New Report Preview

ThyssenKrupp (TKA) reported MarQ adjusted EBIT of €134m, below the Street’s €171.6m, but a 61% improvement sequentially and 69% above the year-ago quarter. Increased profits in the Components Technology and Marine Systems businesses offset lower earnings in the Elevator and Plant Technology units, while the steel business saw increased volume but severe price pressure.

Guidance for fiscal 2012 was for EBIT to be in the mid-three-digit-euro range, which would represent a modest improvement in 2H (JunQ and SepQ) compared with 1H (DecQ and MarQ). Earnings in the Steel Europe business should approximate those of 1H, while the Steel Americas unit will see continuing price pressure, the company said.

In the US, management said operations at the Alabama rolling mill continue to improve, with volumes increasing 25% to 777,000 tonnes in 1Q from 622,000 tonnes in 4Q; sales were 154% higher than year-ago levels.  However, Thyssen said they have had to offer discounts to enter markets and had excess inventory that was sold at higher-than-originally expected discounts.

Our full report is available to subscribers only and provides further thoughts on Thyssen’s MarQ conference call, as well as our views on the potential sale of Thyssen’s plants in the US and Brazil, our opinion of the stock and the implication for other steel equities.

For a free trial subscription, please contact us.