ThyssenKrupp Restructures Business, Realigns Leadership
03/20/2009 - ThyssenKrupp announces sweeping changes to its organization this week, including the resignation of two key executives, streamlining of its five businesses segments into just two, and the reduction of its Executive Board from eight down to five.
ThyssenKrupp announced sweeping changes to its organization this week, including the resignation of two key executives, the streamlining of its five businesses segments into just two, and the reduction of its Executive Board from eight down to five.
The company will combine its Steel, Stainless and Services segments into a new Materials Division, as Dr. Karl-Ulrich Köhler (52) and Jürgen H. Fechter (46) step down from their leadership positions with the Steel and Stainless Segments, respectively. The segments have been developing significant new state-of-the-art steel production facilities in Brazil and in Alabama. The Alabama facility, which will process both carbon and stainless steel, is believed to be one of the largest private industrial investments in the U.S. over the next decade
ThyssenKrupp’s Technologies and Elevator segments will also be combined to form a new Technologies Division.
ThyssenKrupp said the moves will help it to position itself more strongly as an integrated materials and technology Group in response to the economic environment, which continues to deteriorate ‘with even greater speed and severity than expected’. By streamlining its structure, the Group intends to sharpen the focus of its business activity. The Group expect the leaner, more efficient structure to yield additional sustainable cost savings of up to EUR500 million per year.
The restructuring is to be implemented with the start of the group’s next fiscal year on October 1. In the interim, the Steel and Stainless Steel segments will be managed by Edwin Eichler (50), Executive Board Chairman of ThyssenKrupp Services. Eichler will be replaced in his role as leader of the Elevator Segment by Olaf Berlien (46), who will also remain Executive Board Chairman of ThyssenKrupp Technologies. Both changes are effective April 1.
ThyssenKrupp’s restructuring extends also to its Executive Board, with Jürgen H. Fechter and Karl-Ulrich Köhler to stand down by mutual agreement from their positions on the Executive Board as of March 31, 2009, although they ill continue to be available to the Group in an advisory capacity. In addition, the Group is making no reappointment for the position held by Wolfram Mörsdorf (60), whose term of office is due to end on April 14, 2009.
Executive Board Vice Chairman Ulrich Middelmann (64) is also to stand down from the ThyssenKrupp AG Executive Board at the close of the Annual General Meeting on January 21, 2010. From April 1, 2009 until his retirement, Middelmann is to concentrate on implementation of the new Group structure and on the corporate program ThyssenKrupp PLUS. He will also be in charge of Compliance.
The Group also named Alan Hippe (42) as ThyssenKrupp AG Chief Financial Officer, effective April 1, 2009. In his new role, Hippe is to take over responsibility for Controlling, Accounting and Financial Reporting, Taxes and Customs, Mergers & Acquisitions, and Materials Management, as well as Corporate Finance and Investor Relations.
“With this structural and personnel reorganization, ThyssenKrupp will be able to respond more quickly to the market and implement strategic measures more efficiently,” said ThyssenKrupp's Executive Board Chairman Dr. Ekkehard Schulz. “This means we are in the best position to emerge stronger from this difficult economic situation.”
ThyssenKrupp said that it currently expects to report only slightly positive operating earnings—before project and restructuring costs—in the first half of the current fiscal year 2008/09, with a loss expected for the second quarter. Results are expected to be heavily impacted by severe capacity underutilization and price pressure as well as anticipated further write-downs on inventories.
For the second half of the 2008/2009 fiscal year, ThyssenKrupp expects to report positive operating earnings (before project and restructuring costs), ‘provided that the economic situation improves’ as a result of the economic stimulus programs, among other things. The company said that earnings would be significantly affected by project costs for the new steel plants, restructuring expenditures, and write-downs.
The company noted the severe impact of the drastic slump in demand for carbon steel, stainless steel and in international materials distribution on ThyssenKrupp’s business. Some areas of the capital goods business—particularly automotive supplies and civil shipbuilding—are also showing worse-than-expected earnings.
The company also said that earnings in its Elevator segment remain very encouraging and are fully in line with expectations.
