UPDATE 2-ThyssenKrupp sees no economic upturn in 2013 after profit slump
* Sees most core markets for cyclicals stagnant
Q1 adj EBIT down 38 pct at 229 mln eur vs f'cast 220 mln
* Net down 29 percent at 29 mln euros vs f'cast 40.8 mln
* Affirms outlook for decline in FY adj EBIT to 1 bln eur
* Says Steel Americas sale on track
By Maria Sheahan
FRANKFURT, Feb 12 (Reuters) - ThyssenKrupp AG, Germany's biggest steelmaker, warned it saw no global economic recovery this year after a slump in steel prices and weak car markets caused a 38 percent drop in quarterly core profit.
Steel companies have been struggling to make a profit in the rapidly shrinking European market, where austerity has cut demand for cars and new buildings, and demand is seen declining further this year.
ThyssenKrupp said on Tuesday it expected most core markets for its cyclical goods to stagnate this year, as the euro zone debt crisis weighs on national economies while emerging markets grow more slowly.
Its bigger rival ArcelorMittal SA, the world's No.1 steelmaker, last week reported a $3.7 billion loss for 2012 after writing down the value of its European steel business by several billion dollars.
ThyssenKrupp Chief Executive Heinrich Hiesinger is overhauling the Essen, Germany-based company to reduce exposure to the volatile steel sector and shift investments into higher-margin products and services, such as elevators, submarines and parts for manufacturing plants.
In ThyssenKrupp's fiscal first quarter through December, adjusted earnings before interest and tax (EBIT) declined to 229 million euros ($306.4 million), just above consensus expectations of 220 million in a Reuters poll, weighed down by a 71 percent drop in profit at its European steel business.
Net profit was down 29 percent at 29 million euros, falling short of consensus of 40.8 million.
Shares in ThyssenKrupp were seen falling 0.7 percent at the market open against an expected 0.2 percent drop in Germany's blue-chip DAX index.
LOWER STEEL ORDERS
ThyssenKrupp said last week it would slash more than 2,000 jobs at Steel Europe, which accounts for just over a quarter of group sales, in its cost-cutting drive and could see another 1,800 workers go via divestments.
The move will save 500 million euros and is part of the company's drive to save an overall 2 billion euros in costs.
Revenue and new orders at Steel Europe were down about 11 percent in the first quarter, as prices for flat steel fell and customers in the automotive and construction industries drew down their inventories.
But ThyssenKrupp said the economic cycle may have reached its low point.
The company said it still saw full-year adjusted EBIT from continuing businesses declining by more than half to about 1 billion euros, from 2.29 billion last year, while sales would remain about flat at 40 billion euros.
CEO Hiesinger is cutting costs, changing the company's structure and selling assets with 10 billion euros in annual sales to return ThyssenKrupp to growth.
But he faces an uphill battle as the global economy remains weak and after a series of setbacks and scandals caused him to axe half his management board late last year.
One of the company's most pressing problems has been its loss-making Steel Americas business, which it is trying to offload after sinking billions of euros into it over the years.
A massive writedown on the value of the project, comprising two plants in Brazil and Alabama, led to a 4.7 billion euro annual loss last year, forcing ThyssenKrupp to pay no dividend for the first time since the 1999 merger of Thyssen and Krupp.
ThyssenKrupp said on Tuesday the sale of Steel Americas was on track and it was confident it could "find a new way forward" for both plants by the end of its fiscal year, which runs through September.