Thyssenkrupp warns of economic pressure as profit falls

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF (Reuters) - Steel-to-elevators group Thyssenkrupp on Tuesday warned of a darkening economic backdrop, a key driver of demand for its products, signalling tough times for its capital goods business ahead of a planned spin off.

Fears of a global economic slowdown have increased in recent months, with euro zone businesses expanding at their weakest rate since mid-2013 at the start of the year as demand fell for the first time in four years.

Thyssenkrupp, which said last year it would spin off its elevator, car parts and plant engineering unit, still expects adjusted operating profit from continuing operations to rise to more than 1 billion euros ($1.13 billion) in 2018/19.

"But at the same time economic and political uncertainties are growing," the company said, pointing to trade conflicts, Britain's move to leave the European Union, and a weakening of growth in China.

First-quarter adjusted EBIT fell 26 percent to 333 million euros, Thyssenkrupp said, pulled down by a 77 percent slump in profit at its discontinued steel unit which it plans to merge with the European operations of India's Tata Steel.

Shares in Thyssenkrupp have lost about a third since the spin-off was announced in September, with investors anxious over a lack of transaction details Chief Executive Guido Kerkhoff has provided so far.

Thyssenkrupp said corporate costs, which have been a major target of shareholder criticism, would fall to below 300 million euros in terms of operating profit by 2020/21 as a result of the new set-up, a decrease of more than a fifth from current levels.

Shares in Thyssenkrupp, which had hit a three-year low a day earlier, traded 1.7 percent higher in pre-market trade, the second-biggest gainers in Germany's blue-chip index.

(Editing by Sherry Jacob-Phillips and Keith Weir)