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ThyssenKrupp books huge stainless steel hit

German industrial giant ThyssenKrupp said Friday it booked heavy losses in its business year just ended owing to massive €2.9 billion ($3.9 billion) in writedowns on its US and stainless steel businesses.

ThyssenKrupp books huge stainless steel hit
Photo:DPA

ThyssenKrupp said in a statement it booked bottom-line net loss of €1.783 billion in the 12 months to September compared with profit of €927 million a year earlier, on a 15 percent rise in sales to €49.09.

The group — the world’s fourteenth biggest steelmaker and also a leading manufacturer of elevators, submarines and car parts — explained that it had decided to write down €2.9 billion on its US and stainless steel businesses because book values of those assets were “no longer in line with market conditions.”

There had been cost overruns on the construction of a plant in Brazil, which could not be offset in the near term and there was renewed weakness of the markets in the US and Europe, “which is hampering market entry for the products of the Steel Americas business area,” it said.

“The current environment is not easy,” said chief executive Heinrich Hiesinger, who took the reins of ThyssenKrupp at the beginning of the year. But “writedowns show that we’re doing everything necessary,” he said.

ThyssenKrupp shares were among the biggest losers on the Frankfurt stock exchange on Friday, showing a loss of nearly 2.0 percent in a generally firmer market, despite the announcement that the group intended to pay a stable dividend of €0.45 per share for the 2010/2011 financial year.

AFP/jcw

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STEEL

German steel giant rejects ‘high cost’ state support

German industrial giant Thyssenkrupp on Friday rejected state participation to support it during the pandemic, an option favoured by unions but judged too costly by management.

German steel giant rejects 'high cost' state support
Thyssenkrupp's offices in Duisberg. Photo: Ina Fassbender / dpa / AFP
“State participation off the table,” Klaus Keysberg, the group's financial director, told the German daily Rheinische Post on Friday.
   
Keysberg blamed “high costs” in the long term of government assistance, “due to the interest payments and the terms of repayment.”
   
Already weakened by years of cut-price competition from China in the steel industry, Thyssenkrupp has further struggled with the effects of the pandemic that caused business activity to plunge.
   
The company said in mid-November it would cut an additional 5,000 jobs as part of its restructuring plan, bringing the total to nearly 11,000, to be spread out over several years.
 
   
Thyssenkrupp chief executive Martina Merz has not ruled out state assistance.
   
The powerful IG Metall union had organised rallies in October to demand a rescue plan from Berlin.
   
But the government was never enthusiastic, despite their acquisition of stakes in the airline Lufthansa and tour operator TUI, which also had business ravaged by Covid-19.
   
“I don't believe that nationalisation is the right response at the moment,” Germany's Economy Minister Peter Altmaier said in October on Thyssenkrupp.   
 
But national and regional governments favour more traditional aid structures, such as subsidies, or moves to convert to production of so-called green steel.
   
Discussions will continue to find alternatives.
   
A takeover of Thyssenkrupp's steel activities is still on the cards. British steel giant Liberty, founded by industrialist Sanjeev Gupta, launched a takeover bid in October.
   
Discussions are also underway with Sweden's SSAB and India's Tata Steel.
   
An alliance with fellow German steelmaker Salzgitter to create a national steel champion is also being considered. But these options won't be decided until “spring 2021”, Thyssenkrupp said.
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