By Christopher Alessi
FRANKFURT--German industrial conglomerate Thyssenkrupp AG said Thursday it swung to a net profit for the first quarter of its fiscal year 2017, boosted by continued growth at most of its capital-goods businesses.
Net profit for the period ended Dec. 31 was EUR8 million ($8.55 million), compared with a net loss of EUR23 million during the same period a year earlier, falling short of analysts' forecasts. Analysts had predicted net profit of EUR92 million, according to a recent poll conducted by The Wall Street Journal.
The company's closely watched adjusted earnings before interest and taxes climbed by 40% year-over-year to EUR329 million, a result of steady earnings growth at the elevator and specialty auto components units. Both divisions saw a 6% increase in adjusted EBIT, to EUR215 million and EUR75 million, respectively.
Adjusted EBIT was "widely in-line with expectations," according to DZ Bank analyst Dirk Schlamp. But net profit "turned out weaker than expected" as a result of higher special items and tax payments, Mr. Schlamp said.
Overall earnings growth at the capital goods businesses was held back by the industrial solutions unit--which builds a range of products from chemical plants to military ships--by lower milestone billings and weaker margins. That unit saw a 54% decline in adjusted EBIT, to EUR42 million.
The company's materials operations, including its heavy steel businesses, reported mixed results.
At the specialty materials unit, which manufacturers products such as carbon and stainless steels, adjusted EBIT more than doubled to EUR51 million, helped by positive price trends and restructuring measures.
The company's steel unit in Brazil also saw earnings improvement due to stable price recovery, swinging to adjusted EBIT of EUR37 million, compared with a loss during the same period last year.
But the European steel division--once the backbone of the company--was pressured in part by lower selling prices and higher raw material costs. The business reported a 46% decline in adjusted EBIT, to EUR28 million.
Chief Executive Heinrich Hiesinger confirmed last year that the company was in talks with India's Tata Steel Ltd. and other steel groups over a potential tie-up with its European steel division, amid ongoing consolidation in the industry.
The Wall Street Journal reported last year that Thyssenkrupp was in talks with Ternium SA to sell its steel plant in Brazil, the last asset of its unsuccessful venture in the Americas. The company at the time declined to comment on M&A plans for the plant.
Since taking over the top job in 2011, Mr. Hiesinger has overseen a comprehensive restructuring, while moving the company away from its core steel operations to focus more on capital goods. The crown jewel of the capital goods businesses is the elevator division, which is one of the world's top four elevator and escalator businesses.
Group sales rose by 6%, to EUR10.09 billion, helped by new elevator installations in the U.S. All business areas except the industrial solutions unit experienced sales growth in the first quarter, the company said.
Thyssenkrupp reiterated its guidance for fiscal 2017, saying it expects adjusted EBIT to increase to around EUR1.7 billion, compared with EUR1.5 billion last year.
Write to Christopher Alessi at [email protected]