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Thyssenkrupp restructures management as Q1 profits decline
Last Updated: 2019-02-13 09:35 | Xinhua
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The German industrial conglomerate Thyssenkrupp is aiming to make its management structures leaner after completing the planned demerger into two separate branches, the company announced on Tuesday.

"The new leadership structures" would be key to realizing this demerger, emphasized Thyssenkrupp CEO Guido Kerkhoff. "With the separation we will create strategic clarity."

Thyssenkrupp's operating profit for the first quarter of financial year 2018-2019 decreased by 26 percent compared to the same period last year and amounted to 333 million euros (376 million U.S. dollars), while revenues in Q1 (October to December 2018) increased by 2 percent to 9.7 billion euros.

Profits of Thyssenkrupp's steel division, which is planned to merge with the European business of Indian steel producer Tata Steel this year, collapsed from 163 million euros last year to 38 million euros. Other business sectors like industrial plant engineering, elevator business and components technology also recorded a decline in profits.

The German industrial conglomerate confirmed its forecast for fiscal year 2018-2019 but acknowledged that "economic and political uncertainties" would be increasing. The company aims to achieve adjusted earnings before interest and taxes (EBIT) of more than 1 billion euros for its remaining businesses.

Thyssenkrupp expects its net income to increase significantly in 2018-2019 because the "costs of preparing the separation" into two different companies would be outweighed by "earnings improvements at the continuing operations" and by the "positive effects arising at the closing of the steel joint venture" with Tata Steel.

Thyssenkrupp is currently planning to demerge its business into the branches of Thyssenkrupp Industrials, which is to operate the elevator business, plant construction and be an automotive supplier, and Thyssenkrupp Materials, which will cover the materials business. The new companies are scheduled to start operations in October 2019.

In the future, Thyssenkrupp aims to lower total administrative costs to below 300 million euros. Thyssenkrupp's administrative expenses amounted to around 380 million euros in 2017-2018. Shareholders like the investment company Cevian had often criticized Thyssenkrupp for its high administrative costs. (1 euro = 1.13 U.S. dollar)

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