ThyssenKrupp AG, Germany’s largest steelmaker, raised its full-year earnings forecast and reported the first quarterly profit in almost two years after selling assets and cutting costs.
Net income was 269 million euros ($370 million), or 48 cents a share, for the fiscal quarter ended March 31, compared with a loss of 129 million euros, or 25 cents, a year earlier, the Essen, Germany-based company said today in a statement. Full-year profit, excluding one-time items, will be “almost double” last year’s 586 million euros, compared with an earlier target of about 1 billion euros.
“These are good operating results and the increased guidance shows that internal measures really help,” said Christian Obst, an analyst at Baader Bank AG in Munich, who has a buy rating on the stock. “The still negative cash flow and the balance sheet, especially equity, need to be improved considerably.”
ThyssenKrupp, which last reported profit in the third quarter of 2012, is expanding its elevator, industrial and components divisions after waning steel demand and competition from Chinese suppliers cut prices. The 203-year-old company, which has sold or shut units since Hiesinger took over in 2011, said in November it would raise capital by offering stock after finding a buyer for an unprofitable U.S. steel plant.
“This shows that our efficiency program impact is working and our culture change is really bringing about a stronger performance,” Chief Executive Officer Heinrich Hiesinger said in the statement.
ThyssenKrupp rose 4.1 percent to 22.135 euros in Frankfurt, its highest close since Feb. 9, 2012. Volumes were more than three times the three-month daily average. The shares have gained more than 25 percent this year, most of all members of the key DAX index which gained 2.1 percent.
Sales for the quarter climbed to 10.3 billion euros, exceeding the 9.88 billion-euro average of 14 analyst estimates compiled by Bloomberg. Revenue rose for each business except for Steel Europe, ThyssenKrupp said.
Earnings before interest and taxes from continuing operations rose 60 percent to 309 million euros, beating the 293.8 million-euro average of 15 estimates.
The Steel Americas division reported a narrower adjusted loss before interest and taxes of 26 million euros, compared with 44 million euros. ThyssenKrupp seeks break-even earnings before interest, taxes, depreciation and amortization for the unit in the year through September from an earlier target next year, Chief Financial Officer Guido Kerkhoff said on a call with reporters.
The Steel Europe unit posted an increase in adjusted earnings to 62 million euros from 9 million euros.
ArcelorMittal, the world’s biggest steelmaker, said last week demand for the metal in Europe is growing faster than expected and may expand as much as 3 percent this year.