Interview with CEO Martina Merz - May 8 2020
Ms. Merz, the Executive Board described the current situation of the company in an employee letter last week. That sounded grim.
Merz: We want to be honest. Our employees need to know exactly what the current situation of the company is. Only then can they draw appropriate conclusions for their own work. What needs to be done? What can I contribute? We want to offer everyone the opportunity to be "close" to current developments. After all, apart from the health aspects, apart from the restrictions we all experience every day, the corona pandemic unfortunately also has a very significant impact on our business. So it is important that no one gets the wrong impression of the situation.
Our customers, for example in the automotive business, are slowly ramping up their production again. Any reason for hope?
Merz: Like everyone else, we naturally hope that demand will pick up again as quickly as possible. But at the moment I am skeptical. Unfortunately, it is still very unclear when and how the situation will normalize – and at what level demand will be after the crisis. We must therefore force ourselves to be realistic and navigate by sight.
Additional funding may be required if the ET transaction is not completed on time. The media have reported on a bridging loan. Is this a precautionary measure?
Merz: Yes, exactly. As things stand today, we assume that the socalled closing of the sale can take place in the summer. Then the sales proceeds will also be due and money will flow into our account. But until then we will have considerable cash outflows due to corona. And that is why we like many other large companies in Germany have held talks with the Kreditanstalt für Wiederaufbau, a stateowned bank, about additional funding, because we do not know how the Corona crisis will develop.
The financial leeway from the sale of the Elevator business is likely to be less than expected. This is not surprising in this situation. Does this mean that planned investments, such as at Steel, are in question?
Merz: The longer the corona situation lasts, the more the funds from the Elevator transaction will be used up. This will reduce our leeway for investments in the future. On May 18 we will also discuss with the Supervisory Board how we are dealing with this. We are currently working on solutions and options. The task now is to respond with both prudence and determination.
Last week you wrote that everything must be evaluated and nothing must be dismissed. What do we have to prepare for?
Merz: The difficult economic situation at thyssenkrupp will be significantly intensified by corona. The company is in a serious situation. We have to live up to this. It won't help to wait for things to improve on their own. Like most other companies, we must do everything possible to avoid cash outflow from the company wherever possible.
This is why ongoing planning is also very important. The restructuring measures, the cost reductions, but above all the measures with regard to sales growth, which we wanted to work through in the next two to three years, must be completed much faster because of corona. Therefore, all the company's strength, creativity and competence must be incorporated into the plan for next year. Moving boundaries, thinking boldly, not dismissing anything – we all have to put our backs into the next plan. But good ideas are always welcome everywhere, not only in planning. I really see the crisis as an opportunity here.
What else can we do right now?
Merz: We have made a lot of progress with "newtk" in the last months. The company has delivered. Just think of selling the Elevator business or negotiating the Steel strategy. We have also found solutions for all our businesses under review – most recently with the announcement of the restructuring of Springs & Stabilizers. So, there is a lot of progress; this is now a matter of rapid implementation. But: In all units, we need to come up with even more ideas on performance and improve even faster. So far, progress in the businesses has been very mixed. And – quite honestly – overall, it is still far from sufficient. If we don't improve our level of performance quickly and substantially, all the progress we have made so far will be of no help to us. Performance is the key to thyssenkrupp's future success or failure. Only if the individual businesses develop their full potential can the company recover economically. For this reason, performance management will become even more important in the future than it has been in the past. By the way, I take a positive view of how the "Group of Companies" has got off to a good start. The businesses make use of the greater entrepreneurial freedom they have in a group of companies. And unlike in the Group as a whole, the Executive Board and headquarters are increasingly limiting themselves to the role of providing impetus. The decisionmaking authority and responsibility for performance lies with the businesses. I find the open and constructive exchange between the Executive Board and the BA CEOs particularly fruitful – especially in times of crisis. That works well and makes me confident. After all, we still have some very difficult hurdles to overcome in coping with the corona pandemic and the strategic restructuring of the company.
Ms. Merz, thank you very much for the interview. Merz: Thank you, stay healthy!