We have taken a difficult path – but can already see clear progress.
Letter from the Board to all employees on the current situation.
A lot has happened in our company over the past few months. In May we presented our strategy update, with which above all we clearly structured our portfolio. Steel has had a new strategy since the end of March, and in addition we are continuing to pursue possible consolidation options and holding talks to rapidly facilitate the “green transformation”. Several restructurings are underway and not least the sale of the elevator business is due to be closed shortly. We have taken a difficult path – but can already see clear progress. This is also the result of good teamwork, to which all sides have contributed.
However, we continue to face significant impacts from the coronavirus crisis. Around 32,000 colleagues worldwide are on short-time work programs, 22,000 are working from home.
While production is restarting at numerous sites, operating levels are still far lower than before the crisis. Large parts of our business are affected by the continued restraint of our customers and loss of demand on the markets. Our quarterly results will show this very clearly. For the third quarter of the current fiscal year alone, we must expect a loss of up to one billion euros (a high 3-digit million euro amount). From today’s viewpoint, a rapid recovery of our customer industries is unlikely. This is particularly true of the auto sector.
But one thing is clear: With the losses already accumulated in the current fiscal year, our scope for shaping the future will be much smaller than was assumed before the crisis – despite the proceeds from the Elevator transaction.
Our current challenges in dealing with the pandemic are part of a crisis situation affecting the whole of society. We’re all confronted with it every day, not just at work. The new reality is changing our interactions considerably. We are witnessing the primacy of healthcare and medical logic over all other areas of social life and we have to deal with the shift in priorities this entails.
With regard to the economic impacts, we are of course also examining whether and if so which pandemic-related financing support or other state crisis intervention measures could come into consideration for us. The management teams outside Germany are doing the same, because other governments are also offering companies support. We see it as part of our duty of care to thoroughly examine these offers.
But it is also a question of managing this crisis in such a way that the effects remain bearable and a new normality does not permanently affect the way we interact. This is a huge economic and social challenge.
In business terms, the long-term planning perspective will increasingly be replaced by the ability to react to new circumstances quickly, efficiently and flexibly. Such circumstances might be political measures and restrictions such as lockdowns, or the resultant change in customer behavior. In any case from today’s perspective it will no longer be sufficient to limit our countermeasures to short-term liquidity protection. That is necessary fire fighting in an acute crisis situation. But in addition we have to prepare ourselves for the possibility that our business activities will settle at a level in some cases permanently and considerably below our previous volume targets. We therefore have to start addressing effective long-term countermeasures today. We are already doing this together with the management teams of the businesses. We probably won’t know before the end of the year which scenarios we can really expect for our business. Only then will we know in more concrete terms whether and how quickly sales figures will return to normal or what level they will be at in the future.
What does all this mean? The devastating effects of the pandemic have set us back further than we were at the start of the transformation process. Our joy over the proceeds from the sale of the elevator business will be short-lived. If we reduce our debt – and we will have to – there will be less left over for investments and shaping the future. We therefore have to be creative and use the crisis positively as a driver of change. We have to be quickly able to refinance the company under our own steam. To do so, we have to show strongly what potential we have and that we can generate significant earnings.
At the annual press conference in November and the annual general meeting in February 2021, we must therefore be able to show visible steps in improving our profitability. We need real execution successes in the near future. The capital market expects a clear picture from us of where we stand and how we will continue our path. We will have to show which value levers we are pulling and how. We will have to show how we are establishing new processes to increase our performance. We will also have to provide new restructuring details to show that we are doing our homework properly.
It is important to us to give you a clear, open and transparent picture of the company’s situation. So please take away the following messages:
First: Despite all the current difficulties and imponderables, we are convinced that we are on the right path. It is a painful path, but we are pursuing it with commitment and confidence. And that’s why we will succeed in making thyssenkrupp successful again. We referred earlier to the progress already made. More will follow.
Second: We are examining all our steps with great care. It remains our goal to implement necessary adjustments and changes in a responsible way – together with the employee representatives. This is in line with our values at thyssenkrupp, and we remain committed to these values. This crisis will make exceptional demands on us. Nevertheless we will do everything to live up to our goal.
Third: Please continue to work hard and stay committed! This investment in all our futures is worth it.
Many of you are looking forward to the summer vacation and a well-earned break. Use this time to relax and recuperate – whether you’re traveling or staying at home. Please don’t take any unnecessary risks. Follow the safety and hygiene practices and observe the Federal Government’s travel warnings (the official travel warnings). But above all: Stay safe.
Martina Merz - Oliver Burkhard - Klaus Keysberg