Thyssenkrupp's elevator unit seeks margin boost ahead of sale

FRANKFURT (Reuters) – Thyssenkrupp’s elevator unit, which has been put up for sale by the ailing conglomerate, aims to improve its profitability through cost cuts, more efficient factories and a higher share of lucrative service contracts, it said on Wednesday.

Apart from administrative cost cuts totaling 80 million euros ($88 million) over the next three years, the division, which could fetch up to 17 billion euros in a sale, also sees potential to improve production sites in North America and Europe.

The division targets an adjusted operating profit margin of 11.5-13.0% in the 2020/21 fiscal year, compared with 11.4% in 2018/19.

“The global market for elevators and escalators is highly attractive,” Peter Walker, the head of the unit, said in a statement ahead of a capital markets day that will provide investors with a deeper look at the business.

“We have defined specific levers how to drive the profitability of our business. Now it’s on us to execute on this plan,” he said.

Thyssenkrupp (DE:) is the world’s fourth-largest maker of elevators behind United Technologies Corp’s (N:) Otis, Switzerland’s Schindler (S:) and Finland’s Kone (HE:), which is bidding for the unit.

Thyssenkrupp, which needs the proceeds from a divestment to fix its balance sheet, confirmed that it plans both a listing and a sale of the division, adding a decision on whether it will be sold or floated would be made by March 31, 2020.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.