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Pressure mounts on Thyssenkrupp CEO after fourth profit warning

Pressure mounts on Thyssenkrupp CEO after fourth profit warning
FILE PHOTO: Guido Kerkhoff, CEO of steelmaker Thyssenkrupp AG, gestures during the annual shareholders meeting in Bochum, Germany, February 1, 2019. REUTERS/Wolfgang Rattay -
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WOLFGANG RATTAY(Reuters)
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By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF, Germany (Reuters) – Germany’s Thyssenkrupp <TKAG.DE> on Thursday issued its fourth profit warning under current boss Guido Kerkhoff, who faces mounting pressure to turn around the stricken conglomerate.

The move further erodes confidence in Kerkhoff, whose credibility has already suffered from a botched attempt to merge Thyssenkrupp’s steel business with Tata Steel’s <TISC.NS> European unit and a failed plan to spin off the group’s capital goods units.

The company – whose operations run the gamut from building submarines and elevators to steel and car parts – said adjusted earnings before interest and tax (EBIT) are now expected to decline to about 800 million euros (£737.31 million) this year.

That is down from a previous forecast for 1.1-1.2 billion euros, the group said, citing weakness at two of its core markets: automotive and steel.

“Overall we cannot be satisfied with our performance in the first nine months,” Kerkhoff said in a statement. “We were unable to offset the impacts of the current auto market weakness and the ore price trend.”

In an attempt to bring in fresh funds, Thyssenkrupp is planning to list or sell its elevator unit, by far its most profitable operation. The unit is valued at up to 14 billion euros – more than twice Thyssenkrupp’s current market valuation.

Thyssenkrup – which has so far only disclosed plans for an IPO of the unit – acknowledged it was evaluating expressions of interest for a sale of Elevator Technology as well. It said it is also looking at expressions of interest in the group’s other business divisions, which are all lagging behind peers.

Sources have told Reuters that private equity firms KKR <KKR.N>, Advent, and CVC as well as Finnish elevator group Kone <KNEBV.HE> have all contacted Thyssenkrupp to discuss interest in its elevator unit.

The group also said it had put three units – springs and stabilisers, system engineering and heavy plate – under review, adding it would look at strategic options if restructuring them failed.

Shares in the group rose 2.8% in pre-market trade, among the biggest German blue-chip gainers, as traders said the weak results were priced in after its latest profit warning.

Shares of the company have fallen 30% this year, hitting a 16-year low earlier this week.

(Editing by Michelle Martin and Deepa Babington)

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