ThyssenKrupp, Germany's biggest steel maker, swung to a surprise 357 million euro ($471.8 million) operating loss in the last quarter of 2011 as weak demand from customers rattled by Europe's debt crisis hit prices, Reuters reports. The group, which last month agreed to sell its struggling stainless steel unit, said on Tuesday it was unable to give a reliable forecast for its financial year that ends in September due to the uncertain economic outlook.
Its comments echoed those made by rivals such as world No. 1 Arcelor Mittal, No. 3 Posco and Tata Steel . All three have struggled with profitability, missed quarterly forecasts and cited Europe as a concern.
ThyssenKrupp said it saw "encouraging signs on the price and volume side," for its materials division, which includes its key flat carbon steel business in Europe and America that sells to the construction, automotive and machine engineering sectors.
The German Steel Federation said last week that steelmakers might see new orders picking up in coming months because demand from Germany remained intact while distributors would likely re-stock to replenish low inventories.
But it said there were huge economic risks posed by Europe's debt crisis, which soured sentiment and triggered cuts in capital investments.
The company's 357 million euro loss for the three months to the end of December compares with a profit of 273 million a year earlier and a forecast 92 million profit. Excluding Inoxum, the stainless steel unit it is selling to Finland's Outokumpu , the operating loss was 33 million euros.
Steel Europe, which makes premium flat carbon steel, saw profit declining by 60 percent to 2.5 billion euros.
Two writedowns, including Inoxum, and a loss at Steel Americas, the division that operates Thyssen's new plants in Brazil and the U.S. state of Alabama, contributed to the overall operating loss.
ThyssenKrupp declined to say how much its prices fell in the quarter.
The price of hot rolled coil (HRC), a benchmark product used in shipbuilding, transport, construction and energy piplines, was down 10 percent on the quarter at the end of last year in Northern Europe, an analyst said.
The worse-than-expected result sent ThyssenKrupp shares down 3 percent to 21.2 euros by 1138 GMT.
LOSS IN AMERICAS
Steel Americas has been ThyssenKrupp's problem child, hit by delays in boosting mill use at the plant in Brazil due to faulty equipment, higher input costs and dust particle emissions.
The division racked up a quarterly loss of 228 million euros. ThyssenKrupp said it would remain in the red this year, though the loss should narrow quarter-on-quarter as Brazil fixes its technical problems and U.S. output expands as carmakers gradually reduce trial orders in favour of larger quantities, boosting mill use and lowering costs.
Thyssen indicated a window of recovery in the quarter to March, reflecting a pick-up in demand in the U.S. and Europe as steel prices in the spot market and short-term contracts rose.
UK steel consultant MEPS forecast last week global average steel prices rising by around 11.5 percent by the middle of this year, with North America leading the recovery while prospects of higher raw material costs pushing up values in Asia and Europe.
ThyssenKrupp booked a 265 million euro writedown in connection with the carve-out of its Inoxum stainless steel business.
It also booked a writedown of 116 million euros, the bulk of which was for civilian shipbuilding assets the company sold last year as part of efforts to whittle down its to non-core activities and raise money to reduce debts.
Profit at the technologies division, which makes submarines, industrial plants, elevators and automotive components, helped mitigate the downswing in the steel businesses.
Its comments echoed those made by rivals such as world No. 1 Arcelor Mittal, No. 3 Posco and Tata Steel . All three have struggled with profitability, missed quarterly forecasts and cited Europe as a concern.
ThyssenKrupp said it saw "encouraging signs on the price and volume side," for its materials division, which includes its key flat carbon steel business in Europe and America that sells to the construction, automotive and machine engineering sectors.
The German Steel Federation said last week that steelmakers might see new orders picking up in coming months because demand from Germany remained intact while distributors would likely re-stock to replenish low inventories.
But it said there were huge economic risks posed by Europe's debt crisis, which soured sentiment and triggered cuts in capital investments.
The company's 357 million euro loss for the three months to the end of December compares with a profit of 273 million a year earlier and a forecast 92 million profit. Excluding Inoxum, the stainless steel unit it is selling to Finland's Outokumpu , the operating loss was 33 million euros.
Steel Europe, which makes premium flat carbon steel, saw profit declining by 60 percent to 2.5 billion euros.
Two writedowns, including Inoxum, and a loss at Steel Americas, the division that operates Thyssen's new plants in Brazil and the U.S. state of Alabama, contributed to the overall operating loss.
ThyssenKrupp declined to say how much its prices fell in the quarter.
The price of hot rolled coil (HRC), a benchmark product used in shipbuilding, transport, construction and energy piplines, was down 10 percent on the quarter at the end of last year in Northern Europe, an analyst said.
The worse-than-expected result sent ThyssenKrupp shares down 3 percent to 21.2 euros by 1138 GMT.
LOSS IN AMERICAS
Steel Americas has been ThyssenKrupp's problem child, hit by delays in boosting mill use at the plant in Brazil due to faulty equipment, higher input costs and dust particle emissions.
The division racked up a quarterly loss of 228 million euros. ThyssenKrupp said it would remain in the red this year, though the loss should narrow quarter-on-quarter as Brazil fixes its technical problems and U.S. output expands as carmakers gradually reduce trial orders in favour of larger quantities, boosting mill use and lowering costs.
Thyssen indicated a window of recovery in the quarter to March, reflecting a pick-up in demand in the U.S. and Europe as steel prices in the spot market and short-term contracts rose.
UK steel consultant MEPS forecast last week global average steel prices rising by around 11.5 percent by the middle of this year, with North America leading the recovery while prospects of higher raw material costs pushing up values in Asia and Europe.
ThyssenKrupp booked a 265 million euro writedown in connection with the carve-out of its Inoxum stainless steel business.
It also booked a writedown of 116 million euros, the bulk of which was for civilian shipbuilding assets the company sold last year as part of efforts to whittle down its to non-core activities and raise money to reduce debts.
Profit at the technologies division, which makes submarines, industrial plants, elevators and automotive components, helped mitigate the downswing in the steel businesses.