ThyssenKrupp and Tata Steel

ThyssenKrupp Pursues Steel Merger Despite Profits

  • Why it matters

    Why it matters

    Despite the fact that ThyssenKrupp is currently earning hundreds of millions with its steel business, CEO Heinrich Hiesinger wants to move away from steel. Trade unionists, however, are vowing to resist.

  • Facts

    Facts

    • Earnings before interest and taxes (EBIT) in ThyssenKrupp’s steel division rose by 70 percent year over year to reach €352 million for the first three quarters of FY2017.
    • ThyssenKrupp’s steel division has 27,000 employees.
    • Trade unionists are fighting a merger plan that would fuse ThyssenKrupp’s steel division with India’s Tata Steel.
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    Audio

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Steel BIG DPA 84492874
A steelworker at a ThyssenKrupp plant in North Rhine-Westphalia. Many workers fear a proposed merger with Tata Steel will result in job losses and factory closings. Source: DPA

ThyssenKrupp’s CEO, Heinrich Hiesinger, has been struggling since last year to reach an agreement to merge his industrial group’s European steel business with that of India’s Tata Steel. The merger plan, part of ThyssenKrupp’s strategy to focus on heavy equipment and other non-steel divisions deemed more potentially profitable, has been met with resistance by German trade unionists, who fear a merger will put at risk 27,000 steel jobs that have traditionally been considered part of the core of ThyssenKrupp’s business.

Now, Mr. Hiesinger faces a new challenge in his effort to move away from ThyssenKrupp’s steel business: its growing profitability.

In the first nine months of ThyssenKrupp’s 2017 financial year, which ends in September, earnings before interest and taxes (EBIT) in the steel division rose by 70 percent year over year to reach €352 million ($414 million). As a whole, ThyssenKrupp generated an adjusted EBIT of almost €1.4 billion, an increase of 37 percent.

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