Thyssenkrupp sells CSA steel plant in Brazil for €1.5 billion
Staff Writer |
The industrial and technology group thyssenkrupp has taken another big step on its Strategic Way Forward.
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The company has reached agreement with Ternium on the sale of the CSA Siderúrgica do Atlântico (CSA) steel plant in Brazil. The purchase price (enterprise value) is €1.5 billion.
With the sale of CSA, thyssenkrupp is bringing its loss-making chapter of Steel in the Americas to an end: In 2005 the Group decided to expand its steel business into the Americas.
The original plan was to produce slabs at low cost in Brazil and process and sell them in the USA and Europe. The plan didn’t work out.
Following a significant increase in construction costs for the facilities in Brazil and Alabama in the USA as well as technical problems with the ramp-up of the plants and high start-up losses, thyssenkrupp placed the entire project under review immediately after Heinrich Hiesinger took over as CEO.
To date Steel Americas has cost the Group over €12 billion in capital expenditures and start-up losses.
Even after deducting the proceeds from the divestment of the plants in the USA and Brazil and Vale’s share in the financing, a net loss of around €8 billion remains.
The impact is visible on the balance sheet to this day. Redressing it completely will take thyssenkrupp a few more years.
Ternium is a leading Latin American steel producer with production facilities in Mexico, Argentina, Colombia, the southern United States and Guatemala.
With shipments of 9.8 million metric tons of finished steel products, Ternium purchased approximately 3.7 million tons of steel slabs from third parties in 2016.
With the purchase of CSA, Ternium will acquire additional production capacities of up to 5 million metric tons of slabs per year.
Under a slab supply contract agreed up to 2019, CSA will continue to deliver an annual 2 million tons to the ArcelorMittal/Nippon Steel plant in the USA.
The sale of CSA will take economic effect retrospectively at September 30, 2016. Until the closing of the transaction thyssenkrupp’s Steel Americas business area will be reported as a discontinued operation.
The sale will have corresponding effects on the Group’s net income. Beyond this thyssenkrupp does not expect the transaction to have any impact on the adjusted EBIT and free cash flow before M&A targets of its continuing operations for the current fiscal year 2016/2017. ■