FRANKFURT, Germany — Heavy industrial giant ThyssenKrupp announced Friday that it fell into the red in the first quarter of its current business year, weighed down by “a sharp deterioration in the climate for the materials businesses.” 

ThyssenKrupp, which runs its business year from October to September, said in a statement that it ran up a net loss of 23 million euros ($25.86 million) in the three months to December. A year earlier, the group had booked net profit of 54 million euros ($60.71 million) and analysts had been projecting an increase in net profit this year. 

“It was a varied start to the new fiscal year at ThyssenKrupp,” the group said. “The capital goods businesses continued their solid performance, achieving gains in order intake, sales and earnings.

“However, as expected overall performance in the reporting period was impacted by a sharp deterioration in the climate for the materials businesses. The main reason for this was continued high import pressure.”

Steel is historically ThyssenKrupp’s core business, but it is also active in elevators, industrial plant technology, submarines and car parts. 

China’s rampant overproduction in its steel industry has hurt European companies through low prices. Underlying or operating profit fell by 26% to 234 million euros ($263.08 million) in the October-December period, the statement said. Sales fell by 5.0% to 9.6 billion euros and orders intake was down 3.0% at 9.8 billion euros. 

“Despite the difficult environment, earnings and cash flow expectations for the full year remain within the forecast corridor,” ThyssenKrupp said.

“The solid performance of the capital goods businesses confirms that the path we are taking to become a diversified industrial group is right,” CEO Heinrich Hiesinger said. “The materials business continues to cause us concern. We are actively countering this with our efficiency program.” 

ThyssenKrupp said that attaining this year’s targets would be “based in particular on the assumption of a significant recovery of the materials markets in the second fiscal half. The current very difficult conditions on the materials markets are not expected to last.”

Against this background, the management board “continues to expect a clear increase” in net profit.

Copyright Agence France-Presse, 2016