NEW YORK ThyssenKrupp AG is aiming to sign a sales agreement for its Steel Americas division by May, the German steelmakers top executive said Feb. 12 as the struggling unit logged another quarter in loss-making territory.
"We are always very clear that we can control the (sales) process until signing, at least to a certain extent, (and) weve always said that well put all efforts to come to such a situation somewhere in May," chairman and chief executive officer Heinrich Hiesinger said during the companys fiscal first-quarter earnings call.
"Our Steel Americas exit is well on schedule," he added.
While the company aims to sign a sales agreement by May, closing on the potential deal will take more time, Hiesinger said. Bidding on the unit has closed, but the company has previously said a potential sale could take until 2014 to conclude (amm.com, Oct. 9).
Talk of a more concrete sales time line comes as the Steel Americas unit recorded another quarter in the red.
The divisionwhich includes a Brazilian slab mill and a rolling mill in Calvert, Ala.recorded negative adjusted earnings before interest and taxes (Ebit) of 87 million ($117 million) for the three months ended Dec. 31, a nearly 70-percent improvement from negative adjusted Ebit of 288 million in the same 2011 period but still keeping the division well under water. Sales in the region totaled 488 million ($656.4 million), down 2 percent from 498 million in the same comparison.
The Steel Americas divisions order intake fell 4 percent year over year "in a difficult business environment," according to the Essen, Germany-based company. The Brazilian slab mill produced about 900,000 tons in the fiscal first quarter, which it supplied to the U.S. rolling mill and its European facilities, as well as customers in Brazil and North America, it said. The division sold a total of 600,000 tons of flat steel to North American customers during the same period, it added.
But despite the challenging quarter, ThyssenKrupp chief financial officer Guido Kerkhoff said inventory levels look poised to decrease in the near term, lending the struggling unit some support.
For "the Steel Americas (operations), we see strong development. Although the business is ramping up with higher shipments overall, we see that the inventories overall in tons are going down," he said. "This clearly shows we see operational improvements and that ... we could reduce the slab inventory levels significantly."
The Steel Americas unit, put on the auction block last year as the steelmaker looked to cut costs, has garnered interest from several domestic and international competitors. A number of potential bidders have confirmed some level of interest in the assets, including Luxembourg-based ArcelorMittal SA (amm.com, Jan. 9), U.S. Steel Corp. (amm.com, Jan. 30), Ternium SA (amm.com, Jan. 29) and Charlotte, N.C.-based Nucor Corp.
Last year, the steelmaker listed its Steel Americas division as a discontinued operation, taking a 3.6-billion ($4.7-billion) write-down on the assets (amm.com, Dec. 11).
Despite the Steel Americas loss, ThyssenKrupp as a whole recorded a positive financial quarter, reporting net income attributable to ThyssenKrupps shareholders of 35 million ($47.1 million) in contrast to a net loss of 460 million in the corresponding quarter the previous year. Net sales for the overall company fell to 8.8 billion ($11.8 billion) from nearly 9.6 billion ($12.9 billion) in the same comparison.