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. Last Updated: 07/27/2016

Gloomy Forecast From Thyssen

DUISBURG, Germany -- Germany's largest steelmaker Thyssen Stahl AG, after a record loss in a "disastrous" 1992/93, said it expected no profits until the next business year and would continue to axe jobs.

Ekkehard Shulz, board chairman of the Thyssen AG's steel unit, told reporters Wednesday the company still hoped for an agreement on cutting overcapacity among European private steelmakers to solve the industry's worst crisis since World War II.

"The situation must not and cannot stay the way it is," he said, referring to the crisis caused by overcapacity, dumping from Eastern Europe and recession that has driven all major European steelmakers into the red.

Thyssen Stahl said its group net loss surged to 1.23 billion Deutsche marks ($704.5 million) in what the firm called the "disastrous" year ended Sept. 30, from a loss of 306 million marks a year earlier.

Its group operating loss widened to 963 million marks from 208 million marks, while its third-party sales dropped 15 percent to 10.6 billion marks due to sharp falls in steel prices as well as lower deliveries.

"In Thyssen Stahl AG we do not expect positive earnings until the business year 1994/95," Shulz said, adding its group sales dropped 7 percent to 2.5 billion marks in the first quarter of the current 1993/94 financial year.

He said the company had to continue cutting jobs well into next business year to reduce its parent work force to 22,000, compared with 25,000 planned at the end of this business year and 35,268 at the end of the 1992/93 business year.

Schulz said the firm faced even tougher competition after an accord by the European Union in December which granted $7.6 billion in aid to state-owned steelmakers in exchange for cuts of around 5 million tons of steel capacity.

Thyssen shares dipped to an intra-day low of 251.50 marks shortly after the news but recovered quickly to finish at 252 marks, only one mark down from Tuesday's close.

"The results and the forecast were largely as expected," said a trader at a major Munich bank. "Investors are looking to Thyssen's long-term turnaround potential and that seems promising."

German private steelmakers have criticized the EU deal which aims to alleviate the crisis, saying subsidies would hamper a necessary accord among European private firms to slash an additional 10.5 million tons of rolled steel capacity.

"Political decisions are driving the German private steel industry into great distress," Schulz said. "An end should be put to this policy, which is against competition."

He also sharply criticized the German government for its sale of Eko Stahl AG in east Germany to Riva Prodotti Siderurgici SpA of Italy, which plans to build a new hot rolling mill with government support of 828 million marks.

Schulz ruled out a full merger of steel operations with rival Fried Krupp AG Hoesch-Krupp, with which Thyssen has agreed in principle to merge some of its steel production.

A merger of further activities with Krupp would bring few economic advantages as there was little overlap in the two companies' product lines since the closure of some of their steel plants, he said.