Thyssenkrupp slashing 11,000 jobs as steel woes worsen cash burn

This brings total job cuts to 11,000, a third of which have already been realised under a previous programme.
This brings total job cuts to 11,000, a third of which have already been realised under a previous programme.PHOTO: EPA-EFE

FRANKFURT (BLOOMBERG) - Thyssenkrupp will cut almost twice as many jobs as planned just last year as the German conglomerate's beleaguered steel business hemorrhages cash.

The company will eliminate a total of 11,000 positions over the course of several years, according to a statement on Thursday (Nov 19). It's forecasting a more than one billion-euro (S$1.59 billion) full-year net loss, after registering a 5.5 billion-euro deficit for the period that ended in September.

"We will have to move further into the 'red zone' before we have made Thyssenkrupp fit for the future," chief executive officer Martina Merz said. "The next steps could be more painful than the previous ones. But we will have to take them."

Once synonymous with German engineering prowess, Thyssenkrupp is fighting for survival. The pandemic exposed and worsened deep-seated issues at the company, which still employs more than 100,000 people. Its steel division faces severe problems with yawning pension deficits and cheap imports from Asia.

Excluding proceeds from the sale of its elevator division, Thyssenkrupp burned through 5.5 billion euros in the last fiscal period, triple its prior-year outflow. It's forecasting another 1.5 billion euros of negative free cash flow over the next 12 months.

The company said it needs to cut more than the 6,000 jobs planned in May 2019 because of long-term market developments and effects of the coronavirus pandemic.

Thyssenkrupp expects to make a "fundamental" decision in the spring on a solution for its steel business, which swung to a 946 million-euro loss in the last fiscal year. The full group's adjusted deficit before interest and taxes was 1.6 billion euros.

Management has held talks with potential buyers and merger partners for the steel unit in order to address chronic market overcapacity. They're also in discussions with the German government over an aid package that could be worth at least 5 billion euros, people familiar with the negotiations said last week.

Although Thyssenkrupp expects sales growth in the low- to mid-single-digit range after a 15 per cent contraction last year, the company expects an adjusted EBIT loss in the mid-three-digit million-euro range.