Thyssen warns of unstable markets

ThyssenKrupp's steel plant in Duisberg, Germany

FRANKFURT, Germany -- ThyssenKrupp, the German steel and engineering group, said on Thursday it would miss its full-year profit target as restructuring costs cut into its earnings.

ThyssenKrupp (FTKA) posted pretax profit of 96 million euros ($88.97 million) in the second quarter, compared with 159 million euros a year earlier. Sales totalled 9.015 billion euros for the quarter.

Analysts polled by Reuters has forecast an average pretax profit of 70 million euros and sales of 8.6 billion euros.

Despite the better than expected profit in the second quarter, the company said it would not meet its earnings target of 500 million euros for the full fiscal year, which ends on September 30, because of ongoing instability in its main automotive and construction markets.

ThyssenKrupp said the weaker profit outlook was also due to restructuring efforts, mainly at its automotive unit, which are expected to cost more than 100 million euros in the second half of the year.

"Although there are signs of economic recovery, the situation on many markets remain very unstable," it said in a statement. "We will counter the continued pressure on margins by stepping up our restructuring efforts in order to improve the quality of earnings."

Steel companies have been hit hard by overcapacity, cheaper imports and sliding demand for car parts in the U.S., the world's biggest economy.

Thyssen shares, which have outperformed Germany's blue-chip DAX index by about 10 percent since the start of the year, were down 0.1 percent to 17.15 euros in midday Frankfurt trading on Thursday.