Thyssenkrupp steel unit aims to triple core profit in overhaul

Thyssenkrupp Steel Aims to Triple Core Profit Amid Major Overhaul

Thyssenkrupp Steel's Strategic Transformation and Financial Goals

By Christoph Steitz and Tom Käckenhoff

Profit Ambitions Driven by Overhaul Measures

FRANKFURT/DUESSELDORF, Sept 28 (Reuters) - Thyssenkrupp's steel division, Europe's second-largest steelmaker, aims to at least triple core profit over the coming years, it said on Monday, boosted by a mix of capacity and job cuts as well as higher trade barriers against cheap Asian steel.

Group Restructuring and Spin-off Plans

Parent group Thyssenkrupp is in the midst of turning itself into a holding firm and partially divesting all its businesses, including Thyssenkrupp Steel Europe, or TKSE, which is seen as a candidate for a spin-off sometime in 2027.

Recent Listings and Share Performance

The German car-parts-to-fertiliser-plant group has already separately listed its hydrogen and marine divisions, and plans to do the same with its materials trading business this autumn, a strategy that has lifted its shares near eight-year highs.

Mid-term Targets and Sale Preparation

The mid-term targets for TKSE, set out during a capital markets day, reflect efforts to also get the steel division ready for sale, ending years of unsuccessful attempts to sell or list the cyclical business.

Financial Projections and Margin Targets

TKSE's adjusted earnings before interest, tax, depreciation and amortisation are expected to rise to at least €1.2 billion ($1.4 billion) over the mid-term, up from around €400 million this year, it said.

It did not provide a firm target date by which that ambition would be met, saying the mid-term margin target would be more than 11%, compared with more than 4% in the current fiscal year that ends this week.

Market and Regulatory Tailwinds

"On the one hand, we have a very resilient, stable European steel demand. And on the other hand, we see some tailwind from the regulatory environment due to safeguards," TKSE CEO Marie Jaroni said.

Shares in Thyssenkrupp were up 2.1% by 1427 GMT.

Impact of Trade Barriers and Restructuring Efforts

Stricter Import Limits from Brussels

Brussels this year imposed stricter limits and quotas on steel imports from Asia, which have been a major problem for local steelmakers already burdened by high energy and labour costs.

Job Cuts and Capacity Reductions

This has provided tailwind to the sector, Jaroni said, adding to restructuring efforts that include the cutting or outsourcing of 11,000 jobs, or around 40% of TKSE's workforce, as well as reducing annual production capacity to 8.7 million to 9 million metric tons, from around 11 million.

Exchange Rate Information

($1 = 0.8800 euros)

Reporting Credits

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Thomas Seythal, Miranda Murray and Emelia Sithole-Matarise)