Reuters | Feb 12, 2019 16:25
* Car markets in China, Europe weakening - CEO
* Q1 adj EBIT from continuing operations down 37 pct
* Keeps outlook for adj EBIT from continuing operations
* Shares down as much as 3.2 pct (Recasts, adds CEO quote, analyst, updates shares)
By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF, Feb 12 (Reuters) - German steel-to-elevators group Thyssenkrupp TKAG.DE on Tuesday warned of a darkening economic backdrop, including a weakening automotive market, signalling tough times for its capital goods business ahead of a planned separation.
Shares in the group fell as much as 3.2 percent and traded near three-year lows after analysts said it would be more challenging for the conglomerate to reach its operating profit target for the full year.
Thyssenkrupp is in the process of a major restructuring which includes a planned European joint venture with India's Tata Steel TISC.NS and a separate listing of its elevator, plant engineering and car parts unit. Executive Guido Kerkhoff, who is under pressure to revive the group's ailing shares, said that the Chinese car market was weakening somewhat, while car production in Europe was hit by stricter anti-pollution testing rules.
"We will have to see whether those trends will continue going forward," Kerkhoff said after the group released first-quarter results and pointed to growing economic and political uncertainties.
Fears of a global economic slowdown have increased in recent months, with euro zone businesses expanding at their weakest rate since mid-2013 at the start of the year as demand fell for the first time in four years. which said last year it would spin off its elevator, car parts and plant engineering unit, still expects adjusted operating profit (EBIT) from continuing operations to rise to more than 1 billion euros ($1.13 billion) in 2018/19.
Adjusted EBIT from continuing operations, which strips out Thyssenkrupp's steel activities, stood at just 168 million euros in the first quarter, down 37 percent, and will come in below 283 million in the second quarter, the company said.
"That means that Thyssenkrupp needs to double down in the second half of the year," DZ Bank analyst Dirk Schlamp said, keeping a "hold" rating but adding estimates would be reviewed.
Shares in Thyssenkrupp have lost about a third since the spin-off was announced in September, with investors anxious over a lack of transaction details Kerkhoff has provided so far. Shareholders will vote on the split only in about a year's time.
The remaining business after the spin off will be called Thyssenkrupp Materials and its activities will include
materials trading, shipbuilding, a 50 pct stake in the steel joint venture and two smaller units: forging and bearings.
Thyssenkrupp said corporate costs, which have been a major target of shareholder criticism, would fall to below 300 million euros in terms of operating profit by 2020/21 as a result of the new set-up, a decrease of more than a fifth from current levels. ($1 = 0.8862 euros) (Editing by Sherry Jacob-Phillips and Keith Weir)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.