German industrial group ThyssenKrupp AG still expects sales and profits to fall sharply this fiscal year due to the severe global economic downturn, CEO Ekkehard Schulz said on Friday.
“Uncertainty and declining orders are affecting many areas of the group. It is safe to say that we face a significant drop in sales and earnings this fiscal year,” Schulz said in remarks prepared for the annual shareholders meeting. He said he would not rule out further production cuts, shortened work hours and job cuts given the uncertainty on how deep the recession would be and how long it would last.
ThyssenKrupp had said in November it expects a “significant drop” in sales in its fiscal year to end-September 2009 and that “this will have a corresponding effect on earnings”.
It said last month that 20,000 workers at its steel business -- whose sales contribute some 40% to group turnover -- will have shortened work hours from February to September and it dismissed 2,100 temporary workers. Around 40% of its steel products go to the car sector, which is now grappling with a dramatic slump in sales as recession erodes consumer spending.
The steel industry is taking unprecedented measures to cushion the global economic downturn, which has depressed steel demand and prices sharply over the past six months as carmakers and other customers slashed output. Global crude steel output tumbled 24.3% in December year-on-year, the World Steel Association said on Thursday.
Global output in 2008 stood at 1.33 billion metric tons, down 1.2% from the year before.
Output in Germany alone, the world’s seventh-biggest steel producer, fell 35% in December. ThyssenKrupp shares extended declines on the news and were down 3.9% at €15.66 by 0942 GMT, outpacing the 2.4% fall by the German blue-chip index. (Reuters)