German industrial group ThyssenKrupp announced its plans to transform into a “group of companies with a lean management model and a clearly structured portfolio”. According to the statement, in the future, the company’s businesses will be divided into two categories: those whose potential will be developed by itself and those for which the group will pursue development paths outside itself.
The group will be slimmed down to just five core businesses: materials, components, car parts, shipbuilding and steel. The remaining businesses for which ThyssenKrupp sees “no sustainable future” will be bundled together in the “Multi-Tracks” segment, separated from the company’s main balance sheet and put up for sale. That process will be overseen by Volkmar Dinstuhl, Head of Mergers and Acquisitions at ThyssenKrupp AG. For plant technology, the stainless steel plant (Acciai Speciai Terni, AST) in Terni, Italy, including the associated sales organization, powertrain solutions and springs and stabilizers, ThyssenKrupp is seeking partnerships or a sale. “Employing a total of 20,000 people, the Multi-Tracks businesses account for annual sales of around €6 billion. In the previous fiscal year, the businesses recorded a negative business cash flow of around €400 million,” said ThyssenKrupp.
According to media sources, ThyssenKrupp is in talks with international peers about consolidating its loss-making steel business. Last year the company was forced by the European Commission to drop plans for a joint venture with India’s Tata Steel. However, sources reported that contact between ThyssenKrupp and Tata Steel never broke off, and that ThyssenKrupp is also in discussions with Sweden’s SSAB and China’s Baosteel and that both may be interested in a majority of the German firm’s steel unit. In February this year, ThyssenKrupp sold its elevator business for €17.2 billion. However, the company posted a net loss of €1.1 billion in the first half of the financial year 2019-2020.
ThyssenKrupp recalled that it recently adopted its “Steel Strategy 20-30” plan, which “encompasses the reduction of 3,000 jobs, optimization of the production network and additional investment totaling €800 million over the next six years”. With this, “ThyssenKrupp is paving the way to make the steel business sustainably viable in what is an extremely challenging competitive environment. The goal is to keep steel production with its integrated value chains and associated jobs in Germany over the long term”. The company added that the necessity of consolidation in the steel industry has strengthened due to the corona crisis, “as there will be a structural increase in existing overcapacities in Europe”.