ThyssenKrupp SA (TK) – the parent company of ThyssenKrupp Steel USA (TKS) – reported 3rd Quarter earnings on Friday of last week which were 22% below a year earlier. The drop in profits were directly related to rising costs associated with CSA – their slab mill in Brazil as well as minority payouts to shareholders. The company earned $301.9 million well below forecast by analysts.

In the company’s earnings conference call with analysts, Heinrich Hiesinger, CEO told those listening, “On the execution side of our strategic plans, we are in full execution, I'll give you later some details. On a target side with our operating performance at first nine months, we're on track to achieve our official target. Naturally, our environment is not totally favorable given the pricing softness in U.S. for demand for steel, and the development in the capital market, we believe that we clearly have to say to you that we need to consider a more pronounced wait and see attitude amongst some of our buyers leading some pressure on the spot business and prices.

As you know that the spot market in U.S. is clearly important for us due to the ramp up phase of our American Steel plant, virtually a 100% of outer state material is sold by spot markets or service centers. So clearly our target aims to EBIT loss as Steel Americas still [indiscernible] to million euro number and our operational performance pushed the profit. However, we cannot fully exclude potential negative price and volume checks…”

“…In Steel Americas, probably we are not fully satisfied, but again we could significantly reduce the loss reduction in the third quarter.”

Guido Kerkhoff, CFO of ThyssenKrupp SA in his prepared statements said about ThyssenKrupp Steel USA (America's includes CSA which is their slab plant in Brazil):

“…Coming to Steel America is on page 21, quarter-on-quarter the EBIT loss is down by €129 million now to €109 million in the quarter after €378 million in Q1 and €319 million in Q2. This was mainly driven by volume effects, as you see, we are 880,000 tons slab production CSA and we shipped more than 400,000 tons to USA. But on top of that, we could realize lower ramp up cost especially by the performance of coke battery B. We realized higher prices as well.

Quarter-on-quarter shipments from Steel USA increased by 32% to around 400,000, based more that 400,000 tons in Q3. The current product mix, 80% hot rolled and therefore the customer mix has around 95% service centers as Heinrich already mentioned. However, certification process with OEMs is progressing very well and in line with our expectations. The testing volumes have been shipped, and we've got a very positive feedback on surface quality and tolerances...."

Steel Market Update had a detailed report on the ThyssenKrupp SA earnings conference call and especially the details regarding ThyssenKrupp Steel USA in our last Steel Market Update newsletter. Members and trial subscribers can read our newsletter in the News section of our website. You can become a trial member by clicking on the button below.