Stainless Steel Me

German industrial conglomerate ThyssenKrupp forecast a loss in its fiscal second quarter on Thursday as the global economic downturn hits demand for capital goods like cars and ships.

Germany’s biggest steelmaker also announced it would combine its five core businesses into two divisions in a step that aims to save up to 500 million euros ($674.6 million) in annual costs.

“Provided the economic situation improves in the second half of the year as a result among other things of the economic stimulus programs introduced, ThyssenKrupp expects to report positive operating earnings — before project and restructuring costs — for the 2008/2009 fiscal year,” it said in a statement.

“Earnings will be significantly affected by project costs for the new steel plants, restructuring expenditure among other things for personnel measures, and write-downs.”

It expected only slightly positive underlying operating earnings in its fiscal first half after the second-quarter loss.

“The drastic slump in demand for carbon steel, stainless steel and in international materials distribution is having a severe impact on business at ThyssenKrupp,” it said, although it added its elevators business was holding up well.

It expected a big but unspecified hit from “severe” capacity underutilisation and more write-downs on inventories.

Its shares fell as much as 8.2 percent and were down 5.5 percent to 13.67 euros by 1045 GMT, the leading decliner among German blue chips .

Its reorganisation will combine the five segments steel, stainless, technologies, elevator and services into two divisions.

The steel, stainless and services segments will be combined in a new materials division. The technologies and elevator segments will be joined to form a new technologies division