DEEPER IN RED
Troubled German industrial conglomerate Thyssenkrupp reports widening losses.
FRANKFURT: Troubled German industrial conglomerate Thyssenkrupp AG reported yesterday that it sank deeper into the red in its 2018-19 fiscal year, with more pain ahead from a hefty restructuring plan.
The group, a sprawling behemoth that makes products from raw steel to submarines, elevators and car parts, booked a net loss of €304 million ($337 million) in the year to September.
That loss was five times worse than in its previous fiscal year.
Operating, or underlying profit fell 71%, to €272 million, although revenues grew 1% to almost €42 billion — making for an operating margin of just 0.6%.
“The performance of many of our businesses is not satisfying,” chief executive Martina Merz said in a statement.
“This is also due to the fact that necessary structural improvements and restructuring measures were not implemented with the necessary consequence. We will now tackle this,” she added.
Merz, former head of the supervisory board, stepped in as CEO in September after a round of musical chairs at the top of Thyssenkrupp prompted by its business woes.
Predecessor Guido Kerkhoff stepped down after just 14 months on the job, having himself replaced a chief — Heinrich Hiesinger — who was driven out largely by pressure from activist investors.
Kerkhoff’s grand plan for Thyssenkrupp had been to split the company into two halves — “Materials” and
“Industrials”.
But European Commission competition watchdogs threw a spanner into the works by forbidding a merger of its steelmaking arm with Indian company Tata Steel Ltd.
Some 6,000 of Thyssenkrupp’s 160,000 jobs are now set to go, while the company’s crown jewel — its highly profitable elevators division —is slated either for sale or a stock market flotation, with a decision expected in “the first quarter of 2020”.
The group offered little detail on its plans for the steel unit beyond saying executives “are currently working on a concept” whose “aim is to give steel a long-term perspective”, set to be presented next month.
Meanwhile Thyssenkrupp said its industrial plant building division could invite new investors aboard or be hived off entirely.
Given the group’s losses, executives plan not to pay shareholders a dividend for 2018-19 for the first time in six years.
Looking ahead, Thyssenkrupp said it was “generally cautious” about 2019-20, warning that “economic and geopolitical uncertainties” threatened especially “cyclical” businesses like materials and car components.
Adjusted operating profit should come in around the same level as the €802 million booked in 2018-19, but the group forecasts a “significantly higher net loss” based especially on “expenses for the intensification of restructuring”.