ThyssenKrupp chief tests shareholder patience on steelmaker overhaul

Sun Jan 12, 2014 6:25am EST
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By Maria Sheahan and Tom Käckenhoff

FRANKFURT (Reuters) - Three years after taking the helm at ThyssenKrupp (TKAG.DE: Quote), Heinrich Hiesinger is running out of time to implement his ambitious plan to retool the 200-year-old German steelmaker as a high-tech engineering conglomerate.

Setbacks in selling weak assets - as well as costly price-fixing scandals he inherited - have made Hiesinger's promises of sweeping transformation look optimistic. At an annual meeting on Friday, the former Siemens man will face tough questions from shareholders who, for a second year, have received no dividend.

"Some thought that he was the guy who can restructure ThyssenKrupp and move it forward. But he hasn't really achieved that yet," said Joerg Schneider, a fund manager at Union Investment in Frankfurt. "He set the expectations too high."

Adding to pressure on Hiesinger are small but significant shifts in the group's ownership since the last AGM. The family trust, which long shielded managers from predators, has seen its holding diluted below a blocking 25 percent. Meanwhile, activist Swedish fund Cevian has built up an 11-percent stake.

Needing cash to expand higher-margin lines, such as elevators and high-performance car parts, Hiesinger has already sold assets accounting for a quarter of group sales. Yet delays and other problems have sparked speculation - which the CEO has consistently rejected - that he might yet pull out of steelmaking altogether, ending two centuries of Krupp tradition.

A senior manager who has worked with the 53-year-old electrical engineer told Reuters that sentiment would play little role when the CEO determines what must be sold.

"There are," he said, "no sacred cows for Hiesinger."

Despite a 40-percent fall in the share price since he took over, many investors say they are keeping faith in him, for now.   Continued...

CEO of Germany's industrial conglomerate ThyssenKrupp AG Heinrich Hiesinger poses during the annual news conference at their headquarters in Essen December11, 2012. REUTERS/Ina Fassbender