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Thyssenkrupp outlines steel unit overhaul - letter

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By Reuters
Thyssenkrupp outlines steel unit overhaul - letter
FILE PHOTO: General view of the ThyssenKrupp steel Europe plant in Duisburg, Germany, December 3, 2019. REUTERS/Leon Kuegeler   -   Copyright  Leon Kuegeler(Reuters)
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By Tom Käckenhoff

DUESSELDORF (Reuters) – Thyssenkrupp <TKAG.DE>, whose attempt to merge its steel operations with a rival was thwarted by regulators earlier this year, now plans to transform the business into its biggest profit engine, according to an internal memo seen by Reuters.

The German group told staff it aimed to boost earnings before interest and tax (EBIT) at Steel Europe by an average of up to 600 million euros ($661 million) over the coming years, helped by job cuts and selling more to the autos industry.

That would make it the backbone of the conglomerate’s operations following an expected sale or listing of its elevator division, currently its best performing business by far.

“Our plan is a clear forward strategy to strengthen Thyssenkrupp Steel’s long-term competitiveness and viability. We cannot simply carry on as before, unless we accept missing the boat to the future,” the letter said.

It said Steel Europe would cut up to 1,000 jobs in administration and an additional 200 staff would be affected in its operating business. The cuts are part of a job reduction programme announced earlier this year.

Steel Europe’s Heavy Plate and Electrical Steel businesses would either be restructured, sold or wound down, the letter added, with decisions expected in the coming months.

Heavy Plate, which employs 800 staff, has been under review since August.

Thyssenkrupp also said it planned to increase steel shipments to an average 11.5 million tonnes a year, helped by a product drive in the car sector, the company’s single-biggest customer group.

Last year, shipments totalled about 11 million tonnes.

European Union competition regulators in June blocked a planned joint venture between Steel Europe and India’s Tata Steel <TISC.NS>, forcing a strategic rethink at Thyssenkrupp.

(Reporting by Tom Kaeckenhoff, Writing by Christoph Steitz; Editing by Mark Potter)