Rusty recovery

24 November 2016 By Olaf Storbeck

The German engineer’s recovery is fizzling. Falling earnings reveal the weak case for combining elevators, car parts and submarines. CEO Heinrich Hiesinger wants to hive off steel but defends his eclectic collection of capital goods. It’s time for more radical ideas.

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ThyssenKrupp is targeting an operating profit adjusted for one-offs of 1.7 billion euros for the fiscal year ending September 2017, the German steel-to-elevators group said on Nov. 24 when publishing full-year results. The figure is below the average estimate of 1.89 billion euros from analysts polled by Reuters. It also falls short of the group’s long-term target of at least 2 billion euros, which it has said will be necessary to pay a meaningful dividend. ThyssenKrupp proposed an unchanged dividend of 0.15 euros per share for the year to September 2016.

Adjusted earnings before interest and tax fell 12 percent to 1.47 billion euros in the 12-month period, in line with the company's revised target. ThyssenKrupp blamed a slower than expected recovery in raw material prices as well as problems at its submarines-to-plant-engineering business. The division’s CEO resigned earlier this month - in the middle of a restructuring - after accepting a gift from a business partner.

Shares in ThyssenKrupp were up 0.8 percent to 22.14 euros at 1000 GMT.

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