FRANKFURT: ThyssenKrupp AG, Germany's biggest steelmaker, stuck to profit goals as robust demand from its home turf and emerging markets outweigh rising losses at its new U.S. and Brazilian plants.
The group said on Friday net profit in the three months to end-December, its first quarter, nearly halved to 101 million euros ($138 million), hit by start-up costs at its Steel Americas unit.
"We are seeing a pleasing economic recovery with a very dynamic price and volume development in materials and components businesses," ThyssenKrupp Chief Executive Heinrich Hiesinger said.
The economic boom in the euro zone's biggest economy allowed ThyssenKrupp to operate European factories at nearly 100 percent capacity late last year, helping it avoid a margin squeeze that has hit rivals exposed to the still weaker construction sector.
Global No. 1, ArcelorMittal, whose furnaces ran 69 percent of capacity at the end of 2010, forecast a rebound in demand at the start of 2011 and said there were signs U.S. construction was turning a corner.
ThyssenKrupp said Steel Americas would likely post an operating loss in the high three-digit million euro range for its year to end-September. The previous outlook was for a "middle" range figure.
ThyssenKrupp, which released key quarterly figures on Jan. 21, stuck to its outlook for adjusted earnings before interest and taxes (EBIT) to improve by about two thirds to around 2 billion euros in 2010/11.
The plants at the newly created Steel Americas business unit will give ThyssenKrupp a strategic foothold in the NAFTA region just when automotive and non-residential construction sectors are picking up in the United States.
ThyssenKrupp's plant in the state of Rio de Janeiro, Brazil, started ramping-up production of steel slabs last year but it had emitted dust particles into the air, prompting Brazil in December to cap output to 70 percent of capacity.
It aims to make 5 million tonnes of steel slabs annually which will be shipped to Europe and two new U.S. plants to produce steel plates, strips and bars, among others
Analysts said the environmental problems in Brazil and other technical glitches could have prompted the company to increase its estimated loss for Steel Americas, though sharply rising coking coal prices were likely putting pressure as well.
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