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ThyssenKrupp upbeat on quarterly profit

Frankfurt, February 15, 2014

ThyssenKrupp posted a better than expected quarterly operating profit yesterday, as it reined in losses at its steel mill in Brazil and also benefited from robust demand for cement and petrochemical plants.

Its net loss for the fiscal first quarter through December widened on one-off charges related to the sale of a stake in Finnish steelmaker Outokumpu, but ThyssenKrupp said it still aimed to approach break-even this year.

ThyssenKrupp has been trying to return to long-term profitability by investing in services and engineering businesses and reducing its dependence on the volatile steel sector.

It already generates more than 70 per cent of sales from industrial businesses making products ranging from car parts to elevators, submarines and fertiliser plants, compared with less than 60 per cent when chief executive Heinrich Hiesinger took the helm three years ago.

First-quarter adjusted earnings before interest and tax (EBIT) more than doubled to 247 million euros, beating even the most optimistic estimate in a poll of analysts.

The adjusted EBIT margin widened to 2.7 per cent from 1.2 per cent as ThyssenKrupp made more money from powertrain and chassis sales to carmakers and saw continued demand for cement and petrochemical plants.

Earnings at its steel businesses meanwhile remained depressed, with losses in Brazil shrinking but not turning to profits yet and low steel prices weighing on earnings in Europe.

ThyssenKrupp affirmed an outlook for group sales to grow by a medium single-digit percentage in its full fiscal year through the end of September, while adjusted EBIT will jump to about one billion euros from 599m and further improve in 2014/15.

"After 247m euros in the first quarter, there is a chance that EBIT can exceed the current consensus," Baader Bank analyst Christian Obst said. The consensus for full-year adjusted EBIT is 1.04 billion euros.-Reuters

Tags: Steel | ThyssenKrupp |

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