Thyssen-Krupp talks to the federal government about the armaments division

Dusseldorf Immediately at the beginning of the Thyssen-Krupp Annual General Meeting, the Chairman of the Supervisory Board, Siegfried Russwurm, corrected his statement from a year ago. The strategic restructuring of the group was a marathon and not a sprint, he said at the time. “Today I have to admit that even that description was perhaps overly optimistic. It feels more like an obstacle course over the marathon distance.”

Because of the pandemic, the shareholders’ meeting on Friday was held online for the third time – to the displeasure of investors. Marc Tüngler, Managing Director of the German Protection Association for Securities Ownership (DSW), explained that 87 percent of the 5,000 shareholders, institutional and private investors surveyed in Europe wanted a hybrid format or a face-to-face event. “So that you have an orientation as to what your shareholders actually want,” said Tüngler. Investors would rather have a face-to-face discussion.

The board of directors and the head of the supervisory board had to answer the questions from the shareholders about the restructuring of the group and the armaments and steel business in particular detail. The group is talking to the federal government about the future of its armaments subsidiary Marine Systems, explained CEO Martina Merz. “We are aiming for an independent structure for Marine Systems,” she said. The starting point for this is good and Marine Systems is open to partnerships.

However, the environment has changed in such a way that this can be done with great composure – the group cannot be driven to second-best solutions, according to Merz. There is therefore no date for becoming independent.

Marine Systems builds submarines and warships and develops ammunition recovery technology. The subsidiary with locations in Kiel, Hamburg, Bremen and Emden employs around 6900 people. In the past financial year, they achieved an operating profit of 32 million euros with sales of 1.8 billion euros.

A few hours before the general meeting, the fund company Deka had called on the group to sell the Marine Systems armaments business – because of the reputation and compliance risk. “We demand the immediate sale of all armaments activities,” said Ingo Speich, head of the sustainability and governance department at Deka Investment.

Martina Merz

CEO Martina Merz said: “We are striving for an independent structure for Marine Systems”.

(Photo: IMAGO/Revierfoto)

In addition, the search for options for the steel business continues to be difficult. Competitors are either not interested or are not allowed to merge with Thyssen – in 2019 the European Union stopped a deal with the Indian steel company Tata. There are vague hopes of winning a private equity player as a partner.

“We ourselves are not satisfied with the speed of implementation,” explained Merz. “We’ll do whatever we can as soon as the environment is ready.”

Partial IPO of the hydrogen subsidiary Nucera still open

In her speech, Merz had once again asked investors to be patient. The fact that the group has not made progress as planned on some issues is due to the uncertain market environment. The plan for an independent setup and capital market viability of the steel business remains unchanged.

>> Also read: Hydrogen, the beacon of hope, will remain in short supply for a long time

In addition to the steel business, the question of the intended partial IPO of the hydrogen subsidiary Nucera also remains open. This depends primarily on the situation on the stock exchanges, said Merz. “We don’t feel any time pressure, business is developing well.”

Shareholders worried about fatal accidents

At the Annual General Meeting, the shareholders were also concerned about fatal accidents on the Thyssen-Krupp factory premises – and called for measures to improve occupational safety. “Occupational safety is non-negotiable and a priority,” said Human Resources Director Oliver Burkhard.

The death of Refat Süleyman last October, who worked as a cleaner at Thyssenkrupp Steel Europe’s factory premises in Duisburg, still affects the company.

The group is now providing instructions in fourteen languages, and the incident is being worked up with the subcontractor. According to Burkhard, subcontractors would be excluded from working with Thyssen-Krupp if there were signs of breaches of security requirements.

Investors were also concerned about the reason why a dividend would be paid after four years. “Against the background of the strong net financial position, we have decided to give a signal that we are making progress with the transformation,” said Klaus Keysberg. Due to the sale of several subsidiaries, Thyssen-Krupp was able to slightly improve its net financial position from 3.6 to 3.7 billion euros last year.

“In preparation for the decision on the format of today’s Annual General Meeting, we included all possible formats in our considerations,” Russwurm replied to the demands for a hybrid or face-to-face event.

The further procedure depends above all on how the investors vote at the general meeting – in addition, one also wants to wait and see the experiences of other companies.

More: Unrest at Thyssen-Krupp: CEO Merz encounters resistance with sales plans for steel

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