ThyssenKrupp Moves to the Americas with $11 Billion of New Steel Mills

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading industrial manufacturer ThyssenKrupp AG (FRA:TKA) (Dusseldorf, Germany) presented its quarterly financial report for the 2007-08 fiscal year on August 14. Although total sales increased 5% from the third quarter of the 2006-07 fiscal year, ThyssenKrupp showed a year-on-year drop in before-tax earnings of 25% from last year's third quarter, from $1.82 billion last year to $1.35 billion this year (based on the exchange rate of 1 euro = $1.49).

ThyssenKrupp employs 198,000 people in five industrial segments: steel, stainless, technologies, elevator and services. All segments, with the exception of stainless, showed an increase in sales from the third quarter of last year. While overall earnings for the first nine months of the fiscal year are lower than last year, they are higher than ThyssenKrupp had forecast. In a conference call regarding the company's earnings, Dr. Ulrich Middelmann, Chief Financial Officer of ThyssenKrupp, said, "After nine months, we are ahead of our budget for the current fiscal year." Year-on-year, before-tax earnings of stainless for the quarter declined more than 68%, from $439.8 million to $138.2 million. The company blamed this sharp decrease on a lower base price, as well as problems caused by the strength of the euro against the dollar when exporting to U.S. dollar zones.

The company was quite optimistic about its trans-Atlantic expansion, which, to some measure, should help alleviate trade problems caused by exchange rates. "Our well-known trans-Atlantic concept ... is geared to take advantage of the favorable outlook and is progressing in Brazil, in the U.S., as well as in Europe," Dr. Middelmann said.

ThyssenKrupp is constructing additional steel and stainless capacity in Brazil and Alabama. The Alabama project, located in Mount Vernon, Alabama, about 30 miles north from downtown Mobile, is expected to begin commercial operation in early 2010. Civil and site preparation work is complete and contractors are currently pouring foundations and pilings for the mill buildings. The project initially had a projected total investment value (TIV) of $4 billion, which has risen to an expected $4.5 billion. The plant will produce 4.1 million tons per year of flat carbon steel and will have a 1 million-ton-per-year stainless steel melt shop. In Brazil, ThyssenKrupp is continuing construction of an estimated 5 million-ton-per-year steel mill in Sepetiba, near Rio de Janeiro. The plant's accompanying power plant will be ready for operation in the first quarter of 2009, but steel production will not begin until the end of that year. The project's TIV has been raised to $6.66 billion. For more information about ThyssenKrupp and North American steel projects, see recent related articles - ThyssenKrupp CSA Plans March 2009 Completion of 495-Megawatt Cogeneration Power Plant in Brazil and Plans for Major Steel Mill Projects Piling Up in 2008.

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