Thyssen CEO seeks fresh start after sweeping board clean
FRANKFURT (Reuters) - Fresh from axing half of his management board this week, ThyssenKrupp (TKAG.DE) Chief Executive Heinrich Hiesinger is expected to ring in a new era at Germany's top steelmaker when he presents results on Tuesday.
The CEO has had his hands full cleaning up some thorny problems left by his predecessor Ekkehard Schulz - including an ill-fated and costly foray into the Americas that is expected to have caused a drop in fiscal fourth-quarter profits.
Losses at the steel mills in the United States and Brazil, bundled in the Steel Americas business, are expected to have piled up to about 1 billion euros ($1.3 billion) in the full year through the end of September.
Aside from the Americas quagmire, Thyssen cited recent headline-grabbing corruption allegations and cartel probes as reasons for the management reshuffle and said it needed a change in its "leadership system and leadership culture".
JP Morgan analyst Alessandro Abate said the departure of Juergen Claassen, Olaf Berlien and Edwin Eichler was a "clear sign of a real shift of power" toward Hiesinger and his relatively new finance chief Guido Kerkhoff.
The reshuffle comes at a tough time for steel companies, with business hit by a slowdown in demand for cars, appliances and new buildings, with little hope for a recovery soon.
ThyssenKrupp has been selling assets to focus more on engineering products, like car parts and plant construction, to reduce its dependence on steel.
The management shakeout also helps Hiesinger cut ties with the past, almost two years after taking the helm, since Berlien and Eichler were seen as ex-CEO Schulz's crown princes.
"This is a radical but good solution," Thomas Hechtfischer, head of shareholder protection group DSW, told Reuters.
The reshuffle could put Hiesinger at odds with Chairman Gerhard Cromme, one of Germany's most powerful managers.
Cromme - who is also the chairman of Germany's most valuable company, Siemens (SIEGn.DE) - was viewed as the architect of the merger of Thyssen and Krupp in 1999 and has headed the supervisory board since 2001.
Quarterly losses at Steel Americas are seen widening to 227 million euros from 184 million a year earlier, according to a Reuters poll, causing an 86 percent drop in adjusted group operating profit to 71.1 million euros.
Thyssen has said a major reason for the poor performance of Steel Americas was that the former management board based its decisions regarding the business on overly optimistic projections.
The company has been trying to sell Steel Americas and has said it wanted to fetch at least book value of 7 billion euros, which is already much less than the 12 billion it has invested in the mills over the years.
Hiesinger is expected to provide an update on the process, with sources saying final bids were due at the end of next week. Analysts have said they saw bids coming to only 3-4 billion euros, with some reports citing even lower figures.
"We think that keeping the assets could become an option" if bids are too low, Societe Generale analyst Alain William said, adding he valued Thyssen's majority stake in Brazilian mill CSA at 2.5 billion euros and the U.S. plant at 800 million.
But Steel Americas was not the only weak spot at Thyssen during the fiscal fourth quarter, with operating profit at four of the six other businesses expected to have shrunk.
The decline is seen as especially steep at the Steel Europe division, where about 2,000 workers are on shortened working hours as Thyssen tries to shrink output amid a weak economy without cutting jobs.
(Reporting by Maria Sheahan; Additional reporting by Matthias Inverardi and Tom Kaeckenhoff; Editing by Mike Nesbit)
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