ThyssenKrupp’s full year results last week followed rival Arcelor a few weeks ago in showing very healthy profits. Profits in ThyssenKrupp’s financial year ended 31 September doubled to €1.6bn on the back of higher steel prices.
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The group had sales of over €11.1bn to the automotive sector in 2003/04, making it the biggest market for the group.
ThyssenKrupp’s Automotive division (which excludes the group’s sales of steel to the automotive sector) saw sales rise 16.2% to €7.3bn in 2003/04. Pre-tax profit at the division rose 52.4% to €288m.
The company is adding capacity in low labour cost countries with expansion planned for steering systems in Poland and shock absorbers in Romania.
The company also plans to add a plant for structural components installation and is looking at other crankshaft forging and machining capacity in Eastern Europe.
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By GlobalDataThyssenKrupp Automotive’s order intake in 2003/04 rose slightly faster than sales, up 18.4% to €7.4bn. ThyssenKrupp expects steel prices to remain high in 2004/05.
Automotive division looks for acquisitions and disposals
ThyssenKrupp’s Automotive division is one of Europe’s largest automotive suppliers, with a strongly international spread of businesses.
Since 15th April 2004 it has been headed by Dr-Ing Wolfram Mörsdorf, who is also a member of the executive board of ThyssenKrupp AG. Dr-Ing Mörsdorf talked to SupplierBusiness.com at the beginning of December.
Has ThyssenKrupp Automotive been affected by steel price increases?
We are affected like everyone else. Most of the steel that we buy is forged materials that ThyssenKrupp Steel is not producing, and the flat steel we buy around the world. That puts us in the same situation as everyone.
There is no favoured treatment. So we have to find a way to handle it with our customers, we have to pass is through. It is maybe our major wish. They are hard decisions. There will be another round. We expect more increases in all steel material early next year.
Are you managing to do that?
We are fighting very hard. There are customers that understand it; there are others that are resistant. But we are very clear that we have to pass it through, as we cannot be the party that finally suffers. The biggest question is if we can protect the volumes that we are able to supply to our customers.
Are you looking for acquisitions?
We are looking for selective acquisitions, specifically to grow regionally. For example a few weeks ago we bought a 34% share in HSFC [Huizhou Sumikin Forging Co., Ltd.] in China to be part of the forged passenger car crankshafts business.
We are also thinking about truck crankshafts. So we are thinking about acquisitions that complete our existing portfolio, or give us a market entry. Where we feel strong, where we have a market leader position, we want to grow stand-alone.
Is your steering systems business big enough? What are you doing with Mercedes-Benz Lenkung?
We cannot just focus on the DaimlerChrysler business – the sense behind the merger was that we could also supply other customers. That is what is taking place now.
We are getting third parties as customers, so we can grow with that business worldwide, but we have to become one of the technology leaders, and then we have to make sure that we can not only get third party customers, but we have to convince Mercedes-Benz, so that they willingly buy [from us].
We are well on the way; we are making steps forward in our technological capabilities as well as in markets. You can win with technology. You need a solution that the customer wants.
Are there big opportunities for outsourcing body-in-white areas from vehicle makers in the next year or so?
Class A stampings and body-in-white, the assembly itself, are still the core business of the OEMs, and there is no change there so far.
Are there opportunities on niche models?
The OEMs are very efficiently modifying the flexibility of their own capabilities, so they are able to build the niche models in-house. They have their workforce, they have their production facilities, and they have overcapacity.
They are not outsourcing. We want to exit our 10% participation in Valmet [the Finnish niche assembler of the Porsche Boxster], because after almost three years the expected move has not happened.
So how do you make progress in getting more work?
We are working on engineering, designing concepts. This is what we are trying to do with the acquisition of Bertrandt – so we are involved at the earliest point in time when 80% of the material costs are fixed by the design.
We have to be present there with our technology, with a cross section of our cross-segment capabilities in steel and automotive. There we will decide how we can be involved in the future.
SupplierBusiness.com
