German steelmaker ThyssenKrupp cut its earning guidance for this year due to tumbling steel prices, despite posting a 26 per cent increase in first quarter net profit.
ThyssenKrupp said it expects full-year earnings of at least €1.4bn in 2016, compared to a previous forecast of between €1.6bn and €1.9bn.
This came despite net profit rising 26 per cent to €61m in the first half of 2015/16, from €48M in the same period a year ago, largely due to fewer special items such as restructuring costs.
Why it's interesting
While ThyssenKrupp has been touted as a potential bidder for Tata Steel's loss-making UK business, nothing has been confirmed.
Falling steel prices due to cheap imports from China and global overcapacity have hampered steelmakers across the world.
“Our half-year results still reflect the very weak situation on the materials markets," Thyssenkrupp chief executive, Dr. Heinrich Hiesinger, said.
"While we are now seeing a recovery in material prices, it is coming later than we originally expected and from a lower level and will also be reflected in our figures with a time lag, he added.
What ThyssenKrupp said
"High import pressure and customer caution are reflected in the sharp drop in material prices in the first half of the current fiscal year in the order intake, sales and above all earnings of the materials businesses. Against this background Thyssenkrupp is lowering its forecast for the full fiscal year," it said.
ThyssenKrupp's first half earnings show it's struggling to stomach the steel crisis.