ThyssenKrupp may post first profit in 3 years
Frankfurt, August 15, 2014
German steel and industrial group ThyssenKrupp said it could make its first net profit in three years, as chief executive Heinrich Hiesinger's recovery strategy begins to pay off.
ThyssenKrupp raised the outlook for its financial year ending in September to 'break-even to slightly positive net income,' after a turnaround at its steel mill in Brazil, cost cuts and demand for elevators and chemicals plants bolstered third-quarter earnings, said a report in the Gulf Daily News (GDN), our sister publication.
Hiesinger has been trying to turn the group around after a slump in the global steel sector and a failed foray into the Americas caused losses and prevented the group paying shareholders a dividend for two years in a row.
He has cut costs and sold non-core businesses to reduce the company's exposure to the volatile steel sector and close a gap with more profitable industrial peers.
Commerzbank analyst Ingo-Martin Schachel said the new profit outlook was 'a psychologically important milestone' and stuck with his 'buy' recommendation on ThyssenKrupp's stock.
ThyssenKrupp's previous forecast was for a significant improvement in earnings after posting a net loss of 1.5 billion euros ($2 billion) in 2013.
ThyssenKrupp generates more than 70 per cent of sales from industrial businesses making products such as car parts, elevators, submarines and fertiliser plants, up from less than 60 per cent when Hiesinger took the helm more than three years ago. The rest still comes from its steel businesses.
It also raised its outlook for 2014 adjusted earnings before interest and tax, saying it expects the figure to double this year from 586 million euros in 2012-13, which would put it just below analysts' average forecast of 1.18 billion.
The improved outlook comes after a series of frustrating setbacks for Hiesinger. The company's deteriorating finances forced him to ask shareholders for cash late last year - major deals have only been partially successful and compliance issues emerged that were costly and embarrassing. - TradeArabia News Service