to EUR296
million ($312.2 million), compared with EUR309 million a year
earlier, falling short of analysts' forecasts of EUR364 million in
a poll by The Wall Street Journal.
The company's shares opened 2.9% lower following the
results.
Annual sales fell 8%, to EUR39.29 billion, while orders dropped
9% to EUR37.42 billion, mainly because of high import and price
pressure on its materials businesses. Those businesses include the
company's steel operations and its materials services business,
which sells products such as stainless steel and alloys.
Chief Executive Heinrich Hiesinger said that volatility in the
materials markets meant the company needed to forge ahead with
efforts to reshape its portfolio around its more consistently
profitable capital goods businesses.
"We must continue with Thyssenkrupp's transformation," he
said.
The company's closely watched adjusted earnings before interest
and taxes for the full year fell 12% to EUR1.5 billion, weighed
down by lower profitability its European steel, materials services
and industrial solutions businesses.
Steel Europe reported a 36% plunge in annual adjusted EBIT to
EUR315 million, due to declining European spot market prices
through the first half of the fiscal year and a tighter
competition.
Thyssenkrupp in July confirmed that it was in talks with Tata
Steel Ltd. of India and other steel groups over a potential tie-up.
The announcement came amid ongoing consolidation in the European
steel industry, which has had to cope with a protracted
steel-capacity glut and a wave of inexpensive steel imports from
countries such as China.
The company's steel operations in the Americas again posted a
loss, despite an improved operational performance due to efficiency
measures. The Wall Street Journal reported late last month that
Thyssenkrupp was in talks with Ternium SA to sell its steel plant
in Brazil, the last asset of the company's unsuccessful venture in
the Americas.
The industrial solutions unit, which builds a range of products
from chemical plants to military submarines and ships, reported an
adjusted EBIT loss of 16%, to EUR355 million, as a result of weaker
markets for chemicals plants and mining equipment and a dearth of
ship building contracts.
The company's capital goods businesses--including the high
margin elevator division and a unit that produces high-tech
components for the auto industry--were the only areas to post
substantive earnings growth.
For fiscal year 2017, Thyssenkrupp said it expects adjusted
earnings before interest and taxes to increase to around EUR1.7
billion, compared with EUR1.5 billion in fiscal 2016. The company
also expects a "clear improvement" in net profit and a "slightly
positive" free cash flow before mergers and acquisitions for fiscal
2017.
Free cash flow before M&A for fiscal 2016 was EUR198
million, compared with EUR115 million the year before.
Thyssenkrupp said it would propose an unchanged dividend of
EUR0.15 a share for fiscal 2016.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
November 24, 2016 03:46 ET (08:46 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Thyssenkrupp (PK) (USOTC:TKAMY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Thyssenkrupp (PK) (USOTC:TKAMY)
Historical Stock Chart
From Jul 2023 to Jul 2024