ThyssenKrupp share price up, swings to profit and resumes dividends

ThyssenKrupp AG promised to resume dividend payments as the company ended a three-year period of multi-billion losses, boosted by a strong growth in its capital goods unit.

The German steel and elevator group stated net profit of €195 million for the fiscal year ended September 30, versus a loss of €1.6 billion a year earlier.

Yearly sales increased 4% to €41.3 billion, up from the €38.78 billion a year earlier, boosted by strong sales in its industrial-solutions and elevator divisions.

ThyssenKrupp faced weak global demand for its products, especially in its Steel Americas division, which it recently sold. The company launched a restructuring program which affected Q4 performance and led to a net loss of €47 million. Quarterly sales rose to €11.16 billion from €9.91 billion a year earlier.

The European steel business unit reported a decline in volumes due to lower steel prices in Europe and the disposal of the its unit that produced flat steel for automobiles.

In December the company raised €882 million in fresh capital. At the end of September net debt stood at €3.5 billion, down €1.5 billion compared to last year.

Heinrich Hiesinger, who became CEO in 2001, helped the company to turn the corner by maintaining leadership culture, reducing debt and switching to less repetitive technology.

ThyssenKrupp suggested to revive its dividend program and payout €0.11 per share this year. The company stopped paying dividends two years ago, due to heavy losses caused by bad investments in Brazil and the U.S. under the previous management team.

“It is a signal to our shareholders that we have reached a turning point in our earnings development and that we have faith in our future earnings” Mr. Hiesinger said. He also said that the reached profit is a “milestone” for the company, but added the turnaround is not yet done. However the ThyssenKrupp is aiming at positive free cash flow in the next business year.

For his efforts Mr. Hiesinger had his contract extended by five years and received an increase in pay to €5.2 million.

“The company is on the right track” said Ulrich Lehner, supervisory board chairman.

ThyssenKrupp AG lost 0.65% on Wednesday and closed at €19.73 in Frankfurt. The stock gained 1.67% on Thursday to trade at €20.06 at 14:07 GMT, marking a one-year increase of 5.11%. The company is valued at €11.17 billion. According to the Financial Times, the 28 analysts offering 12-month price targets for ThyssenKrupp AG have a median target of €21.15, with a high estimate of €27.00 and a low estimate of €16.00. The median estimate represents a 7.20% increase from the last price of €19.73.

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