Thyssenkrupp annual profit plunges 78%
FRANKFURT: German industrial conglomerate Thyssenkrupp AG reported a sharp fall in annual profit yesterday after months of boardroom turmoil and a cartel probe, as it prepares to tackle a massive restructuring.
The group reported net profit of €60 million ($68.4 million) for its 2017-18 financial year to September, down 78% after taking into account the sell-off of its Americas steel business.
Sales at Thyssenkrupp, which makes products from steel to submarines, elevators and car parts, rose 3.0% to €42.7 billion.
“This will be a year of rebuilding for Thyssenkrupp, so welcome to our big building site,” chief executive Guido Kerkhoff said as he opened a press conference at its Essen headquarters.
“Every construction project begins with taking stock of the situation and ours is extremely complex,” he added.
With German authorities investigating possible collusion between firms on prices for certain types of steel, Thyssenkrupp said it had set aside “a provision for antitrust risks” that impacted on its bottom line.
It did not reveal the amount, but said there was a “more than 50%” chance it would be slapped with a fine.
Meanwhile on the operational side, the industrial plant making division suffered from higher-than-expected costs on some contracts and made a €255-million operating loss.
Higher raw materials costs also weighed on the annual result as the low level of the Rhine River following a hot and dry summer in Germany slowed deliveries.
Meanwhile, the group finally agreed in September to a split into two separate groups — “Industry” and “Materials” — long demanded by activist shareholders who in summer drove out both the chairman and chief executive.
While the initial division will entail costs of more than €500 million, executives expect a pay-off in the shape of “a positive impact on equity and the balance sheet” once the move is completed by late next year.
Additionally, the merger of Thyssenkrupp’s
European steel business with India’s Tata Steel Ltd is expected to help the group stem the challenge from a flood of cheap Chinese steel.
The European Commission is carrying out an in-depth probe into the tie-up.