Strategy

Strategic realignment

In May 2019 thyssenkrupp resolved to realign the company and further concretized its plans in May 2020. At the core of the new strategy is the transformation of thyssenkrupp into a high-performance “group of companies” with a lean management model and a clearly structured portfolio. There will be businesses whose potential thyssenkrupp will develop on its own or together with partners, and other businesses for which thyssenkrupp will primarily pursue development paths outside the group.

In the transformation process we are continuing to focus on the three priority areas: Performance, Portfolio and Organization. The aim is to create the conditions to enable our businesses to perform as well as possible and achieve sustainable and leading market positions.

  • Performance

The overarching goal is to boost the performance and competitiveness of all our businesses. All businesses are expected to strive to be among the best in their respective sectors. Each unit has been set an individual profitability target, based on benchmark analysis. In addition all businesses must earn at least their cost of capital. All targets must be systematically backed with specific measures. The measures will be reviewed, adjusted where necessary and monitored in regular dialogue between the holding company and decentralized unit. The businesses’ management teams bear full responsibility for the results. Within the group, capital is allocated based on the anticipated value added.

As part of Performance we will also be focusing more strongly on our performance culture throughout the group and pressing significantly harder to continuously enhance our competitiveness. This will also involve reviewing our key performance indicators and the logic behind them as well as the associated compensation systems.

  • Portfolio

We have reviewed the individual development potential of each business for thyssenkrupp to determine which constellation would offer the units the best prospects for the future. Criteria included market attractiveness and the future value-adding potential we can leverage. Within the target portfolio (“Focus”) we want to improve the profitability of the businesses (“Improve”) and grow profitably again in the long term on this new basis of efficiency (“Scale”). The following portfolio decisions were taken:
On the basis of their market position and competitive strength, thyssenkrupp continues to see good development potential for Materials Services and Industrial Components. thyssenkrupp will continue to develop these businesses on its own in the future. We will also keep the Automotive Technology business within the group. In line with the industry trend for collaboration, alliances and development partnerships are also conceivable on a selective basis.

Given the specific market and industry situation at Steel Europe and Marine Systems, thyssenkrupp is pursuing performance improvement measures for a stand-alone development within the company while, at the same time, exploring possible partnerships and consolidation options. To take account of the specific market situation at Steel in particular and counter the effects of the corona pandemic, we are currently working on adjustments to the implementation of the steel strategy 20-30, including further efforts to cut costs.

Those businesses where for various reasons the company does not view itself alone as the best owner going forward will be managed separately. These units were combined in an independent “Multi Tracks” segment effective October 1, 2020 and will be subject to active investment management. They are: Plant Technology, the stainless steel plant (AST) in Terni, Italy, including the associated sales organization, Powertrain & Battery Solutions, Springs & Stabilizers, Infrastructure and Heavy Plate. In some of the units managed under Multi Tracks – including Powertrain & Battery Solutions and Springs & Stabilizers – restructuring measures have been initiated and are being implemented. The reinvestment in Elevator included under special units up to the end of fiscal year 2019/2020 and the Tech Center thyssenkrupp Carbon Components previously allocated to special services were also allocated to this segment effective October 1, 2020. We will report in the new structure beginning with the report on the 1st quarter of the new fiscal year 2020/2021.

thyssenkrupp AG: Target picture - group of companies
zoom
  • Organization

Our goal is to give the businesses the freedom to focus as much as possible on their customers and markets and thus offer a convincing price/performance ratio for their products and services.

We want to strengthen an entrepreneurial climate that speeds up decision making, increases efficiency and puts the customer at the center of everything we do. That means more entrepreneurial freedom in the businesses but also more responsibility. In addition to managing performance, in the future and in the course of implementing the group’s transformation process, Corporate Headquarters will increasingly concentrate in particular on governance, portfolio decisions and the allocation of investment funds. The group’s organizational setup is to become leaner and more agile, which will also reduce costs. Overall this more efficient organization should allow the cost base to be reduced by up to €100 million. For the Corporate Headquarters, service units and regional platforms this means further streamlining and alignment with the structure and size of the group of companies on an ongoing basis. The Corporate Functions have now been streamlined from 15 to 10 and the number of jobs at the Corporate Headquarters has already been significantly reduced. The new setup for the service units was launched on October 1, 2020.