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Thyssenkrupp faces pressure to fix steel unit as losses mount

Thyssenkrupp faces pressure to fix steel unit as losses mount

FILE PHOTO: The logo of German steelmaker ThyssenKrupp AG is seen on an escalator at Frankfurt's main railways station in Frankfurt, Germany, January 23, 2020. REUTERS/Wolfgang Rattay

FRANKFURT/DUESSELDORF: Conglomerate Thyssenkrupp on Thursday said its steel unit faced operating losses of 1 billion euros (US$1.2 billion) this year, raising pressure on it to fix or sell the division.

Shares in Thyssenkrupp, which this year sold its elevator unit to a private equity consortium for 17.2 billion euros, fell by 16.2per cent on the news, with analysts pointing to the weak outlook.

The expected loss at Thyssenkrupp Steel Europe, the continent's No.2 player after ArcelorMittal , comes as the sector suffers from cheap Chinese imports, high raw material prices and weak automotive demand.

The group has outlined plans that could see the division sold, kept or combined with a peer, with India's Tata Steel , Sweden's SSAB and Germany's Salzgitter all considered potential partners.

Chief Financial Officer Klaus Keysberg would not be drawn on consolidation efforts, reiterating only that all options were open.

"No steelmaker is making a profit at the moment. But in terms of performance, we're certainly lagging the competition," he told journalists during a call, adding the company was in talks about additional job cuts.

The unit, which employs nearly 28,000, has annual personnel costs of 2 billion euros.

Thyssenkrupp said its fiscal third-quarter adjusted operating loss from continuing operations, which strips out the elevator operations, came in at 679 million euros, less than the up to 1 billion it had flagged in May.

"We have worked hard to keep our costs under control and secure liquidity," CEO Martina Merz said. "As a result we came through the crisis slightly better than initially feared in the third quarter overall."

The company said most businesses were stabilising or even improving in the quarter to September compared with the previous three months, suggesting it has passed the worst of the coronavirus crisis impact.

(Editing by Maria Sheahan, Jason Neely and Barbara Lewis)

Source: Reuters


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