ThyssenKrupp AG (TKA), Germany’s largest steelmaker, reported fiscal first-quarter earnings that beat analyst estimates as revenue from non-steel businesses increased and losses from the Americas narrowed. The shares rose.
Adjusted earnings from continuing operations before interest and taxes more than doubled to 247 million euros ($338 million) in the three months through December, the Essen-based company said today in a statement. That beat the 218.7 million-euro average of 10 estimates compiled by Bloomberg.
ThyssenKrupp is expanding elevator, industrial and components divisions after waning steel demand cut prices. After losing almost 14 billion euros in market value since 2008, the company announced plans last year to sell shares and a U.S. plant in its Steel Americas unit. That deal now has all the necessary approvals and may close in the second quarter, Chief Executive Officer Heinrich Hiesinger said today.
The earnings “look good,” Marc Gabriel, an analyst at Bankhaus Lampe KG, said by telephone from Dusseldorf. “A basic Ebit effect came from Steel Americas.” Results for the unit in the current quarter may not be as positive, he said.
The Steel Americas division reported an adjusted loss before interest and taxes of 17 million euros, compared with a 122 million-euro loss a year earlier. Earnings were helped by cost reductions, higher capacity use and improved currency rates and market prices in the U.S.
ThyssenKrupp rose 3.8 percent to 20.455 euros in Frankfurt trading, the highest closing price since March 19, 2012, and the biggest jump among companies on Germany’s benchmark DAX index.
ThyssenKrupp initially sought to sell an unprofitable plant in Brazil as well as the U.S. mill. The site in Rio de Janeiro state posted a first-quarter loss, which accounted for Steel Americas’ total adjusted loss, according to Chief Financial Officer Guido Kerkhoff. The outlook for the plant is improving and it will probably produce 4 million metric tons of steel this fiscal year, he said.
Steelmakers including ArcelorMittal, the world’s largest, and Asia’s Posco have forecast a rebound in consumption of the metal in the U.S. and Europe as an economic recovery boosts demand from industry.
“We started the new fiscal year with a good first quarter,” Hiesinger said in the statement. The company is on schedule to achieve 850 million euros in savings for the year ending September, with adjusted earnings of about 1 billion euros.
ThyssenKrupp’s net loss widened to 69 million euros in the quarter from 16 million euros a year earlier. It targets positive net income for the full year, Kerkhoff told reporters on a call.
The Steel Europe unit posted a 37 percent slump in adjusted earnings to 19 million euros.
ThyssenKrupp’s results were adjusted to account for one-time items including currency effects and costs from terminating financial links with Finnish steelmaker Outokumpu Oyi.
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