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Thyssenkrupp forecasts profit rise as it seeks to win back trust

Thyssenkrupp forecasts profit rise as it seeks to win back trust
FILE PHOTO: A logo of ThyssenKrupp AG is pictured outside the ThyssenKrupp headquarters in Essen, November 23, 2017. REUTERS/Thilo Schmuelgen   -   Copyright  Thilo Schmuelgen(Reuters)
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By Christoph Steitz and Tom Käckenhoff

ESSEN, Germany (Reuters) – Thyssenkrupp <TKAG.DE> gave a bullish outlook for 2019 on Wednesday, forecasting a recovery at almost all its divisions, as new CEO Guido Kerkhoff attempts to restore investors’ trust in the German industrial conglomerate.

Kerkhoff, who took over in September, hopes to assuage mounting shareholder disquiet by spinning off the elevators and car parts businesses into one division in a bid to unlock value.

But since the news, shares have fallen nearly 29 percent, burdened by a fresh profit warning earlier this month, possible cartel fines and underperformance at the elevators and car parts divisions, its two most promising units.

“The past fiscal year was a turbulent and challenging one for Thyssenkrupp. We initiated one of the biggest realignments in the history of the company,” Kerkhoff said. “At the same time we identified potential for further improvements in all businesses which we are now systematically addressing.”

Remodelling its outlook to reflect the expected close of a European steel joint venture with Tata Steel <TISC.NS>, Thyssenkrupp said adjusted operating profit would rise to more than 1 billion euros ($1.14 billion) in the 2018/19 financial year.

That is an increase of at least 42 percent from the 706 million euros the group reported for 2017/18 and is based on the view that almost all its divisions will show a marked improvement compared with 2017/18.

Shares in the group were indicated to open 2.5 percent lower at 0734 GMT, at the bottom of Germany’s blue-chip index.

Thyssenkrupp has faced calls for years to simplify its structure which makes everything from submarines and steel to chemicals plant and automotive components, with investors arguing the complex setup destroys value.

The group on Wednesday also provided a timeline for the corporate split, expecting the spin off documents to be presented at its next annual press conference before a shareholder meeting in January 2020 to approve the move.

(Editing by Thomas Seythal and Sunil Nair)

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