FRANKFURT: Thyssenkrupp AG will cut almost twice as many jobs as planned as the conglomerate’s beleaguered steel business hemorrhages cash and Germany’s government bickers over a possible rescue.
The company will eliminate a total of 11,000 positions over the course of several years, according to a statement yesterday. It’s forecasting a more than €1bil (US$1.2bil) full-year net loss after registering a €5.5bil deficit for the fiscal period that ended in September.
“We will have to move further into the ‘red zone’ before we have made Thyssenkrupp fit for the future, ” chief executive officer Martina Merz said. “The next steps could be more painful than the previous ones. But we will have to take them.”
Thyssenkrupp shares fell 6% before the open on Germany’s Tradegate exchange. The stock has fallen almost 60% since the start of the year.
Once synonymous with German industrial prowess, Thyssenkrupp is now fighting for survival. The pandemic exposed and worsened deep-seated issues at the company. Its steel division faces severe problems with yawning pension deficits and cheap imports from Asia.
Management has held talks with potential buyers and merger partners for the steel unit in order to address chronic market overcapacity. They’re also in discussions with the German government over an aid package that could be worth at least €5bil, people familiar with the negotiations said last week.
With a workforce of more than 100,000, Thyssenkrupp remains a systemically important employer to politicians in its home state of North Rhine-Westphalia. It’s endured a tumultuous few years marked by a string of management departures and clashes with activist investors Cevian Capital AB and Paul Singer’s Elliott Management Corp.
The conglomerate sold its prized elevator division earlier this year for €17.2bil in a bid to buy time to restructure other parts of the business. It now has about €13.2bil of cash and undrawn credit lines. Excluding proceeds from the elevator sale, Thyssenkrupp burned through €5.5bil in the last fiscal period, triple its prior-year outflow. — Bloomberg
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