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MarketScreener Homepage  >  Equities  >  Xetra  >  Salzgitter AG    SZG   DE0006202005

SALZGITTER AG

(SZG)
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Steel becomes new problem child as Thyssenkrupp posts profit drop

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02/13/2020 | 02:35am EST
FILE PHOTO: German steelmaker Thyssenkrupp AG annual shareholders meeting in Bochum, Germany

FRANKFURT/DUESSELDORF, Germany (Reuters) - Thyssenkrupp's steel division swung to a loss in the first quarter, raising doubts over Europe's second-biggest steelmaker, the conglomerate's core following its planned sale of its elevator business.

By Christoph Steitz and Tom Käckenhoff

Imports from China and weak demand from the car industry have pummeled steelmakers across the continent, including German rival Salzgitter and the local division of India's Tata Steel.

Thyssenkrupp's loss highlights the challenges it will face in revamping the business, which, along with materials trading, will be the backbone of Thyssenkrupp once the sale of its elevator business is decided at the end of the month.

"The latest figures are not great. But we are convinced that we are on the right track," CEO Martina Merz said in a statement.

Restructuring efforts at the steel division, including 2,000 job cuts, are currently under way.

The division posted an adjusted operating loss of 164 million euros in the first quarter versus a profit of 38 million a year earlier, blaming a "significant drop in demand from the auto industry".

Shares in the group were indicated 1.7% lower in pre-market trade.

Pressured by a sector-wide shift toward electric cars, the auto industry has been hit by a raft of profit warnings, with suppliers, including Thyssenkrupp, hit as a result. The auto industry is Thyssenkrupp single biggest client group.

Cash from a sale of the elevator business, which is valued at 16-17 billion euros, will therefore be much needed.

The company's net debt stood at 7.14 billion euros, nearly doubling quarter on quarter reflecting adjusted accounting of lease liabilities under the IFRS accounting standard.

Merz said a decision on the elevator deal was imminent.

The group's equity ratio fell to 5.4% from 6.1% for the 2018/19 financial year, indicating that virtually all of the group's assets are backed by debt.

(Editing by Thomas Escritt and Jason Neely)

By Christoph Steitz and Tom Käckenhoff

Stocks treated in this article : Salzgitter AG, thyssenKrupp AG, Tata Steel Ltd
Stocks mentioned in the article
ChangeLast1st jan.
SALZGITTER AG 1.34% 16.26 Delayed Quote.-17.71%
TATA STEEL LTD 5.14% 475.3 End-of-day quote.0.54%
THYSSENKRUPP AG 0.37% 9.842 Delayed Quote.-18.26%
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Financials (EUR)
Sales 2019 8 792 M
EBIT 2019 132 M
Net income 2019 -134 M
Debt 2019 609 M
Yield 2019 2,52%
P/E ratio 2019 -6,70x
P/E ratio 2020 12,4x
EV / Sales2019 0,17x
EV / Sales2020 0,17x
Capitalization 879 M
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Mean consensus HOLD
Number of Analysts 15
Average target price 17,57  €
Last Close Price 16,26  €
Spread / Highest target 103%
Spread / Average Target 8,08%
Spread / Lowest Target -23,1%
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Managers
NameTitle
Heinz Jörg Fuhrmann Chairman-Executive Board & Chief Executive Officer
Heinz-Gerhard Wente Chairman-Supervisory Board
Burkhard Becker Chief Financial Officer
Uwe Kruse Chief Information Officer
Hasan Cakir Member-Supervisory Board
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