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The dead live longer - Thyssen can make money with steel

Düsseldorf / Frankfurt (Reuters) - Despite a significant recovery, Thyssenkrupp is still considering separating from its steel division.

“We are currently carefully examining the offer from Liberty Steel and are in intensive exchange on a number of questions,” said CFO Klaus Keysberg on Wednesday when he presented the balance sheet for the first quarter of his fiscal year. There is still a need for clarification with the purchase offer. In addition, the options remained to further develop the steel division within the group or to split it off as part of a spin-off. He was convinced that the steel division could also create value on its own, said Keysberg in a conference call with analysts. After a proforma loss of 820 million euros in the previous financial year, Steel Europe posted an operating profit of 20 million euros in the quarter - a ray of hope for the battered division. The entire group raised its forecast - for the first time since May 2017.

The steel business had previously brought the group billions in profits. Overcapacities, bad investments in America, cheap imports from the Far East and ever stricter climate protection regulations made the shine pale. In addition, the demand came to its knees due to the corona crisis. But now the mood in heavy industry is improving. Demand from the automotive industry - the Group's most important customer - is picking up. The construction industry and household appliance manufacturers are also ordering more. Customers fill their warehouses and prices go up. This ensures cautious optimism in the industry: The German number two Salzgitter is expecting a return to profitability in the new year. The European steel association Eurofer announced on Wednesday that it expected steel consumption in the EU and Great Britain to decline by 13 percent in 2020, but growth of 13.3 percent for the current year.

“Steel is the future” is a slogan of the steel cookers in Duisburg, who use it to describe their own wishes as well as those of politics, according to which steel forges should produce in a climate-friendly manner. For months, however, the 27,000 steel mills at Thyssenkrupp Steel Europe have not known where they are going. The intention is to make a directional decision in March, ”said Keysberg on the future of the steel business. According to insiders, the board of directors will meet on March 12th. Before that, Liberty has to make a binding offer to buy.

THYSSEN INVESTS IN STEEL LOCATIONS

Keysberg pointed out that the group also benefited from restructuring and cost reductions. There must be a robust business plan for steel. The group initiated investments of more than 700 million euros for the division. This is intended to modernize the Duisburg and Bochum locations. However, steel boss Bernhard Osburg made it clear that the staff had to be cut further. An agreement has already been reached with the employee representatives to cut 3,000 jobs. The consequences of Corona would burden for years, emphasized Osburg. "It must be clear to all those involved that we must therefore also talk about further personnel and cost measures if we do not want to jeopardize what has been achieved and what has been agreed."

Steel works council chief Tekin Nasikkol welcomed investments. In this way, the AG is fulfilling part of its commitments from the “future collective agreement”. He demanded complete transparency from the board of directors for further plans. “For months we have been wondering where the journey for steel is going. Ms. Merz has announced a decision on the future of the steel sector for March. Against this background, the announcement of further restructuring creates even more uncertainties. "

Not only did the steel division perform better, other areas too, such as the auto parts business, which more than doubled its quarterly result to 109 million euros. Overall, the group posted an operating result adjusted for special effects of 78 million euros in its continued business. In the same period last year there was a loss of 185 million euros on the books. Thyssenkrupp is now confident that the bottom line is that the loss for the year as a whole will not add up to more than one billion euros, as previously expected, but will be in the high three-digit million range. Operationally, in the end, there could be an almost balanced result on the books. “When was that last?” Said a trader. The share rose almost eight percent.

“We are currently feeling signs of an economic recovery and our measures to improve performance in the shops are bearing their first fruits,” explained CEO Martina Merz. Despite the black numbers, the company is still not over the mountain. Further efforts are necessary. "That is why we are continuing to accelerate the renovation."