June 14, 2019 / 11:42 AM / a year ago

Thyssenkrupp names new steel business CEO to lead major overhaul

FRANKFURT (Reuters) - Germany’s Thyssenkrupp will promote Premal Desai to lead its steel division and restructure the business in the face of dwindling global demand, the elevators-to-submarines group said on Friday.

Thyssenkrupp Steel Europe, whose roots go back more than 200 years, has suffered a sharp fall in profits and will bear the brunt of planned job cuts across the group.

Of the 6,000 layoffs Thyssenkrupp is planning, 2,000 will come from Steel Europe, more than 7 percent of the division’s workforce. The unit’s second-quarter adjusted operating profit plunged 81 percent to 37 million euros ($42 million).

“There’s a lot to do,” Desai, who has served as Steel Europe’s finance chief since 2015, said. “The market environment is not easy, but we are in a strong position and have a lot of potential.”

His appointment comes five weeks after a planned deal to combine Thyssenkrupp’s steel division with the European unit of Indian peer Tata Steel collapsed, leading to a strategic U-turn that includes the listing of its elevator unit.

Steel producers in Europe have been hit by falling demand and rising supply, partly caused by an escalating Sino-U.S. trade dispute as well as a downturn in the automotive industry.

Sector leader ArcelorMittal last month cut production twice, only days after British Steel, the country’s No.2 steel producer, collapsed after failing to secure emergency government funding.

On Friday, China - the world’s largest steel market - said it was raising anti-dumping duties on certain alloy-steel seamless tubes and pipes used at utilities and imported from the United States and the European Union.

Thyssenkrupp CEO Guido Kerkhoff, in the job since mid-2018, has said the group would continue to explore steel deals after the joint venture fell apart, adding he assumed that the company would keep a majority in the business long-term.

Desai’s appointment is the latest in a string of management appointments at the conglomerate, which has suffered three profit warnings, two strategy shifts and the resignation of its CEO and chairman within less than a year.

Thyssenkrupp said Andreas Goss will resign from his post as CEO of Steel Europe as of June 15. The group in May said that it was in talks with Goss, who has led the unit since mid-2014, to terminate his contract.

($1 = 0.8881 euros)

Editing by Tassilo Hummel and Elaine Hardcastle

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