Shares of thyssenKrupp AG were gaining around 2 percent in the early morning trading on Germany’s XETRA after the industrial engineering and steel com
Shares of thyssenKrupp AG were gaining around 2 percent in the early morning trading on Germany’s XETRA after the industrial engineering and steel company late Thursday announced its loss making Steel division’s structural realignment, including a significant cut in Duisburg’s production capacity, as well as jobs that are yet to be quantified.
Amid the ongoing challenging market conditions, the company said its far-reaching optimizations in the production network is aimed to considerably boost competitiveness and profitability.
thyssenkrupp Steel Executive Board, in its initial conceptual outlines of the planned realignment of steel operations, said Duisburg’s production capacities installed in the network will be scaled back significantly. This will be done with consolidation of the crude-steel capacities in Duisburg. The measures will also affect the downstream processing stages as well as the administrative and service areas.
According to the firm, the core element of the realignment will be in the production cut to a shipping corridor of between around 9 and 9.5 million metric tons per year, a figure approximately equating to the shipping level registered over the past three years. This is compared to the current production capacity for a shipping volume of around 11.5 million metric tons.
thyssenkrupp said the planned measures are essential toward maintaining competitiveness so as to lead the steel production operations at the Duisburg location into a secure future, create a strong foundation for long-term employment and establish a resilient supply of steel to drive industrial growth in Germany.
The decision was taken due to the persistently weak state of the economy, and primarily due to fundamental medium and long-term structural changes in the European steel market and in crucial customer and target markets.
There is continuing upward trajectory of energy costs owing to climate policy objectives in Germany, and unchecked rising import pressure, mainly from Asia. The market also experiences ongoing deterioration in the steel trade balance, which in aggregate are making for reduced industry competitiveness.
Shipping volumes are expected to remain at the level registered over recent years in the future as well. In comparison, the total production capacity still installed at present is far too high, meaning that the entire production network is structurally underutilized, the company noted.
The company said it will now put the plans for the restructuring in concrete terms and then will consult with the workforce representation and the responsible committees of the steel division.
Thyssenkrupp said its Steel division aims to finance itself sustainably from its own earning power, and thus to further improve the company’s capital market viability. Until the planned structural measures kick in and take effect, the current performance programs will be further intensified in order to achieve the earnings effects already required right now, it noted.
On XETRA, thyssenkrupp shares are currently trading at 4.98 euros, up 1.7 percent. On Thursday’s regular trading, the stocj closed at 4.90 euros, down 7.02%.
www.fxleaders.com
COMMENTS