With the planned merger of Thyssenkrupp and Tata’s European steel holdings likely to fall apart (see other story), Thyssenkrupp CEO Guido Kerkoff said the company would proceed with a “strategic realignment” resulting in a “lean organization,” involving cuts in administrative costs and the launch of a new group-wide performance program including the cutting of 6,000 jobs.
Discussions with employee representatives on this matter would be initiated immediately, he said. The group currently has 27,000 steel employees.
“Our current performance is worse than expected,” said Kerkoff in a conference call Friday. “The bottom line today is that we are still suffering from the long-term consequences of our bad investments in Brazil and the US. The ‘Steel Americas’ adventure cost us a total of $8 billion.”
ThyssenKrupp’s board will propose that the group should no longer be separated into two independent companies and that an IPO of its “elemental and core” elevator business should go ahead. “The economic downturn and its effects on business development and the current capital market environment have led to the separation not being able to be realized as planned,” it stated.
ThyssenKrupp will also reintegrate its Steel Europe Business Area back into the group in the fiscal third quarter which would lead to an adjustment of the forecast for the 2018-19 (October-September) financial year. The board said this would mean an adjusted EBIT of Eur1.2 billion ($1.35 billion), up from the Eur1.1 billion previously estimated, and a net loss for the year.
The group will also increase its provisions for ongoing German cartel proceedings on heavy steel plate: ThyssenKrupp Steel Europe AG is, among other companies, the subject of preliminary investigations into alleged cartel proceedings in both heavy plate and flat carbon steel but noted that the proceedings into the field of flat carbon steel have for the time being been discontinued.
ThyssenKrupp will publish the adjusted group forecast with its Q2 report on May 14, it said.