23 Jan 2012

No profit expected from overseas by steelmaker

1:59 pm on 23 January 2012

ThyssenKrupp AG, Germany's biggest steelmaker, announced on Friday that it won't see a profit from its new overseas operations this year.

Chief executive Heinrich Hiesinger told shareholders he did not expect positive revenues from plants in Brazil and the United States "in the foreseeable future."

While precise company figures will not be available before February, Mr Hiesinger said that first-quarter earnings before interest and tax would be "significantly lower compared with last year."

Last year, the company posted a net loss of 1.78 billion euros ($US2.29 billion), blaming weak markets in the US and Europe, and higher costs at a new plant in Brazil, operated by Steel Americas.

Deutsche Well Radio reports ThyssenKrupp is saddled with debts to the tune of 3.6 billion euros ($ 4.6 billion).

The company, which is active in steel, elevators, submarines and car parts, saw its credit rating lowered to junk bond status, BB+, last year.

Deutsche Well Radio also reports that the Steel Americas operations in Brazil has been dogged by cost overruns and start-up delays since it was built in 2007, accounting for a write-down worth 2.9 billion euros in 2011.

Mr Hiesinger reiterated a plan to divest from a stainless steel business in the United States by the end of 2012. The sale is part of a strategy to expand non-steel businesses and reduce debt.