FRANKFURT (Reuters) - A major shareholder in Thyssenkrupp has criticized Chief Executive Heinrich Hiesinger for failing to achieve his own profit targets, raising tensions before the German industry group’s annual meeting next Friday.
Swedish investor Cevian reiterated its call to restructure Thyssenkrupp, in which it controls an 18 percent stake, piling pressure on Hiesinger as he tries to complete a merger of its steel business with that of India’s Tata Steel.
“Thyssenkrupp is not developing in the way we expected. Something has to change in the structure of the business,” Lars Foerberg, co-founder of Cevian, told the Frankfurter Allgemeine Sonntagszeitung.
Separately, the Spiegel news weekly reported that Hiesinger would tell shareholders that Thyssenkrupp had reduced its debts significantly in recent years and invested billions of euros, while its restructuring was on track.
Hiesinger and his management team consider those achievements to be a success, Spiegel reported citing people it did not name, although a goal of posting earnings of 2 billion euros ($2.44 billion) in 2017 would be missed.
Foerberg, for his part, took Hiesinger to task over his long-term plans to achieve operating margins of between 6 and 7 percent at Thyssenkrupp’s non-steel operations.
“Even today, the company is still achieving just half of its margin target. That is simply too little,” Foerberg told the newspaper in extracts released from its Sunday edition.
He did not give a direct answer to a question on whether Hiesinger should resign, but said: “If a strategy doesn’t achieve the desired goal, you have to change it. We expect that both from the Thyssenkrupp management and supervisory boards.”
Cevian last clashed with Thyssenkrupp after third-quarter results were published in November that showed the company achieving its highest order intake in five years as it develops its ‘smart’ elevator and automotive businesses.
While facing investor criticism that Thyssenkrupp’s conglomerate structure is outdated, Hiesinger has also sought to placate a unionized workforce fearful of job losses that might arise as a result of the steel merger.
Thyssenkrupp management and workers finally struck a deal in December to secure steel plants and jobs, in a major step toward completing a merger that would create Europe’s second-largest steel group after Arcelormittal.
Reporting by Douglas Busvine; Editing by Kevin Liffey