Hello and welcome. My name is Stefan Ettwig and I’d like to welcome you to our we.talk podcast. As the name we.talk suggests we want to talk today about thyssenkrupp, our group of companies and the issues that concern us. Our guest in the studio is Martina Merz. Naturally everything is Covid-compliant, we have both been tested. Ms. Merz, it’s great that you’ve found the time to talk to us. Hello and welcome.

Thank you. My pleasure, Mr. Ettwig.

Ms. Merz, 1st half figures, quarterly figures, investor calls, and now the Supervisory Board meeting. How are you doing here at thyssenkrupp?

I’m doing fine. I feel comfortable at thyssenkrupp, comfortable with the job, comfortable with the people. Like many of course I’m not so comfortable with the coronavirus. These really have been a tough couple of days. Days spent talking a lot about the company and reflecting a little on the situation. I remain confident and can also feel the strength within the company.

Talking with the Supervisory Board is a kind of reporting – as Executive Board members we don’t get praised all the time. The no. 1 goal in our discussions remains positive free cash flow, which simply means earning more than we spend. That is now our no. 1 goal. We have set ourselves the task of carrying out the biggest restructuring program in the company’s history, and of course that’s painful in many areas. A lot of our colleagues are affected by it, are leaving the company or have already left. We are in the middle of a difficult phase. We are transforming in order to improve, and through this improvement we will then be able to unlock our future potential. Our goals for the future are to achieve growth and become a more climate-friendly company.

You just mentioned our employees. The first results of the Pulse Check were published this morning. The responses by the majority or many of our employees were in the middle of the scale. On the one hand that of course indicates that there is potential for improvement. On the other hand it signifies, I believe, that there is uncertainty among the workforce. How do you assess that in the framework of the transformation?

First of all I was really delighted by the high participation rate in the Pulse Check. It’s a tool we developed in-house, it didn’t cost us a lot of money. A lot of employees made use of it and for us the results form the basis of how our employees want to get involved in the further development of our company. Each of us as a private individual is affected, because the situation at thyssenkrupp is affecting all of us in one way or another. People ask: “How are you doing, can you do it?” I think that has shaped the results of the Pulse Check. But the bottom line is that this Pulse Check has really motivated me.

The employees have addressed two things that are both incredibly important. One is that they don’t feel we as the leadership team are credible enough yet. The second point, which I’m really pleased about, is that employees are telling us they want to be involved more. They are saying: “You, leadership team, you also have to tell us what’s going on and you have to be available to us for dialogue.“ And on the other hand: “We want to get more involved.” In a phase such as this you couldn’t wish for anything more than that employees want to get more involved. I think that’s great. And of course that also helps, because for many years thyssenkrupp simply did not deliver what it had promised. I believe we are making progress here. People are realizing that we are really delivering on our promises. We refer to this as “regaining trust”. And here again I think we’re making progress. We definitely want to continue down this path.

Talking of progress, where do you think we stand today? What are the challenges, tasks, opportunities?

Well the absolute number-one challenge – I mean number 1, 1 and 1 – is simply to earn more cash than we spend. That’s the whole purpose of a business, everything else is just destroying value. Next year we are determined to cross the zero line in cash burn. As I said, that really is our number-one priority, three times over. And as I see it, restructuring thyssenkrupp into a group of companies will be particularly helpful. This group of companies is now based very firmly on the performance of the individual businesses. These businesses need to focus on their competition.

The idea that thyssenkrupp is a group of high-performing, successful companies – that’s a key success factor. We have to live up to our claim of being a leading player. And you can only be a leading player if you no longer have a gap to the competition – and that applies on several levels: you want to be as profitable, as efficient, as high-tech as your competitors and deliver products that are just as great. I think we’re pretty good when it comes to these last aspects, we’re still working on the first.

Now you have always said, over the past few months but really right from the start, that it’s a journey of small steps, the journey is the destination. But there are those who say it would be better to have a North Star or a mission statement for the group. Why not, why a journey of small steps?

Well a group of companies would ideally have a sky full of stars. So rather than having one North Star, each business has its own North Star in its own setting. I wouldn’t presume to say “ok, it has to be this one North Star”. We make great products, we think like engineers, act professionally, in a structured way, we deliver high quality. The things we are, the values we represent, all these things make us a group. These values and the way we work unite us and that’s our North Star. Because in the end the way we work forms the basis for our success.

You talk of values, you talk of the businesses having individual requirements. But just to put one concrete question to you: what can we expect for the future of thyssenkrupp as a whole?

Well as I said, the future of thyssenkrupp as a whole is a future that should mean success in every business. And that unites us, a future for all our businesses. We have decided to keep asking ourselves “Are we the best owner for our businesses. Can the businesses in their current constellation and the way they are managed in our group today develop in the best possible way?” For Steel, and we also discussed this at the Supervisory Board meeting, we and the Steel board agree that it could be better for the steel business to operate as a stand-alone company. Steel has to lead the way in the green transformation. We are the second biggest producer in Europe. These are pretty special conditions and challenges that can be better addressed by a company fully focused on itself, and that’s why we are indeed looking at whether it is feasible for us.

We won’t know for sure whether it’s possible until early next year, but we’re working hard. Here too the key prerequisite is to further develop and improve our performance in all units. For the companies in the group, which of course will continue to operate as the thyssenkrupp group of companies, the challenges are very similar. Each business has to develop on its own, and then we will be a high-performing group.

You've just talked about steel, which is being directly linked with the future of thyssenkrupp. But also very high-profile topics, such as hydrogen. In combination, how would you see that going forward?

Hydrogen is of course a super sexy topic right now, if I can put it that way. The newspapers are full of hydrogen every day and we are very fortunate that with Uhde and water electrolysis we certainly have a bit of a head start, have great growth potential and want to take advantage of it. To do that, however, we have to have growth capital, because there are costs, we have to invest. That’s why we’re considering selling a small part of the hydrogen business so that we can invest the cash we receive directly in the business. We are looking into this now and will reach results in the course of the summer. But for now thyssenkrupp is in a very good position with regard to hydrogen.

As I just said, separating steel is a preferred solution for us, and of course in this preferred solution building on our premium position is important. Above all in the automotive industry. We want to defend and expand that position while at the same time making steel green. That won’t be cost-free and it’s a long process, but our Steel team has set out on the road and will achieve its ambitious goals with considerable investment. Now we need planning premises, i.e. regulatory framework conditions that the state has to set. I would like to see a little more clarity here, that would be important for the team at Steel. There is no doubt about our will, but of course we also need a regulatory framework to be able to do this in the best possible way. For many years, Steel has not been able to invest sufficiently. We now have ground to make up, which is why considerable investment funds are being put into Steel. Developing this performance, putting it on the road, turning it into profit and also into a positive cash flow – that’s the demanding challenge for Steel.

You’ve now looked a bit further forward. In the short term, in the next few months, what can we expect from thyssenkrupp?

In the short term we will measure ourselves – and also be measured – by proof of our performance improvement. We have announced that we want to complete this transformation process in three years. That means that we now want to show an improvement in every quarter. This improvement can only come about through actions, not words. So implementing our programs, and also accelerating them, remains very important. Performance improvement is the most important goal, priority 1 and 1 and 1. I have to be honest, I see it as a real sporting challenge. I think we've really picked up speed and now we have to continue this momentum and translate our ambitions into action. And then this joint effort will succeed. I am confident, especially after the Pulse Check, that our employees want to follow this path. Because who doesn't want to work for a successful company, Mr. Ettwig? That’s what we all want, isn’t it.

I would never disagree with that and I thank you for those fantastic closing words. Ms. Merz, thank you very much for your time. Thank you also dear colleagues for being with us. That was we.talk, our video podcast. We will be back with other topics, and of course with other colleagues. Thank you for joining us, stay safe, and see you soon. Bye from Essen.