November 20, 2014 / 6:32 AM / 3 years ago

UPDATE 3-ThyssenKrupp restarts dividend as turnaround takes hold

* Dividend resumed at 0.11 euros per share vs Reuters poll average of zero

* FY net profit 24 mln eur, first after 3 yrs of losses

* Shares up 2.9 pct (adds CEO quotes, details and background on turnaround)

By Georgina Prodhan and Tom Käckenhoff

ESSEN, Germany, Nov 20 (Reuters) - Germany’s biggest steelmaker ThyssenKrupp is resuming dividend payments a year earlier than expected, signalling confidence in a turnaround with the promise of a modest payout for shareholders after it beat profit forecasts.

ThyssenKrupp said on Thursday it would pay 0.11 euros ($0.14) a share for the year to end-September. “It is a signal to our shareholders that we have reached a turning point in our earnings development,” Chief Executive Heinrich Hiesinger said.

ThyssenKrupp shares rose more than 3 percent before settling back to trade 1.6 percent higher at 20.04 euros by 1243 GMT, and were the top gainers in a 0.7 percent-lower German DAX.

“They came out with a quite small 11 cents per share announcement, but it’s symbolic of the company’s transformation after it was pushed into a distressed asset sale and a capital increase a year ago,” said analyst Seth Rosenfeld of Jefferies.

Hiesinger took over in 2011, inheriting a company that had spent 12 billion euros on expanding its steel businesses in Brazil and Alabama, only to be hit by a global economic crisis that choked steel demand, and a strengthening of Brazil’s real.

He began to turn ThyssenKrupp away from its steelmaking roots towards higher-margin businesses like high-tech elevators, but was still forced into a fire sale of the Alabama plant and an emergency rights issue last year to keep creditors at bay.

On Thursday, ThyssenKrupp reported its first net profit in four years, as all its units reported improvements except for logistics, which was depressed by two loss-making units the company wants to sell.

Underlying operating profit more than doubled to 1.33 billion euros in the year to end-September, and the company said that should rise to at least 1.5 billion this year, although it would need to make 2 billion before it could raise its dividend.

“We will not let up in our efforts but will keep the pressure on. That applies to our efficiency programme as well as our operating performance,” Hiesinger said as he raised the company’s savings targets by 200 million euros.

ThyssenKrupp is expected to be lifted in 2015 by a modest increase in steel demand in Europe, as well as its structural shift in favour of high-profit businesses like elevator technology and submarine building.

Steel still makes up about a quarter of ThyssenKrupp’s sales but only one-tenth of its operating profit.

European steel lobby group Eurofer expects demand growth of 2.6 percent - still small against a drop of 25 percent since 2008. Price pressure caused by imports from outside the bloc is expected to remain severe.

Hiesinger emphasised that ThyssenKrupp had to concentrate on factors it could control, and said he planned to sell a Brazilian slab steel plant in the medium term, after a failed attempt last year.

“We cannot expect any major support from the economy,” he said of the steel business. “Particularly in terms of prices, market conditions will probably remain difficult.”

Hiesinger’s hand was strengthened on Wednesday when his contract was renewed ahead of time until 2020, a sign of approval from the company’s two biggest shareholders, the Krupp Foundation and activist investor Cevian.

The Krupp foundation, a philanthropic organisation set up by a member of the Krupp family whose 19th century firm merged with Thyssen in 1999, had its stake diluted to 23 percent when it did not take part in last year’s capital increase.

$1 = 0.7967 euro Reporting by Georgina Prodhan; Editing by Peter Graff

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