Thyssenkrupp Swings to Profit on Business Growth -- Update
February 09 2017 - 3:29AM
Dow Jones News
By Christopher Alessi
FRANKFURT--German industrial conglomerate Thyssenkrupp AG said
Thursday it swung to a net profit for the first quarter of its
fiscal year 2017, boosted by continued growth at most of its
capital-goods businesses.
Net profit for the period ended Dec. 31 was EUR8 million ($8.55
million), compared with a net loss of EUR23 million during the same
period a year earlier, falling short of analysts' forecasts.
Analysts had predicted net profit of EUR92 million, according to a
recent poll conducted by The Wall Street Journal.
The company's closely watched adjusted earnings before interest
and taxes climbed by 40% year-over-year to EUR329 million, a result
of steady earnings growth at the elevator and specialty auto
components units. Both divisions saw a 6% increase in adjusted
EBIT, to EUR215 million and EUR75 million, respectively.
Adjusted EBIT was "widely in-line with expectations," according
to DZ Bank analyst Dirk Schlamp. But net profit "turned out weaker
than expected" as a result of higher special items and tax
payments, Mr. Schlamp said.
Overall earnings growth at the capital goods businesses was held
back by the industrial solutions unit--which builds a range of
products from chemical plants to military ships--by lower milestone
billings and weaker margins. That unit saw a 54% decline in
adjusted EBIT, to EUR42 million.
The company's materials operations, including its heavy steel
businesses, reported mixed results.
At the specialty materials unit, which manufacturers products
such as carbon and stainless steels, adjusted EBIT more than
doubled to EUR51 million, helped by positive price trends and
restructuring measures.
The company's steel unit in Brazil also saw earnings improvement
due to stable price recovery, swinging to adjusted EBIT of EUR37
million, compared with a loss during the same period last year.
But the European steel division--once the backbone of the
company--was pressured in part by lower selling prices and higher
raw material costs. The business reported a 46% decline in adjusted
EBIT, to EUR28 million.
Chief Executive Heinrich Hiesinger confirmed last year that the
company was in talks with India's Tata Steel Ltd. and other steel
groups over a potential tie-up with its European steel division,
amid ongoing consolidation in the industry.
The Wall Street Journal reported last year that Thyssenkrupp was
in talks with Ternium SA to sell its steel plant in Brazil, the
last asset of its unsuccessful venture in the Americas. The company
at the time declined to comment on M&A plans for the plant.
Since taking over the top job in 2011, Mr. Hiesinger has
overseen a comprehensive restructuring, while moving the company
away from its core steel operations to focus more on capital goods.
The crown jewel of the capital goods businesses is the elevator
division, which is one of the world's top four elevator and
escalator businesses.
Group sales rose by 6%, to EUR10.09 billion, helped by new
elevator installations in the U.S. All business areas except the
industrial solutions unit experienced sales growth in the first
quarter, the company said.
Thyssenkrupp reiterated its guidance for fiscal 2017, saying it
expects adjusted EBIT to increase to around EUR1.7 billion,
compared with EUR1.5 billion last year.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
February 09, 2017 03:14 ET (08:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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