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Thyssenkrupp Set to Suspend Dividend 

Thyssenkrupp Set to Suspend Dividend 

(Bloomberg) --

Thyssenkrupp AG plunged the most in a year after moving to suspend dividend payments as it warned losses would deepen, underscoring the challenges facing executives trying to chart a path out of crisis.

The German company will ask shareholders to approve suspending payments for the past fiscal year at a meeting in January and warned the financial situation may worsen as it restructures. Losses widened and debt surged in the year through September as a deteriorating economic environment compounded faltering performance at several units of the steel-to-submarines conglomerate.

The shares fell as much as 12%, and were down 10% by 9:51 a.m. in Frankfurt, taking this year’s decline to 19%.

“The performance of many of our businesses is not satisfying,” Chief Executive Officer Martina Merz said in a statement on Thursday, adding the company would press ahead with a sale or listing of its crown-jewel elevator unit and restructuring measures at other divisions.

Thyssenkrupp Set to Suspend Dividend 

Once a paragon of German engineering might, Thyssenkrupp is fighting for survival in the teeth of a factory sector slowdown. The company has said it would pursue a sale or listing of its elevator division in order to stabilize its worsening balance sheet. The unit, which is riding a global megatrend for urbanization, was again a glimmer of light in an earnings statement that showed the firm’s cash and debt position worsening.

Ingo Schachel, an analyst at Commerzbank AG, said the bank was “somewhat disappointed” by the outlook for 2020 as it implied “a notable increase of net debt and cash burn” in the first quarter.

“The strategy update appears to pull the right levers, but for today, market focus will probably rather be on the short-term outlook for 2020 as many of the strategic steps were already anticipated,” Schachel said by email.

Thyssenkrupp said its earnings performance for financial year 2019-20 was uncertain, but expected adjusted earnings before interest and taxes to be around this year’s level of 802 million euros ($890 million). The company also forecasts net losses will be significantly worse in this fiscal year due to restructuring costs.

“The expenses for the intensification of restructuring will result in a significantly higher net loss for the year than in the previous year,” Thyssenkrupp said in the statement.

Financial highlights:
  • Adjusted Ebit for fiscal 2018/2019 of 802 million euros ($888 million), in line with August guidance
  • Revenue increased 1.1% to 42 billion euros, beating the average estimate for 41.6 billion euros
  • Net loss widened to 260 million euros from 12 million euros
  • Net debt rose 57% to 3.7 billion euros

Thyssenkrupp said it expected binding offers for the elevator unit in the next year. The company also said it has already received indicative offers from strategic and financial investors, and preparations for a possible initial public offering would be completed by the end of this year.

The company said it would slash 640 jobs at its systems-engineering unit. It also hinted it would speed up plans to sell other businesses, and said it has earmarked a “mid triple-digit million” euro amount for pending restructuring measures in the current fiscal year.

Thyssenkrupp reiterated it was prioritizing addressing challenges in its steel unit, with the aim of giving it “a long-term perspective,” and said an advisory group would present a plan to executives next month.

--With assistance from Joe Richter, Richard Weiss and Nicholas Larkin.

To contact the reporter on this story: William Wilkes in Frankfurt at wwilkes1@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Nicholas Larkin, Dylan Griffiths

©2019 Bloomberg L.P.