THYSSENKRUPP, Germany’s biggest steel maker, swung to a surprise €357 million operating loss in the last quarter of 2011 as weak demand from customers rattled by Europe’s debt crisis hit prices.
The group, which last month agreed to sell its struggling stainless steel unit, said it was unable to give a reliable forecast for its financial year that ends in September due to the uncertain economic outlook.
Its comments echoed those made by rivals such as Arcelor Mittal, Posco and Tata Steel. All three have struggled with profitability, missed quarterly forecasts and cited Europe as a concern.
ThyssenKrupp said it saw “encouraging signs on the price and volume side” for its materials division, which includes its key flat carbon steel business in Europe and America that sells to the construction, automotive and machine engineering sectors.
The German Steel Federation said last week that steel makers might see new orders picking up in coming months because demand from Germany remained intact.
However, there were huge economic risks posed by Europe’s debt crisis, which soured sentiment and triggered cuts in capital investments, it added.
The company’s €357 million loss for the three months to the end of December compares with a profit of €273 million a year earlier and a forecast €92 million profit. Excluding Inoxum, the stainless steel unit it is selling to Finland’s Outokumpu, the operating loss was €33 million.
Steel Europe, which makes premium flat carbon steel, saw profit declining by 60 per cent to €2.5 billion. Two writedowns, including Inoxum, and a loss at Steel Americas, the division that operates Thyssen’s new plants in Brazil and the US state of Alabama, contributed to the overall operating loss
ThyssenKrupp declined to say how much its prices fell in the quarter.
The worse-than-expected result sent ThyssenKrupp shares down 3 per cent to €21.2 in mid-morning trading yesterday.
Steel Americas has been ThyssenKrupp’s problem child, hit by delays in boosting mill use at the plant in Brazil due to faulty equipment, higher input costs and dust particle emissions. The division racked up a quarterly loss of €228 million. – (Reuters)
