Thyssenkrupp faces pressure to fix steel unit as losses mount

[FRANKFURT] Struggling conglomerate Thyssenkrupp on Thursday said its steel unit would rack up one billion euros (S$1.62 billion) in operating losses this year, raising pressure to fix or sell the division.

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

In fiscal 2018/19, Steel Europe generated a small profit of 31 million euros.

Shares in Thyssenkrupp, which this year sold its elevator division to a private equity consortium for 17.2 billion euros, were indicated to open 5.7 per cent lower in pre-market trade.

The group 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 one billion it had flagged in May.

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"We have worked hard to keep our costs under control and secure liquidity," chief executive officer 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 reached the trough of the coronavirus crisis.

REUTERS