Thyssenkrupp’s steel division needs a fundamental reorganization

The steel business of the German conglomerate Thyssenkrupp should prepare for a major reorganization, which may include a reduction in production capacity and jobs. This was stated by Sigmar Gabriel, Chairman of the Supervisory Board of the steel division, Reuters reports.

Thyssenkrupp Steel Europe, Germany’s largest steelmaker, is seeking to bring in Czech energy company EPH as a co-owner, but the process has been delayed due to lengthy negotiations with automotive customers.

Last week, representatives of Thyssenkrupp’s trade unions warned the German conglomerate’s management against cutting jobs or capacity as part of the expected sale of the steel division, which has been hit by high energy and raw material prices, weak demand, and cheap Asian imports.

We have plants that are designed for an annual production of almost 12 million tonnes, but we are currently only selling around nine million tonnes – and the trend may point even lower. This can be offset for a while without adjustments, but not in the long term,» Gabriel told Westdeutsche Allgemeine Zeitung (WAZ).

The chairman of the supervisory board of the steel division told WAZ that the division’s management plans to present a concept for the future by mid-April this year.

«How the current situation may affect future employment over the next few years is one of the questions that the Steel Executive Board will naturally have to address. It certainly cannot be ruled out that capacity adjustments will also result in job cuts,» he explained.

As GMK Center reported earlier, Thyssenkrupp lowered forecasts of sales and net profit in the 2023/2024 financial year, in particular due to falling sales in the steel and raw materials businesses. One of the reasons for the decrease in the planned profit indicator is losses from the depreciation of fixed assets. In the first quarter (October-December 2023), the group wrote down its steel business by another €200 million.