Thyssenkrupp Plans to Spin Off, List Elevator Unit -- Update
May 10 2019 - 6:46AM
Dow Jones News
--Thyssenkrupp abandons planned split in favor of separate
listing for elevator unit
--Group to reintegrate European steel business as EU set to
block Tata Steel merger
--Net loss forecast for year; adjusted EBIT guidance cut
By Nathan Allen
Thyssenkrupp AG (TKA.XE) has abandoned plans to split itself
into two separate companies and will spin off and list its elevator
unit, the company said Friday.
The German conglomerate said the separation as initially planned
wasn't feasible given the economic downturn and the current
capital-market environment.
Thyssenkrupp also said it expects the European Commission to
block a proposed merger of its European steel business with that of
Tata Steel Ltd. (500470.BY).
Instead, Thyssenkrupp will reintegrate the business back into
the group in the third quarter of its fiscal year and won't book
the expected capital gains from the merger.
The company said it now expects to post a net loss for the 2019
fiscal year and forecasts adjusted earnings before interest and
taxes of between 1.1 billion euros and 1.2 billion euros ($1.23
billion to $1.34 billion).
The news marks yet another twist in what has been an
exceptionally turbulent year for the conglomerate.
After losing its former chief executive and chairman in less
than a month last summer, CEO Guido Kerkhoff presented a strategy
based on splitting the group's materials operations into a separate
company from its capital-goods businesses.
However, since then the company has issued two profit warnings
and the company's shares have dropped more than 40%, forcing
today's strategic U-turn.
The elevator division has long been Thyssenkrupp's most
profitable and investors have previously pushed for it to be hived
off as it should command a higher valuation as a separate
enterprise.
In the last fiscal year, the division generated an adjusted
margin on earnings before interest and taxes of 11.5%, compared
with 2.5% at the components business and a negative margin of 5.1%
at industrial solutions.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
May 10, 2019 06:31 ET (10:31 GMT)
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