Thyssen sees lower profit

August 28, 2001 Posted: 0823 GMT

LONDON (CNN) -- Steelmaker ThyssenKrupp warned its annual earnings would be lower than last year, as it posted an 8.3 percent drop in third-quarter profit.

Pretax profit at Germany's biggest steel producer fell to 374 million ($340 million) in the three months to June 30 from 408 million a year earlier. Analysts polled by Reuters expected between 363 and 430 million.

The pretax figure included a 330 million gain from the sale of its Brazilian iron ore unit Ferteco Mineracao to Companhia Vale do Rio Doce. Excluding that sale, pretax profit fell to 44 million.

Net profit rose 32 percent to 270 million, or 0.52 as share, as the company benefited from a lower taxation burden.

"Owing to the weak economic conditions we will be unable to repeat last year's pretax earnings," said the company, the world's fourth-largest maker of flat carbon steel. But it said that because of non-recurring changes in its tax bill, net income would exceed the result for 1999-2000.

The Duesseldorf-based steel and engineering company, formed by the 1999 merger of Thyssen and Fried. Krupp AG Hoesch-Krupp, has been under pressure from falling steel prices that have hit 20-year lows due to overcapacity.

The company had aimed to maintain pretax profit at the same level as last year.

ThyssenKrupp warned it does not expect a recovery it its business before the second quarter of calendar 2002.

Third-quarter sales fell 2 percent to 9.6 billion, while order intake slipped 7 percent to 9.4 billion.

The company said the "forces driving economic growth have weakened significantly. In the USA the long period of expansion has come to an end. The Japanese economy is stagnating ... euro zone economic activity also slowed."

ThyssenKrupp expects the value of the world steel market in 2001 to match last year's level in 2001, adding that the whittling away of existing steel stocks that is already under way would provide greater scope for supplies.

Pretax profit at the automotive parts units more than halved to 44 million.

"With automobile production down sharply, there will be no impetus for world vehicle market growth in the near future," ThyssenKrupp said.

Shares in ThyssenKrupp (FTKA) slipped a quarter of a percent to 15.06 in early Frankfurt trading.

Note: Search results will open in a new browser window