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Company News, 2005-12-09, 12:18 PM

ThyssenKrupp Electrical Steel: Forward strategy after successful restructuring

The restructuring of the electrical steel operations of ThyssenKrupp Steel is starting to bear fruit: for the 2004/2005 fiscal year, subsidiary ThyssenKrupp Electrical Steel GmbH reported an eight-figure profit, compared with a high eight-figure loss a year earlier. At 200,000 metric tons, the company also set a new production record in the past fiscal year. Sales amounted to 387 million euros, a 28 percent improvement on the prior-year figure. Orders in hand already extend to July of next year. Measures aimed at increasing capacity, some of them already completed, will boost output to 250,000 metric tons by the 2006/2007 fiscal year.

ThyssenKrupp Electrical Steel GmbH is Europe's biggest supplier of grain-oriented electrical steel and ranks number two worldwide. The company has 1,100 employees at two sites - Gelsenkirchen in Germany (also the company's headquarters) and Isbergues in France. Grain-oriented electrical steel has a special microstructure, developed in a complex manufacturing process, and is mainly used in transformers. Depending on their size, modern high-efficiency transformers feature between 50 and 350 tons of grain-oriented electrical steel.

ThyssenKrupp Electrical Steel is currently profiting from dynamic market growth, driven mainly by strong demand from India and China. At present, some 40 percent of the worldwide annual production of 1.5 million tons is being consumed by the Asian markets. "This has resulted in significant undersupply on the market," says Clemens Iller, CEO of ThyssenKrupp Electrical Steel. ThyssenKrupp Electrical Steel supplies more than half of its output to Europe. The average price for grain-oriented electrical steel is currently 1,500 euros per metric ton. Two years ago, when the market was characterized by overcapacity and price dumping, the average price per ton was only 1,100 euros.

In addition to the buoyant market, much of ThyssenKrupp Electrical Steel's strong performance is attributable to an internal efficiency-enhancement program, which has improved production quality and boosted productivity by seven percent. The company is currently carrying out commercial-scale trials of a new technology which will make the production of grain-oriented electrical steel significantly more cost-effective. Clemens Iller: "Our investments and efficiency enhancement measures will secure jobs at our production sites well into the future."

The current structure of ThyssenKrupp Electrical Steel GmbH with its focus on grain-oriented electrical steel is the result of a radical reorganization of the electrical steel business of ThyssenKrupp Steel. The two key events were the closure of the unprofitable electrical steel production operations in Terni, Italy at the end of September 2005 and the integration of the non-grain-oriented electrical steel activities in the parent company ThyssenKrupp Steel. Non-grain-oriented electrical steel has a different microstructure than grain-oriented grades and is mainly used in generators and electric motors. Integrating production in ThyssenKrupp Steel has generated synergies, as in part the material can be produced on the same equipment as conventional steels. Since October 2005, production in Terni has been focused exclusively on stainless steel. The reorganization of the electrical steel activities is now completed.

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