Thyssenkrupp Swung to a Loss in 3Q, Sets New Division Targets -- Update

(Adds background, CEO comment, detail on cash flow.)

 
   By Nathan Allen

Thyssenkrupp AG (TKA.XE) set out detailed financial targets for its individual units on Thursday in an effort to appease increasingly frustrated investors, after the group swung to a loss in the third quarter.

The German industrial conglomerate posted a group net loss of 131 million euros ($152.0 million) compared with a net profit of EUR120 million a year earlier.

Thyssenkrupp said the loss was partly due to a tax hit stemming from the signing of the proposed joint venture with Tata Steel Ltd. (500470.BY). Additional project expenses of around EUR200 million at the group's industrial-solutions unit weighed on earnings, confirming a profit warning issued at the end of July.

Sales edged up 2% to EUR11.12 billion from EUR10.93 billion, while total orders were EUR10.89 billion, up 1% on year, the company said. Excluding comparative figures from Thyssenkrupp's Steel Americas operation, which it sold in 2017, sales and orders rose 7%, the company said.

However, free cash flow remained weak at negative EUR1.6 billion.

"The bottom line is, that we are not satisfied with the current results," Guido Kerkhoff, recently named interim chief executive following the former CEO Heinrich Hiesinger's surprise resignation, said.

"Notably the cash flow is unsatisfactory, and that is not a situation which can be sustained long-term," he said.

In a nod to investor concerns, Thyssenkrupp published medium-term cash-flow and earnings targets for its individual units, which it said will shed light on how it plans to hit a groupwide goal of at least EUR1 billion in free cash flow by the 2021 fiscal year.

Thyssenkrupp has come under fire recently from its activist shareholders Cevian Capital and Elliott Management Corp., who say the conglomerate needs to pare down its sprawling portfolio to focus on its more profitable units.

Write to Nathan Allen at nathan.allen@dowjones.com

(END) Dow Jones Newswires

August 09, 2018 02:45 ET (06:45 GMT)

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