German steel and engineering giant Thyssenkrupp has said that the much-anticipated spinning-off of its troubled steelmaking arm will not take place until Spring 2022 at the earliest, banking on rising global demand having a "positive effect on earnings" at the business.
Blast furnaces 8 and 9 at Thyssenkrupp Steel site in Duisburg Hamborn. Photo: Thyssenkrupp Steel Europe
Blast furnaces 8 and 9 at Thyssenkrupp Steel site in Duisburg Hamborn, Germany. Photo: Thyssenkrupp Steel Europe
The steelworks future has been unclear since 2019 when a proposed merger with India's Tata Steel was blocked on antitrust grounds by Brussels. In February, a takeover attempt by Liberty Steel's Sanjeev Gupta failed when the company was unable to raise enough capital.
The steel sector, in general, has been thrown a lifeline by the rise in demand for commodities over the past few months. European steelmakers are also seeing the benefits of a fall in the production of cheaper steel in China, after years of struggling to compete.
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Thyssenkrupp has been weighing up an independent listing for its steelmaking arm, which is based in Germany's industrial heartland, the Ruhr valley, and employs 26,000 people.
In the three months leading to the end of July, the units sales were €2.4 billion, up considerably from the €1.4 billion during the same period in 2020. This was caused largely by the bounce back in car sales. The automotive sector is Thyssenkrupp's largest customer.
Nonetheless, profits did not rise as much as some of the company's European competitors.
Klaus Keysberg, Thyssenkrupp's CFO said: "Our long-term contract structures mean there is a delay in increased raw material and steel prices feeding through to our revenues and earnings."
He also said that some steel production had been hampered because of the relining of a blast furnace.
The company still has confidence in the benefits of a possible spin-off, with Keysberg saying that "a pure, independent steel company will have more opportunities to develop in a sustainable way."
He also said that a decision such as the spinning-off of such magnitude "needs planning certainty, with regard to political support and in terms of the regulatory framework, infrastructure and financing."
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Yesterday, the company reported better quarterly results than was expected. Pre-tax profits had risen to €223 million compared with a loss of €574 million for the same period last year.
Thyssenkrupp says it had expected an overall adjusted profit in the "three-digit million euro range" for the fiscal year, which would see an end to three consecutive lossmaking years for the group.
The company, which has divisions ranging from shipbuilding to industrial components, sold off its much-celebrated lift and escalators business in 2020 for €17.2 billion.
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