And once again a loss: The ailing conglomerate Thyssenkrupp will report a deficit in the current financial year – a low three-digit million sum, as the Essen MDax member announced on Wednesday. At least that’s an improvement on the previous year, when the bottom line was a loss of two billion euros. However, CEO Miguel López had previously predicted a balanced result. But because of the weak economy and tough competition in the steel business, the German-Spanish company lowered its annual profit and sales forecasts, for the second time in just a few months.
The business year for the company with 100,000 employees ends at the end of September, López now presented it Figures for the quarter to March. Sales fell by a tenth compared to the same period last year, and the bottom line was a loss of 78 million euros, mainly due to depreciation on the balance sheet.
In order to achieve better results in the future, López has prescribed a savings and efficiency program; The 59-year-old is also looking for investors or buyers for the steel and shipyard division. When presenting the figures, the former Siemens manager, who has led the company for a good eleven months, emphasized the progress that has been made here. In the efficiency program, which has been running since autumn, more than 4,600 measures have been identified and are now being gradually processed, said the boss. The US financial investor Carlyle is interested in the shipyards, the world market leader for non-nuclear-powered submarines.
The future of the steel subsidiary Thyssenkrupp Steel Europe is hotly contested. Two weeks ago, thousands of employees took part in a protest against López’s actions organized by IG Metall, and demonstrations are scheduled to take place again next week. Management is currently drafting a plan to reduce the capacity of the underutilized Duisburg location. The group has not been able to find buyers for the production volume that has been possible so far for years, also because the European auto industry is weakening, López said on Wednesday. And that is one of the main reasons for the poor business figures. The industry also suffers from cheap steel imports from China. The CEO said EU punitive tariffs on these imports were “an issue we need to deal with”. The US government just increased tariffs on certain imports from China.
Blast furnaces are too bad for the climate
In Duisburg, the company operates Europe’s largest steelworks with four blast furnaces, where 13,000 of the 27,000 employees work. There are also two blast furnaces at HKM, a Duisburg joint company between Thyssenkrupp and two partners. If a blast furnace were to be shut down or even the entire HKM site was closed, it would cost thousands of jobs. López said the group wanted to get by “as far as possible without compulsory redundancies”. A collective agreement prohibits this for two years anyway.
In the long term, all blast furnaces will have to be shut down because production with coke and coal is too harmful to the climate. The company is already building a so-called direct reduction plant in Duisburg, which will instead produce pig iron from 2029 using climate-friendly hydrogen. However, this system costs three billion euros – and only replaces one blast furnace. The management’s eagerly awaited plan therefore also addresses the question of when and how many blast furnaces will be replaced by more of these systems.
The federal and state governments are supporting the construction and operation of the first direct reduction plant with two billion euros in subsidies. López defended the windfall with the argument that maintaining – then climate-friendly – steel production was “extremely important” so that Germany does not become too dependent on foreign suppliers. However, Thyssenkrupp and other German steel companies still need to replace several more blast furnaces. When asked whether the state therefore needs to provide more subsidies, the manager said this is something “we can wish for”.
The rich Czech could supply energy
IG Metall demands that the group refrain from layoffs at the steel subsidiary and keep HKM. The trade unionists are currently angry with López because they feel poorly informed about the entry of Czech billionaire Daniel Křetínský. He will initially take over 20 and later 50 percent of the shares in Thyssenkrupp Steel Europe.
In the future, climate-friendly steel production will require huge amounts of green electricity and green hydrogen. Energy will therefore account for up to 50 percent of manufacturing costs in 2035, said the CEO. Now it’s ten percent. Conveniently, Křetínský’s group of companies operates power plants and invests heavily in green electricity projects. That’s why the Czech’s entry brings important energy expertise to the steel subsidiary, said López. Perhaps the daughter could also have deliveries directly from Křetínský, but that has not yet been decided.