ThyssenKrupp ‘Cannot Exclude’ Capital Raising Over Next 9

ThyssenKrupp AG, Germany’s biggest steelmaker, said it can’t rule out the need to raise capital in the next nine months after a 683 million-euro ($880 million) writedown of its Steel Americas unit widened its quarterly loss.

The net loss increased to 656 million euros ($845 million) in the second quarter from 587 million euros a year earlier, the Essen, Germany-based company said today in a statement. The steelmaker said it will cut 3,000 administrative jobs.

“We cannot fully exclude a capital increase for the next six to nine months” due to “limited balance sheet capacity,” Chief Executive Officer Heinrich Hiesinger said today on a conference call.

ThyssenKrupp confirmed its outlook for adjusted earnings before interest and taxes from continuing operations of about 1 billion euros for the year ending in September. Sales will be down from the 40.1 billion euros a year earlier, it said. The number of administrative staff will be cut within the next three years from current levels of about 15,000.

“Despite a persistently difficult economic environment we are on track to meet our operating targets for the full year,” Hiesinger said in the statement. The disposal of the company’s Steel Americas unit “is also running to plan. We remain focused on signing a deal promptly.”

ThyssenKrupp fell 1.7 percent to 14.85 euros in Frankfurt trading.

Waning Demand

The company is selling plants in Brazil and the U.S. as it reduces the number of business units to five from eight while expanding non-steel operations. Waning demand from the auto and construction industries and competition from China has pushed steel prices lower and squeezed producers’ profit margins.

“The targets ThyssenKrupp reached must be very low,” Hans-Peter Wodniok, an analyst at Fairesearch GmbH & Co KG, said by phone from Kronberg near Frankfurt. “It’s going downhill everywhere except for elevators and industrial solutions. The drop in sales is accelerating. That shows it’s getting even more difficult.”

Cia. Siderurgica Nacional SA, Brazil’s third-largest steelmaker, has emerged as the leading bidder for ThyssenKrupp’s Brazilian and U.S. steel-plant assets, people with knowledge of the talks said earlier this month. ThyssenKrupp and CSN could sign an agreement in coming weeks, said one of the people.

While Hiesinger confirmed today that there’s a leading bidder for the assets, he didn’t name the party and said the steelmaker is continuing talks with other potential buyers.

ThyssenKrupp’s adjusted loss before interest and taxes at the Steel Americas unit narrowed to 12 million euros from 228 million euros a year earlier.

While the group’s equity ratio fell to 9.5 percent in the quarter, it said it’s “solidly financed.” Adjusted Ebit fell 33 percent to 241 million euros, beating the average 202.3 million-euro estimate of 15 analysts in a Bloomberg survey.

(Updates shares in sixth paragraph.)
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