UPDATE 2-Thyssenkrupp scraps dividend for first time in six years as pain continues

Christoph Steitz


* Will not propose dividend for 2018/19

* Adj EBIT seen stable in 2019/2020, net loss to widen

* Expects binding bids for elevator division next year

* Shares indicated down 4% (Recasts, adds details on results, pre-market shares and background)

ESSEN, Germany, Nov 21 (Reuters) - Thyssenkrupp on Thursday scrapped its dividend after its full-year net loss widened five-fold, raising pressure on new Chief Executive Officer Martina Merz to sell the group's elevator division as an operational turnaround seems distant.

The German conglomerate has been in decline over the past 18 months, suffering from four profit warnings and two failed attempts to restructure, triggering a decision to sell its best asset - elevators - in a last-ditch turnaround effort.

Caused by operational weakness in its cyclical businesses as well as restructuring charges, Thyssenkrupp's net loss widened to 304 million euros ($337 million) in 2018-19, compared with 62 million euros in the prior year.

"The performance of many of our businesses is not satisfying," Merz said. "This is also due to the fact that necessary structural improvements and restructuring measures were not implemented with the necessary consequence."

The sprawling conglomerate, whose activities range from steelmaking to plantbuilding, said its adjusted operating profit would only remain stable in 2019/20 after it dived 44% in the last financial year to 802 million euros.

This is mainly due to limited visibility in cyclical areas such as the car sector - its largest client group - as well as materials, the company said, also pointing to geopolitical uncertainties.

For the first time in six years, the German conglomerate will also propose not to pay a dividend for 2018/19, while its net loss for the current business year is expected to widen further.

"Disastrous especially looking at the guidance even as weak operations is no surprise," a local trader said. "Merz now has to show how to put the ailing group back on track."

Shares in the group were indicated to open down 4% at 0654 GMT.

Merz, who has been in the job since Oct. 1, has been tasked with accelerating a turnaround started under her predecessor Guido Kerkhoff, who got the boot in September after just 14 months at the helm.

Hopes to ease the balance sheet pressure now lie with the group's effort to sell its prized elevator division, which could be valued at up to 17 billion euros, and which Thyssenkrupp said will draw binding bids next year.

($1 = 0.9029 euros)

(Editing by Michelle Martin and Sherry Jacob-Phillips)