ThyssenKrupp Says Fiscal 2007 Earnings Were Record
Oct. 7 (Bloomberg) -- ThyssenKrupp AG, Germany's largest steelmaker, expects to report its ``best'' full-year results as demand grows for carbon steel, Chief Executive Officer Ekkehard Schulz said.
Profit before tax and one-time items for the fiscal year ended Sept. 30 was about 3.6 billion euros ($5.1 billion) and sales totaled more than 50 billion euros, Schulz said today at a press conference in Berlin. The Dusseldorf-based company expects full-year sales to climb to about 60 billion euros by 2010.
ThyssenKrupp increased prices for flat steel this year as economic growth in Germany and across Europe boosted demand for housing and industrial goods. The company's technologies unit, which makes submarines, bearings and vehicle bodies, added to earnings as orders for products including military ships drove sales.
``The cycle is at a peak, but it will also stay on a very high level,'' Schulz said today in an interview. ``We expect steel demand in the coming year to be high and expect to be able to pass on higher raw material costs.''
Shares of ThyssenKrupp have gained 26 percent so far this year, lagging a 39 percent advance by the nine-member Bloomberg Europe Steel Index. The company has a market value of 23.2 billion euros.
ThyssenKrupp's third-quarter pretax profit climbed 51 percent to 1.22 billion euros, beating the median analyst estimate of 1.03 billion euros. The company is scheduled to report fiscal fourth-quarter results on Dec. 4.
Longest Expansion
Demand for steel is set for its longest expansion, driven by China and other emerging markets, Schulz said. Steel sales may also be supported since the metal can be recycled easily, he said.
``The German steel industry is profiting from the extraordinarily good business climate in the sectors that use steel,'' said Dieter Ameling, head of the German Steel Association. ``The foundation is in place for a continued steel boom.''
ThyssenKrupp has benefited from large contracts including a German order in June for four naval frigates. The Class F-125 vessels are scheduled for delivery in the middle of the next decade.
This year will be a ``transition year'' for the company's stainless-steel business, Juergen Fechter, head of ThyssenKrupp's stainless unit said at the press conference. Orders are rebounding after sinking earlier this year, he said.
They have ``passed the low point,'' Fechter said. ``Order intake in August and September was already better than it was in July; nevertheless, we have the situation that our customers remain insecure.''
Nickel Prices
Stainless-steel prices in Europe dropped 42 percent in the 12 months ended Sept. 30, according to data compiled by Metal Bulletin. Traders and service centers built inventories in 2006 and have since reduced orders, ThyssenKrupp said in August. Increased output from local producers in Asia reduced stainless- steel selling prices there.
ThyssenKrupp has taken steps to address the increased costs of stainless steel alloying ingredients including nickel. Starting November, the company will calculate alloy surcharges based on average alloy prices in the 30 days before the 20th day of the previous month, rather than using average prices over the previous several months.
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