Thyssenkrupp Chief Faces Dismissal as Turnaround Stalls -- WSJ
By Ruth Bender and Ben Dummett
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 26, 2019).
BERLIN -- Thyssenkrupp AG's directors moved to oust the
company's chief executive 14 months after he took the job, marking
the latest effort to pull the industrial conglomerate out of years
of slowing sales, shrinking profit and indecision over
Thyssenkrupp, a former crown jewel of German industry with
products ranging from high-grade steel to submarines and elevators,
said its supervisory board's personnel committee has recommended
that Guido Kerkhoff be replaced by Chairwoman Martina Merz until a
long-term successor could be named. Ms. Merz would be
Thyssenkrupp's first female CEO and one of only two women running a
major listed company in the country.
The directors decided to act after Mr. Kerkhoff failed to
convince them that he could reverse the prolonged erosion of
profit, people familiar with their thinking said.
A company spokeswoman declined to comment and said Mr. Kerkhoff
wasn't available to comment.
Thyssenkrupp's struggles, including executive turnover, point to
the challenge of trying to turn an unwieldy conglomerate into a
simpler, nimbler company and squeeze higher value from disparate
Siemens AG, another German behemoth that has produced everything
from lightbulbs to mobile phones and gas turbines, has been
aggressively pruning underperforming businesses, simplifying its
corporate structure and trimming its head office. Thyssenkrupp, by
contrast, long resisted pressure to reshape itself and relented
only after becoming targeted by activist investors.
Mr. Kerkhoff, who was serving as finance chief, became interim
CEO in July 2018 as both his predecessor and the company's chairman
left under pressure from investors. However, Mr. Kerkhoff's first
major initiative -- a plan to split the company into two businesses
-- was abandoned after regulators blocked plans to form a European
steel joint venture with India's Tata Steel Ltd.
A deteriorating economic environment has added to Thyssenkrupp's
homegrown problems. The company, which issued four profit warnings
under Mr. Kerkhoff, has been hit by weaker demand from car makers,
higher raw material prices and uncertainty caused by international
Mr. Kerkhoff announced plans to shed nearly 4% of the staff and
nearly halve administrative costs in May, when the company issued
its third profit warning. However, some directors thought Mr.
Kerkhoff was moving too slowly, according to people close to the
Some board members also disagreed with Mr. Kerkhoff's decision
to sell only a minority stake in the company's elevator business,
instead of a full divestment or an initial public offering, these
Trade union IG Metall said Mr. Kerkhoff's termination, which is
still being processed, is bound to unsettle employees already
troubled by the uncertainty over planned asset sales.
Thyssenkrupp said late Tuesday that the planned overhaul would
be "systematically continued."
The Krupp foundation, representing heirs to the company's
founders with a roughly 21% stake, and Cevian Capital, which holds
about 18%, said they fully support Ms. Merz. A trained mechanical
engineer, Ms. Merz spent 17 years at auto supplier Robert Bosch
GmbH and has overseen restructuring as a board member of Swedish
car maker Volvo AB.
"We expect that the new leadership will speed up the
transformation process that Thyssenkrupp so urgently needs, and
improve the quality of implementation," said Lars Förberg, founding
partner of Cevian Capital.
Shares in Thyssenkrupp, which were little changed Wednesday, are
down about 18% so far this year. As a result, the company was
dropped from Germany's blue-chip DAX index earlier this month.
Write to Ruth Bender at Ruth.Bender@wsj.com and Ben Dummett at
(END) Dow Jones Newswires
September 26, 2019 02:47 ET (06:47 GMT)
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