Steelmakers risk another downturn in 2010

Essen: Germany's biggest steelmaker ThyssenKrupp warned yesterday that economic growth would not return to 2008 levels before 2012 and there was a risk of a temporary downturn next year.

The outlook chimed with a muted forecast from ArcelorMittal, the world's biggest steelmaker, which said last month there should be a further gradual improvement through 2010 but the operating environment would be challenging.

Austrian steelmaker Voestalpine said there were signs of stabilisation compared with the previous quarter but prices were likely to remain volatile.

"We see the fledgling economic recovery as still being fragile and expect only a slow improvement," ThyssenKrupp Chief Executive Ekkehard Schulz told reporters.

"For 2010, the risk of a temporary setback remains."

ThyssenKrupp reiterated its outlook for the fiscal year to September 2010, with sales flat and adjusted pretax profit in the low three-digit million euro range.

It published its fourth quarter results on November 13, posting a pretax yearly loss of 2.4 billion euros (Dh13.22 billion). Excluding one-offs, the loss was 734 million.

Days after the disclosure of results, credit rating agency Standard & Poor's downgraded its stance on the company's debt to BB+ from BBB-.

Limited impact

ThyssenKrupp said yesterday the direct impact of S&P's decision will be limited due to the measures carried out in fiscal 2008-09 to secure liquidity, which included cost savings of 1.5-2.0 billion euros.

"The group's financing costs will increase only slightly," it said, adding its primary goal is to regain investment grade status at S&P as quickly as possible.