FRANKFURT -- ThyssenKrupp AG said on Thursday a pick-up in demand for steel had helped it more than double its quarterly earnings and said it hoped to lift profits further over the course of the year.
The world's biggest stainless steel producer said its pre-tax profit in the three months to March 31 rose to 250 million euros ($288 million) from 96 million a year ago, beating the 209-million euro average forecast in a Reuters poll.
Shares in Thyssen, which has hiked its steel prices four times over the past 12 months as the market recovers from near historic lows early last year, were up 1.4 percent in morning Frankfurt trade, outperforming a 0.75 percent rise on the DJ Stoxx basic resources sector.
The steelmaker, which also supplies parts for car manufacturers like DaimlerChrysler and BMW and builds elevators, said it aimed at least to match first-half pre-tax profit of 391 million euros in its fiscal second half, assuming no further deterioration in the health of the economy.
"It's a cautious forecast. They worry that steel prices are close to peak and will probably experience a downturn in the coming months," said Societe Generale analyst Fabrice Theveneau, who rates the stock "sell".
European steel prices have been supported by strong Chinese demand, output discipline on the part of producers and by EU import restrictions set up last year to protect the market.
STRONG STEEL MARKET
Thyssen said its production sites were running at almost full capacity in the first three months of 2003, a period in which world crude steel output rose nine percent, with China the strongest growth market but the U.S. and Europe also on the up.
Orders at the steel division rose six percent to 3.3 billion euros as a result, with sales and crude steel output both 10 percent higher than a year ago.
The strength of the euro against the dollar led to a slight decrease in sales to 1.6 billion euros at the group's automotive business, although new orders were marginally higher, while sales at its elevators business slipped six percent due to weakness in the construction sector.
Thyssen said its net debt, a perpetual worry for investors, amounted to 4.9 billion euros at the end of March, up 189 million from September due partly to its dividend payment, but down 2.4 billion from a year ago.
Credit ratings agency Standard & Poor's cut its debt to "junk" status in February citing a pension fund shortfall, and Thyssen has vowed to hasten disposals to bolster its finances.