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FRANKFURT (Reuters) - Thyssenkrupp on Thursday posted better-than-expected third-quarter orders and profits, helped by a recovery in steel prices that boosted its Steel Europe unit which the German group is trying to merge with Tata Steel's European unit.
"We are pleased by the recovery in earnings at the materials businesses. We have achieved the minimum level necessary to cover the cost of capital," Chief Executive Heinrich Hiesinger said in a statement.
The company posted a 14 percent rise in third-quarter order intake to 10.7 billion euros ($12.6 billion) and adjusted earnings before interest and tas (EBIT) of 620 million. Analysts had, on average, expected order intake of 10.3 billion euros and adjusted EBIT of 493 million.
Quarterly operating profit at Steel Europe, which sources say Hiesinger hopes to agree to merge with Tata Steel's European business before the end of next month, more than doubled to 232 million euros, well above the poll average of 187 million euros.
Hiesinger said that large swings in steel and raw material prices were a key argument in favour of the group's continued focus on more stable and better performing business lines, most notably its elevators business.
Thyssenkrupp kept its outlook for sales and profits but toned down its forecast for free cash flow before M&A, citing the sale of its Brazilian steel mill CSA, which closes earlier than expected.
It now expects free cash flow before M&A to be negative in the mid to higher triple-digit million euro range. It was previously forecast to be a negative mid triple-digit million euro amount.
($1 = 0.8510 euros)
(Reporting by Christoph Steitz; Editing by Georgina Prodhan)
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