(Reuters) - Struggling German conglomerate Thyssenkrupp (TKAG.DE), whose shares hit a fresh 16-year low on Monday, put three underperforming businesses under review last week, hoping this will ease pressure on the group’s cash flow.
The new plans come in addition to a planned sale or listing of its elevators division, by far its most profitable business.
The three units put up for review — Springs and Stabilizers, System Engineering and Heavy Plate — account for 4%, or 1.7 billion euros ($1.9 billion), of group sales but a quarter of cash outflow this year, more than 250 million.
Their combined 9,300 staff make up 5.7% of Thyssenkrupp’s total workforce. The company is now drawing up restructuring plans. If that should fail the businesses could be sold or shut down.
Here are some basic facts on the units:
- part of Thyssenkrupp’s Components Technology business division
- described as “the biggest drag” on profits and cashflow by Thyssenkrupp Chief Executive Guido Kerkhoff
- makes chassis components for the car industry, a heavily commoditized market
- employs about 3,600 staff
- adjusted loss before interest and tax of 127 million euros in the 2017/18 fiscal year
- negative cash flow of 109 million euros in 2017/18
- has production sites in Mexico, Brazil, China, Hungary and Germany
- peers include Italy’s Sogefi Group (SGFI.MI), Germany’s Mubea and U.S.-based Federal-Mogul
- part of Thyssenkrupp’s Industrial Solution business division
- subject to “inefficient cost basis” and “increasing customer reluctance”, CEO Kerkhoff says
- makes assembly lines for the car, aerospace and battery industries
- employs about 4,900 staff in Europe, Asia and the Americas
- made adjusted earnings before interest and tax (EBIT) of 15 million euros in 2017/18 on sales of 1.1 billion (adj EBIT margin of 1.4%)
- cash flow of 16 million euros in 2017/18
- part of Thyssenkrupp’s Steel Europe business division
- makes solid steel plates for the construction, shipbuilding and pipeline industries
- hit by “import pressures” from cheaper rivals, Thyssenkrupp says
- employs about 800 staff in Duisburg, Germany
- made an adjusted loss before interest and tax of 28 million euros in 2017/18
- negative cash flow of 47 million euros in 2017/18
Reporting by Christoph Steitz in Frankfurt and Tom Kaeckenhoff in Duesseldorf; Editing by Keith Weir