Thyssenkrupp: Steel brings back profit

Steel is once again in great demand worldwide – from which the entire industry benefits. Nevertheless, the largest German manufacturer, Thyssenkrupp, is sticking to its plan to split off the steel division.

For Thyssenkrupp it is success in the fight against Corona – in every respect: the steel and industrial group has vaccinated 12,000 employees itself. According to the company, all processes in the factories and offices ran smoothly again. And above all: because customers around the world are ordering significantly more, the Ruhr group is also back in the black. “The recovery in our markets is progressing,” said CFO Klaus Keysberg in a conference call today. “We continued to catch up. And not only surpassed the previous year’s quarter, but also the previous quarter.”

Orders almost doubled

Compared to the peak of the corona pandemic a year ago, orders at Thyssenkrupp have almost doubled, and sales jumped 50 percent. The largest German steel manufacturer is now benefiting from the fact that, after Corona, it is again investing heavily around the world.

Whether it is chassis for trucks, cars and construction machinery, whether sheet metal for car bodies or steel for construction – the demand is enormous right now, according to Thyssenkrupp. This is particularly true for the important customers in the automotive industry: “Demand remains high,” said Keysberg. “We still see a high level of dynamism there. We still see it in such a way that the automobile manufacturers could actually sell more than they are able to produce.”

One reason is a shortage of materials, for example in the case of important semiconductors. In addition, after many manufacturers had drastically reduced their capacities due to the pandemic, steel is now in short supply during the upswing. This ensures massive increases in sales prices. “That is good for the time being. With our longer-term contract structures, however, we can only reflect the increased raw material and steel prices with a time lag in our revenues and earnings,” said the CFO.

Billions in investments necessary for climate protection

That means: some of the profits only end up in the till six to twelve months later. Still, the company is no exception. Scarce materials, high prices – the entire steel industry is benefiting from this at the moment: Salzgitter, the German number two in the steel business, reports the best result for ten years, the Duisburg steel trader Klöckner the best quarter since 2006. Arcelor, the global market leader, also posted record results.

Nevertheless, Thyssenkrupp is sticking to its plan to part with the traditional and now profitable steel division with around 26,000 employees. The business alone has better chances, believes CFO Keysberg – also with a view to the high investments necessary to reduce the high CO2 emissions during production.

Green or at least CO2-reduced steel is what many customers like car manufacturers want. But for this a considerable renovation is necessary in the factories. Thyssenkrupp speaks of investments of ten billion euros – and hopes for the state. An ulterior motive could be that politics might find it easier if the grants do not flow into a conglomerate with car components, factory construction, shipyards and so on, which has been ailing for years, but into a pure steel company.

Thousands of jobs have already been lost

“A decision about how we can make Steel an independent company and at the same time manage the green transformation requires planning security,” said Keysberg. “With a view to the political support with regard to the regulatory framework, the infrastructure and the financing. That is clear. We will continue to work on that, but it will take time. There will be no decision on this before next spring.”

On the other hand, the downsizing is being pushed forward decisively. 6900 jobs have already been cut, albeit without layoffs. A further 5,000 will follow by the end of next year. And the list of company parts for sale should also continue to be processed as planned. In the end, according to the vision of the board of directors, there should no longer be a strong industrial group as before. But a network of more or less independent divisions.