May 12, 2020 / 5:02 AM / 17 days ago

Thyssenkrupp faces deep quarterly loss due to coronavirus, shares tank

FRANKFURT/DUESSELDORF, Germany (Reuters) - German conglomerate Thyssenkrupp (TKAG.DE) warned on Tuesday that its operating loss could swell to 1 billion euros ($1.1 billion) in the April to June quarter due to the coronavirus crisis.

FILE PHOTO: The logo of Thyssenkrupp is seen near elevators in its headquarters in Essen, Germany, November 21, 2019. REUTERS/Leon Kuegeler

Shares in the struggling steel-to-submarines group fell as much as 13.5% on the news, which highlighted a rapid deterioration of most of its business lines as carmakers and other industries have come to a standstill.

The group, whose operations range from making car parts to building fertiliser plants, said the April-June quarter would likely be the trough in its fiscal year to Sept. 30.

Its peer Siemens (SIEGn.DE) said last week the downturn could last for six to nine months, but said the worst effects of the crisis would be felt in coming weeks.

“The full impact of the crisis on our businesses is not yet foreseeable. But it is already clear that the economic disruptions will leave very deep marks,” Thyssenkrupp CEO Martina Merz said.

The group’s equity ratio fell to 3.3%.

In a sign of just how tight the group’s financial situation has become, Thyssenkrupp said it secured a 1 billion euro credit line from German state-owned bank KfW to tide it over until it receives cash from the sale of its elevator division, expected by the end of September.

“We don’t have a liquidity problem,” Chief Financial Officer Klaus Keysberg told journalists, pointing to 4.5 billion euros of additional liquidity the group had access to as of March 31.

Keysberg said the group was in regular contact with Advent and Cinven [CINV.UL], which in February agreed to buy the elevator unit for 17.2 billion euros just as the coronavirus crisis kicked in.

“There are no indications that things are getting critical,” he said, when asked whether there was a risk the deal could collapse.

The group said its January to March second quarter net loss increased by more than five times to 948 million euros as the pandemic hit all business lines, notably steel and automotive, Thyssenkrupp’s largest client group.

“Proceeds from the sale of the elevator division are melting like butter in the sun. The need for action is greater than ever,” said Michael Muders, fund manager at Union Investment, a top-20 shareholder.

“We are eagerly waiting the strategy for the steel unit.”

Thyssenkrupp will update investors on its strategy on May 19. It is planning to shut down or sell assets to stop cash outflow and Keysberg said it was in discussions with potential suitors for its Plant Technology unit.

Editing by Jason Neely and Edmund Blair

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