DUESSELDORF (Reuters) – Thyssenkrupp <TKAG.DE> is seeking new ways to strengthen its balance sheet, including through state aid programmes, after its finances took a hit during the coronavirus crisis, according to a company memo seen by Reuters on Friday.
Proceeds of 17.2 billion euros ($19.6 billion) from the sale of an elevator unit to a consortium led by Advent and Cinven [CINV.UL] in February, would only provide a short reprieve for the group, management said in the memo to staff dated July 17.
“With the losses already accumulated in the current financial year, our leeway for shaping our future is significantly smaller than we had assumed prior to the crisis.”
“From today’s point of view a fast recovery of the industries we are serving is unlikely,” management said, pointing to weakness in the automotive sector, Thyssenkrupp’s single largest customer.
A Thyssenkrupp spokesman declined to comment on the contents of the letter.
After selling its most profitable business, elevators, Thyssenkrupp said it was exploring which financing support schemes or other “state instruments” of crisis intervention could be suitable.
Thyssenkrupp has already secured a short-term 1 billion euro loan from state-lender KfW [KFW.UL] it can draw if the proceeds from the elevator deal do not arrive by the end of Septmeber. The deal’s closing is scheduled for this month, sources have told Reuters.
But management said it was no longer sufficient to limit its crisis counter-measures to securing short-term funding. “That’s necessary ‘fire fighting’ in the acute crisis situation.”
Thyssenkrupp’s businesses will likely stabilise at much lower levels compared to previous expectations, according to the memo, adding the group must visibly improve profitability and show results at both the annual press conference in November and the annual general meeting in February 2021.
(Additional reporting by Christoph Steitz; Editing by Edward Taylor and Elaine Hardcastle)
