Out: Heinrich Hiesinger addresses what would be his last annual shareholders meeting as the CE of Thyssenkrupp. Picture: REUTERS
Out: Heinrich Hiesinger addresses what would be his last annual shareholders meeting as the CE of Thyssenkrupp. Picture: REUTERS

Duesseldorf/Frankfurt — Thyssenkrupp will take its time replacing CE Heinrich Hiesinger after his resignation, dampening hopes of a speedy restructuring or even a break-up of the German industrial group.

Hiesinger’s resignation came less than a week after he sealed a landmark joint venture with India’s Tata Steel, the culmination of two years of negotiations that came too late to placate investors hungry for change.

Activist shareholders Cevian and Elliott had criticised Thyssenkrupp’s performance under Hiesinger, with its share price down 28% since he took office in January 2011. There have been calls to break up the company, which spans submarines, lifts and car parts.

The board did not appoint an interim CEO but said it had asked the remaining executives — Guido Kerkhoff, Oliver Burkhard and Donatus Kaufmann — to lead the company for now. "In this difficult situation it is most important now for the company to remain on course," said the supervisory board’s chairman, Ulrich Lehner.

Structured process

The CE had been set to present a revamped strategy for the group, which was forged by the merger of two German steel groups founded in the 19th century. Such a presentation seems likely to be delayed.

"The succession … will follow in a structured process," Thyssenkrupp said, without providing details on possible candidates or a timeline. Thyssenkrupp’s stock jumped as much as 6.6% to the top of the pan-European Stoxx Europe 600 index on Friday before giving up some of its gains to trade 1.7% higher by the afternoon.

Hiesinger was brought in to turn Thyssenkrupp around seven years ago after it lost billions of euros in an ill-fated venture in the Americas, which forced his predecessor, Ekkehard Schulz, to step down.

The former Siemens executive vowed to fix the "disaster" at the group, axing half his management board amid losses and corruption allegations.

He presided over Thyssenkrupp’s drawn-out exit from its volatile steel business, the roots of which go back more than 200 years, and provided the company’s backbone for many generations. But his shareholder backing dwindled during his quest to simplify the group’s structure while keeping it intact. "We welcome the CE’s resignation as this could be a sign of a change of strategy, a move towards the split of the company’s assets and the end of the conglomerate discount," said Frederic Guignard, European equities fund manager at Aviva Investors, a top-30 investor in Thyssenkrupp.

Breaking up conglomerates is harder in Germany than, for example, in the US, mainly because of the power of labour unions on German boards.

"Now there is an opportunity to develop a new strategy, to advance restructuring and to reposition the group," said Ingo Speich, fund manager at Union Investment, which has about $28.5m of Thyssenkrupp stock.

"A successor should therefore add a new perspective rather than hold on to the existing strategy," he said.

The resignation was the fourth by a German blue-chip company CE in four months, after those of Deutsche Bank, Volkswagen and Beiersdorf.