ThyssenKrupp, Salzgitter Drop After Downgrade: Frankfurt Mover
ThyssenKrupp dropped as much as 4.2 percent, the steepest slide since Aug. 2, as UBS AG said expectations for the benefits from the sale of the company’s Steel Americas unit are too high.
“The market got overexcited by a potential Steel Americas disposal,” Carsten Riek, a UBS analyst, wrote in an e-mailed note, cutting ThyssenKrupp to “sell” from “neutral.”
European steel companies have seen margins squeezed as the region’s economic woes curb demand from the car, appliance and building industries, weighing on prices. Austria’s Voestalpine AG (VOE) reported a 34 percent decline in net income last month, and ArcelorMittal (MT) posted a 28 percent drop in earnings in July.
ThyssenKrupp’s Head of Steel Edwin Eichler and Salzgitter Chief Executive Officer Heinz Joerg Fuhrmann wrote in a letter that they disagree with Voestalpine CEO Wolfgang Eder, who said steel capacity in Europe is as much as 60 million metric tons more than supply, the Financial Times Deutschland said today.
Eder, also head of the Eurofer lobby, earlier called for a European-wide restructuring plan to reduce excess capacity.
ThyssenKrupp fell 2.9 percent to 17.96 euros by 10:16 a.m. in Frankfurt. Salzgitter declined 2.1 percent to 34.28 euros.
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