September 14, 2018 / 8:10 AM / 11 days ago

Thyssenkrupp reorganizes industrials unit as problems mount

FRANKFURT (Reuters) - Thyssenkrupp is to separate its shipbuilding business from its struggling industrials division in a restructuring that could decide the fate of interim Chief Executive Guido Kerkhoff.

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

The move allows the group to focus on turning around the division’s plant construction business under new management, and potentially clears the way for a sale of the shipbuilding unit.

Kerkhoff, who took over until a permanent replacement is found for ex-CEO Heinrich Hiesinger, joined in 2011 and is seen by some investors as part of an ‘old guard’ that failed to turn around the conglomerate fast enough.

Sources told Reuters this week that the restructuring at Industrial Solutions could help Kerkhoff to mark himself out as a strong contender to keep the job.

The division triggered a profit warning in July, hurt by cost overruns at projects in Turkey, Saudi Arabia and Australia and adding yet another item Thyssenkrupp’s list of problems, which also include a vacant chairman position.

As part of the overhaul, the group’s marine unit, which builds battleships and submarines, will be spun off from Industrial Solutions and managed directly by Thyssenkrupp AG from Oct. 1, leaving the division to focus on factory engineering.

“We have now undertaken the necessary steps to enable Industrial Solutions to concentrate entirely on plant construction,” Kerkhoff said in a statement.

The division’s current Chief Operating Officer Marcel Fasswald will become its new CEO, while Oliver Tietze will join the unit’s board as chief financial officer. Current CEO Peter Feldhaus, who took the role in May last year, will leave the group, as will current CFO Stefan Gesing.

“Marcel Fasswald has the clear task of ensuring that Industrial Solutions achieves the much-needed turnaround with his extensive experience and expertise in plant construction,” Kerkhoff said.

Once a stable profit contributor, Industrial Solutions has turned loss-making over the past two years.

It made a nine-month operating loss of 224 million euros ($262 million). In the 2015/16 financial year, it accounted for about a quarter of group profits.

Thyssenkrupp is already slashing a total of 2,000, or about one in ten, jobs at the division, which it hopes will improve operating profit by up to 200 million euros a year.

Separating the marine unit from the division could fuel hopes for a sale or divestment. Rheinmetall and French shipping company Naval Group have been considered potential buyers, people close to the matter have said in the past.

($1 = 0.8538 euros)

Editing by Maria Sheahan and Keith Weir

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