ThyssenKrupp reports loss of euro1.87 B ($2.8 B)

AP News
Posted: Nov 27, 2009 7:29 AM

German steel maker ThyssenKrupp AG reported a loss of euro1.87 billion ($2.8 billion) for the 2008-9 fiscal year and announced plans Friday to cut 5,000 jobs and sell divisions employing another 15,000 people.

The loss for the fiscal year that ended Sept. 30 compared with a net profit of euro2.3 billion the previous year for ThyssenKrupp, based in Duesseldorf.

The company said the drop was due to a number of restructuring charges and the impact of the global economic downturn on the steel industry. At the same time, the company faced construction costs for building up businesses in Alabama and Brazil.

Revenue fell 24 percent to euro40.5 billion ($60 billion) from euro53.4 billion in the previous fiscal year.

Order intake declined to euro36 billion ($54 billion) from euro55 billion in the 2007-2008 fiscal year _ a 35 percent decline.

The company did not immediately release fourth-quarter figures.

Chief executive Ekkehard Schulz told reporters the company expected to cut about 5,000 jobs and the rest of the payroll reductions would be made through divestment of units. He didn't specify what the company planned on selling off.

Last week, the company said it was selling industrial services unit North American Safway Group to Odyssey Investment Partners LLC, a private equity company based in New York.

Safway, based in Waukesha, Wisconsin and Fort Saskatchewan, Alberta, has businesses including scaffolding. It had sales of more than $700 million in 2008 and a work force of around 5,000 across the U.S. and Canada.

In overall terms, ThyssenKrupp said it expected only a slow recovery for this fiscal year.

In a letter to shareholders, Schulz said "our customers are placing more orders, even if a return to the level of the good years is still some time away."

"Now that the world economy seems to have passed the worst of the recession, the new fiscal year 2009-2010 will be characterized by at best slow economic recovery," the company said in the report.

"As a result, there will be only moderate growth in order intake and sales," it added. "The group's new organizational structure will make us leaner and more efficient. Together with the optimization programs we have introduced, this will have a positive effect on earnings."

ThyssenKrupp said it expected sales to stabilize in the current fiscal year, and said pretax earnings should be in the high three-digit million euro range.

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However, it said they would be significantly impacted by project costs and startup losses in the Steel Americas business.

ThyssenKrupp reiterated that construction work on a new steel mill and processing plant near Mobile, Alabama was being adapted to reflect the decline in steel demand.

It said the construction of a carbon steel-processing line is continuing as planned, and that it will start operating in the second quarter of 2010. A stainless steel mill at the site is set to begin production next October.

ThyssenKrupp said the startup of other stainless units in Alabama will be spread out over a longer period, with the possibility of changing start dates.

It said the stainless melt shop, which was to start operating in 2012, could be delayed by two years, but that the scale of the overall project in Alabama will be retained.

"Once the U.S. economy has recovered, the NAFTA market offers promising growth opportunities," Thyssen said.

A new facility in Brazil is expected to start limited operations in mid-2010.

ThyssenKrupp shares were up 0.6 percent at euro24.12 in Frankfurt afternoon trading.


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