Thyssenkrupp AG is to cut almost twice as many jobs as planned as the conglomerate’s beleaguered steel business hemorrhages cash and the German government bickers over a possible rescue.
The company would eliminate 11,000 positions over the course of several years, it said in a statement yesterday.
It is forecasting a more than 1 billion euros (US$1.2 billion) full-year net loss after registering a 5.5 billion euros deficit for the fiscal period that ended in September.
Photo: EPA-EFE
“We will have to move further into the ‘red zone’ before we have made Thyssenkrupp fit for the future,” Thyssenkrupp chief executive officer Martina Merz said.
“The next steps could be more painful than the previous ones, but we will have to take them,” Merz said.
The COVID-19 pandemic exposed and worsened deep-seated issues at the company, whose steel division faces severe problems with yawning pension deficits and cheap imports from Asia.
Thyssenkrupp management has held talks with potential buyers and merger partners for the steel unit to address chronic market overcapacity, people familiar with the negotiations said last week.
Management is also in discussions with the German government over an aid package of up to 5 billion euros, the people said.
The conglomerate this year sold its prized elevator division for 17.2 billion euros in a bid to buy time to restructure other parts of the business.
It now has about 13.2 billion euros of cash and undrawn credit lines.
Excluding proceeds from the elevator sale, Thyssenkrupp burned through 5.5 billion euros in the last fiscal period, triple its prior-year outflow.
It is forecasting another 1.5 billion euros of negative free cash flow over the next 12 months.
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