Thyssenkrupp Says Elevator Sale Is Imminent as Losses Mount

(Bloomberg) --

Thyssenkrupp AG said it expects to make a decision on its elevator sale soon and released quarterly results that laid bare the company’s rapidly deteriorating finances.

Debt surged and losses deepened during the fiscal first quarter. The results show just how badly the German engineering conglomerate needs to orchestrate a sale of the elevator business, which could fetch more than 15 billion euros ($16.3 billion), and stave off a broader collapse.

“The latest figures are not great,” Chief Executive Officer Martina Merz said. “We are convinced that we are on the right track. A decision on the elevator transaction is imminent.”

Thyssenkrupp’s shares rose 1.1% by 9:59 a.m. in Frankfurt, rebounding from earlier losses and cutting the decline over the past year to 18%.

Once an emblem of German industrial prowess, Thyssenkrupp is fighting for survival. The company has been bruised by a slowdown in Chinese and German manufacturing, rising pension costs and falling demand for European steel.

It’s now entering the final stage of talks with suitors for its elevator unit, a division that’s still reaping rich profits. The supervisory board met on Wednesday to whittle the number of suitors down from four. A final decision on the buyer is expected later this month.

Worsening finances could complicate the decision-making process for the elevator sale. Some Thyssenkrupp executives and labor representatives are concerned a bid by Finland’s Kone Oyj would face a lengthy and complicated antitrust review, according to people familiar with the matter.

Kone and co-bidder CVC Capital Partners have offered around 17 billion euros for the unit, Bloomberg News reported in January.

The Kone consortium has been competing with three rival bidding groups led by Blackstone Group Inc., Advent International and Brookfield Asset Management Inc. Some private equity suitors have offered major Thyssenkrupp investors the chance to keep a minority stake in the elevator unit and have discussed plans to relist the business in Germany in a few years, the people said.

Financial Highlights

• Adjusted 1Q Ebit was 50 million euros, down from 217 million euros.
• EPS was a 60-cent loss versus 10-cent profit a year earlier.
• Net debt rose 52% to 7.1 billion euros in the three months ended December.
• In steel, adjusted Ebit was negative 164 million euros. The division was hit by rising iron ore prices and weak auto demand.
• Guidance for the year was maintained.

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