Feb. 12 (Bloomberg) -- ThyssenKrupp AG, Germany’s biggest steelmaker, said profit slumped 38 percent in the fiscal first quarter as the global economic slowdown eroded demand.
Adjusted earnings before interest and taxes fell to 229 million euros ($307 million) in the three months through December from 372 million euros a year earlier, the Essen-based company said today in a statement. That beat the 211.8 million-euro average estimate of 13 analysts surveyed by Bloomberg. Sales dropped 7.9 percent to 8.84 billion euros.
Dwindling demand for steel from the auto and construction industries in Europe and competition from China have pushed down prices and squeezed producers’ profit margins as they grapple with surplus capacity. ArcelorMittal, the biggest steelmaker, last week posted the lowest quarterly profit in three years.
ThyssenKrupp “cannot be satisfied with the group’s current earning power,” Chief Executive Officer Heinrich Hiesinger said in the statement. The shares fell 0.3 percent to close at 17.70 euros in Frankfurt trading.
The company is selling its Steel Americas division as it cuts the number of business units to five from eight and expands non-steel operations. Steel Americas, labeled a discontinued operation, reported an adjusted loss before interest and taxes of 87 million euros, compared with a loss of 288 million euros a year earlier, according to Kilian Roetzer, a spokesman.
Hiesinger expects to agree on the sale of the unit by May, he said today on a conference call. ThyssenKrupp has a “clear preference for cash” and intends to close the deal this fiscal year, Chief Financial Officer Guido Kerkhoff said on the call.
ArcelorMittal and Nippon Steel & Sumitomo Metal Corp. have teamed up to bid for ThyssenKrupp’s plant in Alabama, making a non-binding offer of about $1.5 billion, people with knowledge of the talks said last month. They face competition from Cia. Siderurgica Nacional SA, which is bidding for the plant and another in Brazil, and Nucor Corp., said the people, who asked not to be identified because the talks are private.
ThyssenKrupp intends to save 500 million euros by reorganizing its European steel business and cutting more than 2,000 jobs to reduce excess capacity. Hiesinger has already sold the company’s Inoxum stainless-steel unit to Outokumpu Oyj in a deal valuing the business at about 2.7 billion euros.
“I doubt whether investors will profit from the savings of the restructuring program because of the huge overcapacities in Europe,” said Joerg Schneider, a Union Investment GmbH portfolio manager responsible for the fund’s 0.56 percent stake in ThyssenKrupp. “Hiesinger’s strategy is going in the right direction, but that is already considerably included in the share price.”
ThyssenKrupp’s net financial debt shrank to 5.21 billion euros at the end of December from 5.94 billion euros a year earlier.
The company confirmed a forecast for adjusted Ebit of about 1 billion euros for the current fiscal year.
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