Thyssenkrupp posts $2.3 billion impairment on steel division

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF (Reuters) -Germany’s Thyssenkrupp (ETR:) on Wednesday unveiled a 2.1 billion euro ($2.3 billion) impairment on its steel unit due to a “gloomy” outlook, highlighting the challenge in efforts to win Czech energy group EPH as a co-owner for the business.

As a result of the impairment, Thyssenkrupp, which has been trying to divest its steel division for several years, posted a 2-billion-euro net loss for the fourth quarter. Adjusted operating profit in the July-September quarter fell 45% to 88 million euros.

“The figures show that we have made progress with the transformation of Thyssenkrupp, despite the difficult environment, but also that we must continue to work hard at raising the performance of our businesses,” Thyssenkrupp CEO Miguel Lopez said.

Thyssenkrupp – which apart from steel builds submarines, car parts and operates a large materials trading business – said it was in constructive and open-ended talks with EPH about a potential steel joint venture.

EPH, controlled by Czech billionaire Daniel Kretinsky, would support Thyssenkrupp Steel Europe with its energy expertise in any joint venture, the company said.

Thyssenkrupp last month flagged a marked deterioration in the steel market, adding optimistic assumptions had been dampened by a mix of economic weakness in Germany and other markets as well as higher raw materials and energy costs.

Cheap Chinese steel imports into Europe have been an additional headache, along with the fact that Asian rivals do not have to bear the costs of CO2 emissions, which puts local players at a disadvantage.

($1 = 0.9168 euros)