ThyssenKrupp cautious after unsatisfactory first quarter

12th February 2013, Comments 0 comments

German heavy industry giant ThyssenKrupp said Tuesday it is forecasting sluggish sales and earnings this year as it continues to suffer from weak steel demand in Europe.

"Our business performance in the 2012/2013 fiscal year will be characterised to a very large extent by the continued absence of a global economic recovery, with an unsolved debt crisis in particular in the eurozone and slower growth in the emerging economies," ThyssenKrupp said in a statement.

The group said it expected sales "to remain at the prior-year level of around 40 billion euros ($53.6 billion), provided there are no major dislocations on the raw materials markets."

And underlying profit, as measured by earnings before interest and tax (EBIT), "should be around 1.0 billion euros ... assuming that the slower activity on the materials markets at the beginning of the new fiscal year compared with the prior year continues but does not progressively worsen," it said.

ThyssenKrupp, which runs it business year from October to September, booked EBIT of 1.4 billion euros in the year ended September 30, 2012.

In the first quarter of the current business year, the three months to December, ThyssenKrupp turned in net profit of 35 million euros, compared with a loss of 460 million euros a year earlier.

But net profit from continuing operations fell by 29 percent to 29 million euros.

First-quarter EBIT fell by 14 percent to 219 million euros on stagnant orders of 9.642 billion euros and an 8.0-percent drop in sales to 8.837 billion euros.

"We cannot be satisfied with the group's current earning power," complained chief executive Heinrich Hiesinger.

The steel division in particular was being hit by falling demand and downward pressure on prices.

Alongside steel, ThyssenKrupp also makes elevators, industrial plant technology, submarines and car parts, most of which reported stronger business in the first quarter.

Last week, ThyssenKrupp unveiled plans to axe more than seven percent of the workforce at its Steel Europe division to make the business more competitive.

ThyssenKrupp said it would axe "more than 2,000 jobs" out a total workforce of 27,600 at its Steel Europe division in a 500-million-euro cost-cutting drive.

© 2013 AFP

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