Despite the current challenges resulting from the coronavirus crisis, thyssenkrupp is continuing to press ahead with the strategic realignment it has initiated.
In their meeting today, the Executive Board presented its respective plans to the Supervisory Board. At the core of the new strategy is the transformation of the company into a high-performant 'Group of Companies' with a lean management model and a clearly structured portfolio. In the future, the company's businesses will be divided into two categories: those whose potential thyssenkrupp will develop on its own or together with partners, and those for which thyssenkrupp will primarily pursue development paths outside the Group.
Clearly structured portfolio of materials and capital goods businesses
Based on the potential of each individual business, the following portfolio decisions were taken. The former Business Areas will be known as 'Segments' going forward:
On the basis of its own market position and competitive strength, thyssenkrupp sees persistently good development potential in Materials Services and Industrial Components (Forged Technologies and Bearings). The company will continue to develop these businesses on its own in the future. thyssenkrupp will keep the Automotive Technology business within the Group. In line with the industry trend for collaboration, alliances and development partnerships are also conceivable on a selective basis. Given the specific market and industry situation for Steel, thyssenkrupp is pursuing performance improvement measures under a stand-alone development within the company while, at the same time, exploring possible partnerships and consolidation options. The same two-way approach applies to Marine Systems.
Those businesses for which thyssenkrupp sees no sustainable future prospects within the Group for various and very specific reasons will be managed separately. These units will be combined in the 'Multi-Tracks' segment under the leadership of Dr.
Systematic performance management in the businesses
The overarching goal of the revised strategy is to boost the performance of all businesses. Each unit has been set an individual profitability target, based on benchmark analysis. All targets are to be systematically backed with specific measures. The businesses' management teams bear full responsibility for the results. Within the Group, capital is allocated based on the anticipated value contribution.
Dr.
Elevator transaction creates capacity for action
In order to finance the realignment, thyssenkrupp decided in February this year to sell the Elevator business to a consortium of financial investors for
In addition, part of the proceeds will be selectively used to develop businesses where respective target margins can be achieved. The exact allocation and priorities for using the funds will depend on how the corona crisis develops; today, this cannot yet be forecast with any adequate degree of accuracy.
Steel: discussions about possible consolidation
In order to safeguard the competitiveness of its steel business, thyssenkrupp recently adopted the 'Steel Strategy 20-30' and negotiated the corresponding collective agreement with employee representatives. This strategy remains the correct course of action. The plan encompasses the reduction of 3,000 jobs, optimization of the production network and additional investment totaling
In the past, thyssenkrupp has repeatedly emphasized the benefits of consolidation in the steel industry. The necessity is only heightened as a result of the corona crisis as there will be a structural increase in existing overcapacities in
This is why thyssenkrupp is also examining possible consolidation solutions for Steel Europe and is keeping all its options open. With the knowledge of the Supervisory Board, discussions are already ongoing. Implementation of the 'Steel Strategy 20-30' remains a component of each potential scenario.
Seeking a national or European solution for Marine Systems
Alongside Steel, thyssenkrupp is also actively seeking consolidation options for its Marine Systems business. In light of the current competitive situation and its market position, the company sees long-term future prospects in developing Marine Systems together with partners. thyssenkrupp believes that naval shipbuilding will be better able to compete in domestic and international markets in a consolidated set-up.
Against this backdrop, thyssenkrupp is in intensive discussions with various potential partners. Politics is also involved in these considerations.
Strengthening the automotive components business within the company
Automotive Technology, in which thyssenkrupp has made substantial investments globally in recent years, will be continued as a segment and undergo strategic realignment. In the wake of the automotive sector's ongoing transformation, size and technology leadership are increasingly becoming mission-critical.
Alongside further measures to enhance performance and competitiveness, Automotive Technology will therefore align with the industry trend in exploring, evaluating and independently pursuing strategic options to develop the automotive components business in alliances and development partnerships. The guiding principle in this approach is to selectively extend product and system competencies as a means of expanding the company's technology leadership in this area and creating the basis to improve its market position overall.
Aligning all areas of the organization with portfolio development
The portfolio transformation and the stronger focus on performance will take the organization another step forward. It means thyssenkrupp will evolve into a
'We have a clear roadmap for the future. We are transforming thyssenkrupp into an international group of largely independent, efficient industrial and technology businesses. The focus lies on industrial development and competitive financial results. With our products and services, we make an important contribution to a better and sustainable future. We combine a performance culture with entrepreneurial and social responsibility. These are the values that will guide the new thyssenkrupp,' Merz concluded.
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