Dusseldorf: Thyssenkrupp AG will cut as many as 2,500 administrative workers to reduce costs and help Germany’s biggest steelmaker meet its profit targets.
Administrative costs of €2.4 billion ($2.7 billion) are “clearly too high” and will be lowered by €400 million by September 2020, the company said in a statement on Tuesday. That will result in the loss of 2,000 to 2,500 of the business’s 18,000 administrative workers, with about half going from Germany.
The company’s shares jumped as much as 3.1% to €26.965 to the highest level since August 2011 after Bloomberg reported the news, and were up 2.5% by 9:51am in Frankfurt, leading Germany’s benchmark DAX index of major stocks.
Chief executive officer Heinrich Hiesinger has sought to transform Essen, Germany-based Thyssenkrupp into a diversified industrial manufacturer since he took over in 2011, with a plan to raise earnings before interest and taxes to at least €2 billion. While the company, with roots dating to 1811, has earned more from elevators than steel in the past six years, Hiesinger said in 2016 that it was struggling to reach the profit target.
Management has also been in talks with Tata Steel Ltd. for more than a year on proposals to place the two companies’ European steel businesses into a joint venture with few signs of progress. Thyssenkrupp agreed in February to sell its Brazilian steel plant to Ternium SA, completing the exit from its Steel Americas unit, the worst investment in its history. Bloomberg
