By Nathan Allen
Thyssenkrupp AG (TKA.XE) trades sharply lower Friday morning after the company issued its second profit warning since July, citing the need to book provisions against the outcome of an investigation into alleged cartel activity.
The steel and technology group cut its 2018 net profit forecast to 0.1 billion euros ($114.1 million) from a previous estimate that net income would be "significantly better" than the prior year's result of EUR271 million.
Thyssenkrupp also lowered its outlook for adjusted earnings before interest and taxes to EUR1.6 billion from its earlier projection of EUR1.8 billion.
0837 GMT Thyssenkrupp was trading 7.8% lower at EUR17.57
The company had already disclosed it was the subject of an investigation into alleged cartel activity relating to the pricing of heavy plate and flat carbon steel products, but hadn't warned of any financial fallout.
On Thursday the group said it had decided to take out risk provisions due to new developments in the investigation process.
"This news is clearly negative for TKA but does not come as a complete surprise following cautious recent commentary," Jefferies analyst Seth Rosenfeld said.
Thyssenkrupp also said unspecified quality issues at its automotive and industrial components business, lower-than-expected earnings at its elevator unit and shipping restrictions at its steel business contributed to the guidance cut.
Mr. Rosenfeld said production and shipping issues with the steel business, due to low water levels on the River Rhine and reduced automotive demand, likely accounted for more than half of the hit.
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