By Christoph Steitz and Tom Käckenhoff
ESSEN, Germany (Reuters) – Thyssenkrupp warned of deeper losses ahead and scrapped its dividend on Thursday, sending shares in the German conglomerate down 12% as new CEO Martina Merz cautioned that restructuring could take up to three years.
After four profit warnings and two failed attempts to restructure since July 2018, Thyssenkrupp aims to slash 6,000 jobs and sell its elevators business in a last-ditch bid to stem its losses.
Its net loss for the year to Sept. 30 widened to 304 million euros (£260 million) from 62 million a year earlier, it reported on Thursday. That loss is expected to widen in the current fiscal year, it said.
Thyssenkrupp shares, which dropped out of Germany’s DAX 30 index in September, fell as much as 11.7% on the news.
Merz, who served as Thyssenkrupp chairwoman before being appointed CEO last month for 12 months in an emergency move, said talks with investors, executives and employees had convinced her that the group required substantial change.
“Some of what I’ve seen and heard has been sobering. We lag far behind our ambitions in many areas,” she said, adding any restructuring would need 2-3 years to fully take effect and pouring cold water on hopes for a quicker turnaround.
Thyssenkrupp’s adjusted EBIT fell 44% to 802 million euros and the company said it expected a similar level for 2019/20.
It reported negative free cash flow before M&A of 1.1 billion euros in 2018/19 and warned that would widen this year.
“Thyssenkrupp needs to focus on the comprehensive and sustainable restructuring of the business areas, in the interest of safeguarding the future of the company,” said Michael Muders of Union Investment, a top-10 shareholder.
The conglomerate, whose activities include steelmaking and plant building, proposed to scrap its dividend, a move supported by top shareholder, the Alfried Krupp von Bohlen und Halbach Foundation.
Hopes to ease balance sheet pressure now lie with its effort to sell its elevator business, which could be valued at up to 17 billion euros. Thyssenkrupp said it expects binding bids for the unit next year.
(Editing by Michelle Martin and Jason Neely)