ThyssenKrupp said that it is seeing keen interest from potential investors in its US and Brazilian mills, raising hopes of a deal to cut its exposure to loss-making assets and help it cope in a worsening steel market.
"The outlook for its steel businesses is very weak. The market is focusing on the divestment of Steel Americas and debt issues," said Equinet analyst Mr Stefan Freudenreich, referring to hopes that asset sales in Brazil and the United States could reduce ThyssenKrupp’s debt burden.
Steelmakers worldwide are facing plummeting demand in Europe as a sovereign debt crisis drags on and weakening demand in China, the world’s biggest steel consumer, which has laid bare overcapacity in the industry and pressured prices.
ThyssenKrupp said that "Against the background of the overall economic situation the short to medium term prospects for the steel markets have darkened further. Global finished steel demand is expected to grow by only 3% in 2012."
Earlier this week, German steel distributor Kloeckner & Co warned its 2012 profits were likely to fall short of expectations, while steelmaker Salzgitter issued a profit warning in May 2012.
ThyssenKrupp plunged to a net loss in 2011, hit by the cost of expansion in Brazil and the United States, which has backfired amid weakening demand and rising material prices.
The group is now slimming down to cut debt and focuses on its European heartlands and, having sold its stainless steel division and its super yachts business, is looking at selling other assets including Brazilian and US mills.
ThyssenKrupp said that "We are seeing keen market interest and are holding talks with potential investors." It said in May 2012 that it would offer its Brazilian plant to partner Vale and talk to possible partners in Asia.
ThyssenKrupp also said that it was in advanced talks to sell its Construction Group business, and was looking at selling Italian unit Berco, which makes undercarriage parts for heavy equipment machinery, boosting hopes of further deals to reduce its borrowings. Net financial debt fell to EUR 5.8 billion at June 30th 2012, down from EUR 6.38 billion at March 31st 2012.
Source - Reuters
(www.steelguru.com)
