Portfolio optimization

ThyssenKrupp AG decided on May 13, 2011 on an integrated program for the further strategic development of the Group. The main aims of the Strategic Way Forward are to reduce the Group's debt, enable sustainable growth, increase earning power, and create value. It involves focusing our portfolio and divesting businesses for which there are stronger strategic alternatives. It will strengthen our financial base and provide new flexibility to expand strategically promising businesses.

The strategy is driven by a corporate culture based on transparency, responsibility and clear leadership. For us, transparency means measuring our actions against clear indicators. Responsibility means shaping a sustainable future for the Group. By leadership we mean defining clear strategic goals and creating the framework for implementing them successfully. Our aim is to rank among the best in the market in each of our businesses over the long term.

First measures as part of the Strategic Way Forward have now been initiated or already completed:

• In a move towards portfolio optimization the Group will divest the operations of the Stainless Global business area. The corporate, organizational and contractual conditions for the carve out of Stainless Global were established effective September 30, 2011: The new entity – called Inoxum – has a holding company structure with a functional board performing strategic tasks and directing the operating units.

In what form the actual separation is subsequently carried out is being examined with an open mind. The options are an IPO, a spin-off or a sale. As a separate entity Inoxum will be able to develop its competitive position with greater flexibility in the future – also with a view to potential strategic partnerships.

• The negotiations with the Abu Dhabi MAR group on the complete takeover of the civil shipbuilding activities and a joint venture in naval surface ship building were ended by mutual consent. The scope of the transaction is now restricted exclusively to the civil part of the former HDW-Gaarden with the transfer of around 180 employees and corresponding assets.

Talks are currently being conducted on the sale of the civil operations of Blohm + Voss – the yacht building and repair and components businesses in Hamburg; Marine Systems will concentrate on military shipbuilding in the future. The restructuring of the shipyard site in Emden was completed at the beginning of the reporting year with the sale of ThyssenKrupp Fahrzeugtechnik.

• We have found a best owner for the Xervon group in REMONDIS, a service company focused on water and recycling services. Xervon provides technical services for the erection and maintenance of industrial plants around the world and is therefore an excellent fit for the REMONDIS portfolio. The sale and purchase agreement was signed in the final quarter of the reporting year; the closing will follow after approval by the responsible merger authorities. The approval of the EU competition authority has already been received. Altrad S.A. of France purchased Xervon's Spanish subsidiary back in October 2010. This took Materials Services a major step forward in restructuring its industrial services business.
• The sale of the Metal Forming group to the Spanish automotive supplier Gestamp Automoción was completed in July 2011 after the approval of the EU competition authorities. The group, which manufactures high-quality chassis and body parts, was no longer part of the core business of Steel Europe. In addition it is planned to sell ThyssenKrupp Tailored Blanks.
• Under the new strategic framework we will also combine the chassis operations of the Bilstein group and Presta Steering, and divest the spring and stabilizer business and the Brazilian Automotive System operation as part of a best-owner solution. The management structure for the new entity formed from Bilstein and Presta Steering has already been decided. The combination creates one of the world's biggest chassis full-service providers with a global footprint. With its damping and steering expertise it will be better able to meet customer demands for modern chassis systems. We also plan to divest the US foundry group Waupaca.
• In September and October 2011 Elevator Technology acquired all the operations of two US companies: General Elevator Sales and Services, Inc. in Florida, and United Elevator Company, Inc. in Pennsylvania. Both companies specialize in elevator service, maintenance and modernization and have been operating successfully on the American market for decades. This consolidates the already strong position of ThyssenKrupp Elevator in North America and sets us on course for further growth in this region. We strengthened our market position in Europe with further acquisitions in the Benelux countries and in Spain, Italy and France.

Source: Annual Report 2010/2011, p. 51-52

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Active Portfolio Management at ThyssenKrupp

Significant change in portfolio since the merger (Sales in million €)