Germany’s Thyssenkrupp gave a modest earnings outlook and increased its dividend by less than expected yesterday, citing continued pressure on steel prices for its conservative stance after full-year results highlighted significant progress with its turnaround plan.
Thyssenkrupp, with 19th-century roots in German steel, has been transforming itself into a diversified industrial group, with three quarters of its sales now coming from capital goods such as elevators, car parts and components for energy plants.
The company earned more money than it spent in the year to September 30 for the first time in nine years, with free cash flow of €65mn ($69mn), and posted a better than expected 26% rise in adjusted operating profit.
But the group said it was worried about cheap imports, especially from China, continuing to depress steel prices and expects operating profit in the current quarter to be lower than in the same period last year.
Thyssenkrupp forecast EBIT in a wide range of €1.6bn to €1.9bn for the coming financial year, against €1.68bn in 2014/15. The forecast reflected confidence in the capital goods businesses but uncertainty over steel and other materials, it said, adding that sales should be flat on a comparable basis.
The proposed dividend of €0.15 per share, up from the token €0.11 it paid for 2013/14, was at the bottom end of analysts’ forecasts.
Thyssenkrupp has few levers in the short term to combat this other than cutting costs. It said that it made efficiency improvements of €1.1bn in 2014/15, beating its target of €850mn, mainly through consolidating purchasing.
The company announced a further €850mn efficiency programme for this fiscal year.