Dusseldorf After the premature departure of Martina Merz as CEO of the Thyssen-Krupp industrial group, many unanswered questions have arisen in the group. Her successor, Miguel Ángel López Borrego, will have to answer this question from the beginning of June. The current interim boss of the auto supplier Norma Group is said to be working as a restructurer and pushing ahead with the long-awaited restructuring of the group, as people familiar with the process said.
“With him at the helm, we will continue on the path of transformation based on the strategic lines that have been developed,” said Siegfried Russwurm, Chairman of the Supervisory Board, in a press release. Although this is challenging, it is necessary because the structural restructuring of Thyssen-Krupp is not yet complete.
As the new CEO, Borrego has to find a clear direction for the group that is supported by company and employee representatives – unlike his predecessor. Criticism of Merz’ plans to restructure the group had recently grown. Merz wanted to spin off the steel business and convert Thyssen-Krupp into a “Group of Companies” in which all of the Group’s units would operate side by side under the umbrella of a holding company. However, employee representatives and parts of the Management Board spoke out against this purely administrative holding and wanted to make the steel division the core business of the group.
Borrego already gained experience in buying and selling parts of the company as head of Siemens in Spain and chairman of the supervisory board of Siemens Gamesa Renewables from 2018 to 2022. His M&A experience from this time is said to have been decisive for his commitment as head of Thyssen Krupp, according to corporate circles.
From June, the new CEO faces four major challenges:
future of the steel business
The answer to the question of what will become of the steel business will be at the heart of a new corporate strategy. According to company circles, the interest of competitors in buying the steel division is low. Although Thyssen-Krupp had spoken to strategic investors from South America and the Gulf region, they would ultimately shut down the blast furnaces at the Duisburg site. This is not an option for the works councils and IG Metall – they would rather continue to run the business themselves.
However, according to reports from employees, the condition of the steelworks leaves a lot to be desired because the group has “kept short” the steel division – after all, Thyssen-Krupp has long classified it as a sale object.
Several challenges await the new boss at Thyssen-Krupp.
(Photo: Norma Group)
In addition, the approval of funding applications from the European Union (EU) for the green transformation is still pending: Thyssen-Krupp Steel Europe wants to put the first direct reduction plant into operation in Duisburg as early as 2025, with which steel can be produced in a more climate-friendly manner and has an order for two billion euros awarded to the plant manufacturer SMS Group. The state of North Rhine-Westphalia and the federal government want to support the group financially – but the federal and state governments can only pay out the money once the EU has approved it.
According to supervisory board circles, the departure of Merz now takes the pressure off the sale of the steel division in the short term. Because the CEO had driven the spin-off of the steel business significantly. According to group circles, the business could remain under the umbrella of the parent company for the time being if it were to become more independent.
IPO of the hydrogen subsidiary Nucera
The question of the intended partial IPO of Nucera, the hydrogen subsidiary of Thyssen-Krupp, is also still open. The group announced the sale in 2021, but kept postponing it. The timing of the IPO depends on the situation on the stock exchanges, Merz announced at the Annual General Meeting in February: “We don’t feel any time pressure, business is developing well.”
But Thyssen-Krupp missed entering the hydrogen business when the market environment in 2020 was particularly good, an analyst told Handelsblatt: “Back then, investments were made in other areas of the group that were more important in the short term.” The time window was then no longer suitable . “As long as the group does not develop a good concept for this, Nucera will not be able to assert itself against the competitors on the market.”
Sale of the armaments division
Furthermore, Thyssen-Krupp is about to spin off the Thyssen-Krupp Marine Systems (TKMS) shipyard division. TKMS builds submarines and warships and develops ammunition recovery technology. The subsidiary with locations in Kiel, Hamburg, Bremen and Emden employs around 6900 people. The armaments subsidiary is a burden for the group, since the development of new naval units requires significant investment sums.
The sale of the armaments business should keep other sectors interesting for potential investors, according to one analyst: “The ESG criteria of many investors pretend not to invest in companies that have any armaments shares at all – or only to invest in corporations where the armaments division contributes a small share of five percent of sales.” If Thyssen-Krupp sells other shares in the company, however, the armaments division’s share of total sales would increase. This would make the group less attractive to investors.
Preparations for the spin-off are already underway. At the beginning of April, the supervisory board approved plans for a separation in a special meeting, and financial investors are said to have already submitted non-binding offers. But the sale of the armaments division should not be easy.
Although several armaments companies in the industry are willing to acquire a stake, people familiar with the processes reported to the Handelsblatt. However, the federal government has reservations about investments from abroad, such as Naval from France or the Swedish Saab Group, since technology could be withdrawn from Germany.
Cost factor Uhde
Another construction site is the strategic development of Thyssen-Krupp Uhde. The company with around 5000 employees plans and builds electrolysis plants, fertilizer and chemical plants, refineries and coking plants worldwide.
According to an analyst, the chemical plant manufacturer has recently lost a lot of money due to several major projects. In the past five years, up to 50 million euros a year have been lost due to large projects, but also due to poorly designed cost structures. Therefore, the “sale could represent a major value lever,” according to the analyst.
More: Thyssen Krupp boss Martina Merz leaves – share collapses