Feb. 13 (Bloomberg) -- ThyssenKrupp AG, Europe's third- largest steelmaker, said fiscal first-quarter earnings rose 65 percent, helped by increasing demand for the metal as economic growth in the U.S. and Europe picked up.

Net income rose to 89 million euros ($114 million), or 18 cents a share, in the three months through December from 54 million euros, or 10 cents, a year earlier, Dusseldorf, Germany- based ThyssenKrupp said in a faxed statement. Pretax profit rose to 166 million euros from 141 million euros.

``After the economically subdued summer months, the overall economic picture brightened slightly in the further course of the year,'' the company said in its quarterly report. ``This also stimulated ThyssenKrupp's business.''

Increasing demand for metal from carmakers such as DaimlerChrysler AG helped ThyssenKrupp increase sales at its steel division. Chief Executive Ekkehard Schulz has also been selling businesses that aren't related to steel, car-parts or elevators to boost profitability and cut debt.

Borrowings stood at 4.5 billion euros at the end of December, 318 million euros more than at the end of September. New orders increased 6.5 percent to 9.6 billion euros, while sales were unchanged at 8.7 billion euros, held back by the euro's 7 percent gain against the dollar.

The company said it expects 38 billion euros of sales for the full year.

Economic Growth

The U.S. economy may grow as much as 5 percent this year, the fastest pace since 1984, Federal Reserve Chairman Alan Greenspan said Wednesday. The European Commission expects economic growth in the countries that share the euro to accelerate to 1.8 percent this year from 0.4 percent in 2003.

Pretax profit at the steel division rose 26 percent to 91 million euros. ThyssenKrupp increased steel prices by 20 euros a ton in January to counter rising raw material costs and plans to raise them by as much as 40 euros in April. European export prices for benchmark hot-rolled coil have gained 44 percent in the past six months, according to Metal Bulletin.

World steel production may reach 1 billion tons this year, led by gains in China, the Brussels-based International Iron and Steel Institute said this month. In Germany, output will probably rise to 46 million tons from 45 million tons last year, ThyssenKrupp has said.

ThyssenKrupp reiterated that it expects pretax profit of 1 billion euros or more for fiscal 2004. The company in December revised its target of 1.5 billion euros because an expected economic recovery failed to materialize last year. ThyssenKrupp plans to meet its original goal ``as soon as possible.''

Schulz has accelerated asset sales after Standard & Poor's a year ago lowered ThyssenKrupp's debt rating by two steps to a high- yield, high-risk ranking of BB+ on concern about pension obligations. The company plans to sell assets with 4.8 billion euros in revenue in the next two years, it has said.

To contact the reporter on this story: Nicole Weimer in the Frankfurt newsroom at 207 and nweimer@bloomberg.net.

Last Updated: February 13, 2004 02:05 EST