Industrial Solutions – thyssenkrupp’s industrial group – is expected to report negative adjusted earnings of €220 million in the coming quarter, due to additional project expenses, including those related to the construction of a cement plant in Saudi Arabia. The correction to expected costs comes following a comprehensive project analysis and review of budgeted figures related to the restructuring of the business.
"It is important to me to call it what it is. The results of our analysis at Industrial Solutions are anything but satisfying,” said Guido Kerkhoff, Chairman of the Executive Board of thyssenkrupp AG. “The structure of plant construction must be adjusted to the changed market conditions in order to achieve a turnaround and finally become competitive again. We must act swiftly here."
Industrial Solutions core business had focused on plant construction in the chemical and cement industries. This business has been significantly reduced in recent years, however, after a build up of overcapacity within the cement industry and uncertainty over investments in the fertilizer sector. The time period between project announcement and implementation has also doubled, again hitting thyssenkrupp’s business.
The company is in the midst of restructuring Industrial Solutions to focus order intake on medium-sized and smaller projects, as well as to focus plant construction on the higher-margin service business.
This change “requires an adjustment of the current structures to the actual market conditions. The aim is to reduce costs and complexity, to improve efficiency, flexibility and quality in order processing and also to further develop the technology portfolio in plant construction – especially with a view to digital transformation,” the company said.
Read the article online at: https://www.worldcement.com/product-news/03082018/industrial-solutions-hit-by-cement-project-cost-increases/