Thyssenkrupp Chief Executive Heinrich Hiesinger warned shareholders that it would take time to forge a deal for its Steel Europe business with a rival such as Tata Steel.
“We too would like a speedy solution, but it has to be a good solution. A solution that secures the future of steel production in Germany and Europe – and that takes time,” he said, according to the prepared text of a speech for the industrial group’s annual general meeting on Friday.
The German company and Tata have been in talks for about a year to merge their European steel operations to cut costs and overcapacity, but negotiations have been complicated by Tata’s huge pension deficit in the UK.
“We are conducting talks with Tata with great care. For example Tata would have to find a viable solution for its high pension obligations in the UK,” Hiesinger said. “We will not be pressured by external factors.”
Thyssenkrupp – whose other business include car parts, submarines and materials distribution – is almost 20 percent owned by activist shareholder Cevian, which would like to split off parts of the group to increase its financial value.
Hiesinger added that Thyssenkrupp’s fiscal first quarter to end-December had been in line with the company’s expectations.
“It is too early yet to provide a detailed view of our business performance in the first quarter. But the way things are going I can say that the first quarter will be in line with our guidance. So we are well on track to achieving our full-year targets,” he said.
For its current year, Thyssenkrupp has forecast an increase in adjusted operating profit to around 1.7 billion euros ($1.8 billion) from 1.5 billion last year, a “clear improvement in net income” from last year’s 261 million euros and slightly positive free cash flow before mergers and acquisitions.