November 5, 2018 / 7:07 PM / a year ago

Thyssenkrupp to replace head of elevators division in shake-up: sources

FRANKFURT (Reuters) - Thyssenkrupp (TKAG.DE) is planning to replace the head of its elevators division, Andreas Schierenbeck, two sources familiar with the matter said on Monday, as part of a far-reaching restructuring drive at the German conglomerate.

FILE PHOTO - A logo of ThyssenKrupp AG is pictured outside the ThyssenKrupp headquarters in Essen, November 23, 2017. REUTERS/Thilo Schmuelgen

The move is part of a broader push by Chief Executive Guido Kerkhoff, who was awarded a five-year contract in October, to stamp his authority on the steel, elevators and submarines manufacturer as he defends a deal to split the company in two.

“Margins at elevators have been dwindling and Thyssenkrupp needs a manager who can hike the division’s performance ahead of the spin-off,” a source familiar with the matter said. The elevators division has cut its full-year outlook twice this year.

Thyssenkrupp declined to comment on whether Schierenbeck would be sidelined or dismissed, while Schierenbeck could not immediately be reached for comment. German daily Handelsblatt was first to report that he would be replaced.

Thyssenkrupp plans to spin off its elevators, car parts and plant engineering units into a separate listed entity named Thyssenkrupp Industrials, while separating its steel and materials-related activities.

The elevators division, Thyssenkrupp’s cash cow, forms the heart of the capital goods businesses to be spun off. But even this division has seen its margins under pressure, prompting the Essen-based conglomerate to consider more deep-seated reforms.

When slashing the unit’s outlook, Thyssenkrupp cited high raw material costs and currency headwinds that have kept adjusted operating margins at 11.6 percent after nine months, unchanged from a year earlier.

This is lower than the 12 percent at Finnish rival Kone (KNEBV.HE), which cut its annual outlook last month.

It was not immediately clear whether Thyssenkrupp would seek an external candidate to replace Schierenbeck, who has been head of the elevator unit for nearly six years, or whether the job would be given to a company insider.

The landmark deal to split the company has failed to lead to a sustainable rise in the company’s share price, prompting Kerkhoff to seek new ways to hike the company’s performance.

“Kerkhoff needs to show that he is the right person for the job. There is a management overhaul under way,” a second source familiar with the matter told Reuters.

Thyssenkrupp announced a restructuring of its Industrials unit after the division triggered a profit warning in July, hurt by cost overruns at projects in Turkey, Saudi Arabia and Australia.

Reporting by Edward Taylor and Christoph Steitz; Editing by Jan Harvey and Adrian Croft

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