Thyssenkrupp Lowers Fiscal Year Guidance as Headwinds Drag Earnings
By Ruth Bender
BERLIN--German steel-to-elevators group Thyssenkrupp AG on
Thursday lowered its full-year earnings target as price pressure in
steel, slowing demand in the automotive sector and higher
raw-material costs dragged down profits in the latest quarter.
Thyssenkrupp's warning is the latest example of a German
export-reliant industrial group suffering from a worsening economy
weighed down by global trade frictions. Siemens AG last week warned
that a weakening global economic environment was dragging down its
key industrial businesses, while chemicals maker BASF SE in July
slashed its profit forecasts citing the ongoing Chinese-U.S. trade
frictions and sluggish demand in the auto market.
For Thyssenkrupp, the warning comes at a delicate time as the
company has for months been trying to come up with a plan to
reinvent itself as a more profitable organization.
Under pressure from activist investors, the group, which makes
steel, elevators and auto components, abandoned in May a previous
plan to split the company into two separately-listed units. Now it
is working on a plan to list its lucrative elevators business and
is cutting costs drastically to improve its performance.
Additionally, Thyssenkrupp said Thursday that it placed under
review three industrial business operations that it currently sees
as uncompetitive and where market conditions are particularly
tough: springs and stabilizers, which makes chassis components for
auto component makers, system engineering, which makes production
lines for auto companies, and heavy plate, part of the steels
Thyssenkrupp said these three businesses contribute 4% of the
group's revenue but burn a lot of cash, accounting for a quarter of
the company's expected negative cash flow this year.
While the company has been trying to overhaul itself, results
have disappointed again and again. Last year, Thyssenkrupp issued
two profit warnings.
When announcing the new strategic plan in May this year,
Thyssenkrupp already warned of a net loss for the full year after
integrating its steel division back into forecasts when it
abandoned the split and a planned European joint venture with
India's Tata Steel (500470.BY).
In the quarter to the end of June, Thyssenkrupp posted a net
loss of 94 million euros ($105.3 million), a slight improvement on
the EUR131 million posted the same quarter last year, while
adjusted earnings before interest, a key number looked at by
analysts, fell 32% to EUR226 million. Sales were flat at EUR10.78
Chief Executive Guido Kerkhoff said the group's performance so
far this year was "not satisfying", but said that was why its plan
was exactly the right one. For the full financial year Thyssenkrupp
now expects adjusted EBIT to reach around EUR800 million, compared
with a previous forecast of between EUR1.1 billion and EUR1.2
Write to Ruth Bender at email@example.com
(END) Dow Jones Newswires
August 08, 2019 02:44 ET (06:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Historical Stock Chart
Von Aug 2020 bis Sep 2020
Historical Stock Chart
Von Sep 2019 bis Sep 2020