Stainless Steel Me

Germany’s largest steelmaker ThyssenKrupp downgraded its fiscal 2009 forecast after swinging to a worse-than-expected pretax loss in the second quarter due to pricing pressure and inventory writedowns.

“The negative surprise was the outlook. They are telling us now that it would post a triple-digit million euro pretax loss before one-offs,” according to Commerzbank analyst Dirk Nettling.

“The market consensus had been for a small profit of around 100 million euros ($136.3 million) based on their previous guidance. Now, the guidance means at least a 500 million euro pretax loss,” he added.

ThyssenKrupp said a “loss before taxes and major nonrecurring items in the mid to high three-digit-million euro range is expected” in the year to September 2009.

The company had said in March it expected “positive operating earnings before project and restructuring costs”, but analysts had been sceptical about this outlook because it was based on the assumption the economy would improve in the second-half of this year.

The company said on Tuesday it swung to a pretax loss of 455 million euros in the three months to the end of March compared with a profit of 742 million euros a year ago.

A Reuters poll of analysts had predicted on average a pretax loss of 401 million euros including restructuring and other one-offs.

Nettling said however that if one-offs were excluded, the pretax loss was only 282 million euros. “The one-offs were larger than expected,” he added.

The company said it expected a significant drop in new orders and sales for the fiscal year to September 2009, adding that falling raw material prices would only partly offset this slump.

Global steel demand and prices have tumbled after hitting a peak middle of last year, with customers in the car and construction industries slashing output.

Steelmakers in Germany — Europe’s largest steelmaking nation and the No. 7 in the world — have responded by cutting production by 43 percent between January and April and shutting down six of the country’s 15 blast furnaces.

Reuters