Thyssenkrupp 1Q Profit Soars on Higher Steel Prices -- Update
February 14 2018 - 5:06AM
Dow Jones News
By Nathan Allen
Germany's Thyssenkrupp AG (TKA.XE) reported an almost tenfold
increase in net profit for the first quarter of its fiscal year as
stronger steel prices buoyed its materials business, the company
said Wednesday.
Net income for the October-December period was 78 million euros
($95.7 million), up from EUR8 million a year earlier. The profit
figure includes an EUR87 million hit from the U.S. tax reforms, the
company said.
Despite the rise, earnings failed to meet a FactSet-compiled
consensus of EUR194 million.
Net sales fell 3% on year to EUR9.82 billion, the company said,
narrowly missing the consensus estimate of EUR10.16 billion.
Under Chief Executive Heinrich Hiesinger, Thyssenkrupp has been
divesting from its historical business of steel production and
pivoting toward higher-margin capital-goods manufacturing, but a
recent recovery in steel prices has made the traditional industry
far more profitable.
Adjusted earnings before interest and taxes, or Ebit, at Steel
Europe was EUR160 million, the company said, equivalent to around
36% of the company's total, compared with just over 10% a year
earlier.
However, the company said the market environment for steel
remains "extremely challenging structurally--with continuing global
overcapacities, risks from trade imbalances and highly volatile raw
material prices."
In capital goods, both the elevator technology and components
technology units reported slightly higher earnings. However,
adjusted Ebit at the industrial solutions unit fell to EUR12
million from EUR42 million a year earlier.
Thyssenkrupp attributed the fall to an unfavorable comparison
effect, as the company booked a large order in the first quarter of
the previous year. It added that improvements from restructuring
are yet to take effect.
The company confirmed its guidance for the fiscal year of
clearly positive net income and adjusted EBIT of between EUR1.8
billion and EUR2 billion.
It also said it expects positive free cash flow for the fiscal
year, which UBS says is "increasingly challenging," given Thyssen's
rising net debt.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
February 14, 2018 04:51 ET (09:51 GMT)
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