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Business

ThyssenKrupp Steeled for More Profits

Booming worldwide demand has yielded Germany's biggest steel company, ThyssenKrupp, with the highest profits since Thyssen and Krupp merged in 1999.

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Chinese demand: Steel makes up a third of ThyssenKrupp's business

Five years after Thyssen and Krupp's merger, the integration and consolidation phase has been largely completed, according to the conglomerate's CEO, Ekkehard Schulz.

"ThyssenKrupp has geared itself to the profound changes brought about by globalization. The platform for ThyssenKrupp was the merger in 1999. Today's success confirms that this was the right move," Schulz was quoted as saying on the company's Web site.

Now expansion is the aim for the firm, whose portfolio includes carbon and stainless steel, components and systems for the automobile industry, elevators, escalators, machine tools, materials trading and services as well as industrial services. In Brazil -- with its rich iron ore mines -- ThyssenKrupp is building a $2 billion (€1.5 billion) steel plant, and in China, where the demand is booming, the company's investing in steel production and treatment.

ThyssenKrupp's sales grew by 11 percent in the past business year -- to €39 billion ($52 billion) and orders grew by 17 percent, to €41 billion. The company expects even greater growth in coming years.

Increasing prices, fewer employees

U-Boot mit Brennstoffzellenantrieb

HDW Shipbuilders in Kiel

Despite no shortage of orders, production working at full capacity and record earnings, the steel boom isn't all roses for ThyssenKrupp managers. Prices for iron ore, coal, coke, alloys, energy and freight have increased significantly. Within a year the price of iron ore rose by around 30 percent and scrap metal went up by nearly 50 percent. The price for imported coke grew by 110 percent, and both nickel and chrome cost 60 percent more.

However, ThyssenKrupp's record profits show that the company took advantage of market opportunities and pushed through higher prices for both steel and stainless steel. ThyssenKrupp production was far higher than the industry average. The company used the difficult years of the steel crisis to reduce personnel and modernize plants.

And it plans to continue restructuring while concentrating on its core business. Besides its strong position in the steel industry, ThyssenKrupp is one of the car industry's largest suppliers. Through new acquisitions, it was able to strengthen its position in the elevator and escalator business in Asia as well as in the construction of large facilties, such as complete cement and chemical plants, an area in which its subsidiary Uhde is a world leader.

ThyssenKrupp has planned a merger with Howaldtswerken-Deutsche Werft (HDW) shipbuilders, which will strengthen its dominant position building military vessels and allow it to control the market in conventional submarines. The project has been met with reservations from European Union anti-trust authorities. ThyssenKrupp said that under the right conditions it might take part in a European shipyard network.

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