Fri May 6, 2011 12:45pm GMT
* Divestments could total as much as 10 billion euros
* Volume and speed of planned divestments surprise market
* To 'separate' stainless steel business
* Shares up 8.1 percent
(Adds stainless steel valuation, comments from Acerinox and Outokumpu)
By Marilyn Gerlach and Maria Sheahan
FRANKFURT, May 6 (Reuters) - ThyssenKrupp (TKAG.DE: Quote) shares jumped on Friday after the German steelmaker unveiled a 10 billion euro ($14 billion) divestment plan that could spur consolidation in Europe's overcrowded stainless steel sector.
The restructuring will include a spin-off of the company's stainless steel division and aims to help ThyssenKrupp pay down debt and focus on its engineering business.
Analysts had expected a shake-up since the company's new Chief Executive Heinrich Hiesinger took over early this year.
But the scope of the revamp was more far-reaching and quicker than anticipated by the market.
"More surprising is the considered spin-off of Stainless Global, opening up strategic partnerships with former ArcelorMittal stainless unit Aperam or Finland-based Outokumpu," Equinet analyst Stefan Freudenreich said.
ThyssenKrupp shares jumped 8.1 percent to 32.24 euros by 1244 GMT, outpacing Germany's blue-chip index .GDAXI.
ThyssenKrupp's stainless business is Europe's biggest with almost 3 million tonnes of output and annual sales of 5.9 billion euros. The company will examine all options for continuing the business outside the group.
"They might opt for an IPO (initial public offering) because no one really has the money to buy it," said a steel analyst who declined to be named.
Analysts value the stainless business at between 2.2 billion euros and 5 billion euros. They said the wide range was explained by the fact that Thyssen does not break out full unit figures for profit and debt in its earnings report.
Analysts had previously called for divestments at ThyssenKrupp, a lumbering giant that has piled up debts of 5.8 billion euros related to mammoth plants it has built in the United States and Brazil.
Analysts expect Hiesinger -- the company's first CEO who has no steel background -- to strengthen the non-steel sectors, including elevators and other technology-related activities, whose strong performance has offset start-up losses at its Steel Americas division.
Analysts estimate that the non-steel activities, which they see contributing around 70 percent to the group's total value, were the main growth drivers in the fiscal second quarter to end-March, along with European carbon steel operations and the global stainless business.
ThyssenKrupp is due to report quarterly results on May 13 and is expected to show its second-quarter earnings were boosted by higher steel prices and a booming German automotive industry.
OVERCAPACITY IN STAINLESS
Europe's stainless steel sector has long suffered from overcapacity and volatility. ThyssenKrupp and its rivals sounded out possible consolidation in the sector in 2009, but Germany's biggest steelmaker opted for a stand-alone strategy.
It then launched a restructuring that included a shutdown of one of its German stainless factories last year and brought forward production plans for a new stainless plant in Alabama.
Analysts have said a natural partner for ThyssenKrupp could be Outokumpu (OUT1V.HE: Quote) because the Finnish rival has a strong presence in northern Europe and the German firm is absent there.
They also have said the German company would have a clash of culture with ArcelorMittal (ISPA.AS: Quote), while No.1 stainless steel producer Acerinox (ACX.MC: Quote) is not keen to acquire assets in Europe.
"We consider consolidation in Europe as positive and we are following closely the situation, but we are not an active player in this process in Europe," a spokesman for Acerinox told Reuters on Friday.
"At the moment, our main focus is getting production at our plant in Malaysia into full flow."
Outokumpu also said it saw sector consolidation as positive in general, but said it would not speculate about who would play a role in the process.
Global steel market leader ArcelorMittal this year spun off its stainless steel division, Aperam (APAM.AS: Quote), and listed it on the stock exchange, prompting speculation about possible consolidation. [ID:nLDE6B709B]
Aperam kicks off a raft of steel-industry earnings next week with quarterly results on Tuesday, followed by ArcelorMittal on Wednesday, Germany's second-biggest steelmaker Salzgitter (SZGG.DE: Quote) on Thursday and ThyssenKrupp on Friday. (Additional reporting by Robert Hetz in Madrid and Terhi Kinnunen in Helsinki; Editing by Dan Lalor and Jane Merriman,sourced Thomson Reuters) ($1=0.7158 euros)
* Divestments could total as much as 10 billion euros
* Volume and speed of planned divestments surprise market
* To 'separate' stainless steel business
* Shares up 8.1 percent
(Adds stainless steel valuation, comments from Acerinox and Outokumpu)
By Marilyn Gerlach and Maria Sheahan
FRANKFURT, May 6 (Reuters) - ThyssenKrupp (TKAG.DE: Quote) shares jumped on Friday after the German steelmaker unveiled a 10 billion euro ($14 billion) divestment plan that could spur consolidation in Europe's overcrowded stainless steel sector.
The restructuring will include a spin-off of the company's stainless steel division and aims to help ThyssenKrupp pay down debt and focus on its engineering business.
Analysts had expected a shake-up since the company's new Chief Executive Heinrich Hiesinger took over early this year.
But the scope of the revamp was more far-reaching and quicker than anticipated by the market.
"More surprising is the considered spin-off of Stainless Global, opening up strategic partnerships with former ArcelorMittal stainless unit Aperam or Finland-based Outokumpu," Equinet analyst Stefan Freudenreich said.
ThyssenKrupp shares jumped 8.1 percent to 32.24 euros by 1244 GMT, outpacing Germany's blue-chip index .GDAXI.
ThyssenKrupp's stainless business is Europe's biggest with almost 3 million tonnes of output and annual sales of 5.9 billion euros. The company will examine all options for continuing the business outside the group.
"They might opt for an IPO (initial public offering) because no one really has the money to buy it," said a steel analyst who declined to be named.
Analysts value the stainless business at between 2.2 billion euros and 5 billion euros. They said the wide range was explained by the fact that Thyssen does not break out full unit figures for profit and debt in its earnings report.
Analysts had previously called for divestments at ThyssenKrupp, a lumbering giant that has piled up debts of 5.8 billion euros related to mammoth plants it has built in the United States and Brazil.
Analysts expect Hiesinger -- the company's first CEO who has no steel background -- to strengthen the non-steel sectors, including elevators and other technology-related activities, whose strong performance has offset start-up losses at its Steel Americas division.
Analysts estimate that the non-steel activities, which they see contributing around 70 percent to the group's total value, were the main growth drivers in the fiscal second quarter to end-March, along with European carbon steel operations and the global stainless business.
ThyssenKrupp is due to report quarterly results on May 13 and is expected to show its second-quarter earnings were boosted by higher steel prices and a booming German automotive industry.
OVERCAPACITY IN STAINLESS
Europe's stainless steel sector has long suffered from overcapacity and volatility. ThyssenKrupp and its rivals sounded out possible consolidation in the sector in 2009, but Germany's biggest steelmaker opted for a stand-alone strategy.
It then launched a restructuring that included a shutdown of one of its German stainless factories last year and brought forward production plans for a new stainless plant in Alabama.
Analysts have said a natural partner for ThyssenKrupp could be Outokumpu (OUT1V.HE: Quote) because the Finnish rival has a strong presence in northern Europe and the German firm is absent there.
They also have said the German company would have a clash of culture with ArcelorMittal (ISPA.AS: Quote), while No.1 stainless steel producer Acerinox (ACX.MC: Quote) is not keen to acquire assets in Europe.
"We consider consolidation in Europe as positive and we are following closely the situation, but we are not an active player in this process in Europe," a spokesman for Acerinox told Reuters on Friday.
"At the moment, our main focus is getting production at our plant in Malaysia into full flow."
Outokumpu also said it saw sector consolidation as positive in general, but said it would not speculate about who would play a role in the process.
Global steel market leader ArcelorMittal this year spun off its stainless steel division, Aperam (APAM.AS: Quote), and listed it on the stock exchange, prompting speculation about possible consolidation. [ID:nLDE6B709B]
Aperam kicks off a raft of steel-industry earnings next week with quarterly results on Tuesday, followed by ArcelorMittal on Wednesday, Germany's second-biggest steelmaker Salzgitter (SZGG.DE: Quote) on Thursday and ThyssenKrupp on Friday. (Additional reporting by Robert Hetz in Madrid and Terhi Kinnunen in Helsinki; Editing by Dan Lalor and Jane Merriman,sourced Thomson Reuters) ($1=0.7158 euros)
Posts
No comments:
Post a Comment