The industry is looking forward to a recovery late this year, says Mr Schulz

The firm's pre-tax profits fell to 867m euros (�535m; $772m) on sales of 38bn euros in the year to September, down from 1.09bn euro profits a year earlier.

The company, which is weighed down by up to 15bn euros of debts including unfunded pension liabilities are included, is under severe pressure to cut costs.

In response to such pressure, ThyssenKrupp has announced that it will introducing shorter shifts to cut man hours worked.

Shareholders turned up the heat last month when rumours emerged that the investment group WCM was seeking to buy up to 20% of ThyssenKrupp's shares.

WCM's takeover ambitions are seen as an attempt to take over control of ThyssenKrupp's property portfolio.

Steel price recovery

Looking ahead, ThyssenKrupp has expressed hopes of hiking steel prices as the troubled industry's back-log of unsold products slowly shrinks.

"Given a general economic recovery, a gradual improvement in steel demand is expected for the second half of this year," chief executive Ekkehard Schulz said.

But until then, times will be tough. The first half of this year will be "particularly difficult", Mr Schulz said.

"Demand for steel on the world market is likely to soften further, at least in the first half of 2002, due to an expected fall in steel consumption combined with a further reduction in inventories."

Investor confidence

ThyssenKrupp is the world's fourth largest flat carbon steel maker, supplying lift makers and car manufacturers as well as firms in the construction sector.

And given that demand from these sectors appear slow to pick up, the company is reducing its production.

"This temporary tightening of investment policy is in response to the weak business situation," Mr Schulz said.

"It will result in a reduced cash outflow for investing activities in 2002 and 2003".

ThyssenKrupp's plans were announced in response to a halving of the group's share price over the last two years.

During the period, ThyssenKrupp embarked on two major, but unsuccessful, business ventures.

And the company was hit by a sharp fall in global steel prices.

Bouncing back

The world economic slowdown slammed the steel industry hard during 2001.

The industry, which has been plagued by overcapacity and trade conflicts, saw steel prices fall to their lowest levels for two decades.

But investors who share the company's hopes of an economic recovery in 2002 have pushed its share price back up from their low in September, when confidence was low in the wake of the terror attacks on the US.

ThyssenKrupp shares have risen by 70% since 21 September.