Germany's largest steelmaker, Thyssenkrupp, said government support would be too costly. Its chief financial officer, Klaus Keisberg, said in an interview with the German newspaper Rheinische Post that the WSF, set up by the government to help affected populations in the aftermath of the pandemic, "is not the right vehicle" to support the concern.
Keisberg noted that the costs of this scenario - which is likely to include direct government involvement - could seriously threaten the future prospects of the steel division.
“This would result in significant and steadily increasing annual interest payments, which could account for about 9% of total assistance. This cannot be satisfied by the cash flow of the steel business, ”Keisberg said.
The news sparked outrage at IG Metall, which pushed for government involvement as a way to save a business that suffered operating losses of nearly € 1 billion ($ 1.2 billion) last fiscal year.
Jurgen Kerner, IG Metall spokesman and deputy chairman of Thyssenkrupp's supervisory board, said it was irresponsible to completely rule out any form of government involvement.
He recalled that Thyssenkrupp CEO Martina Merz has not yet ruled out state aid.
During the financial year ended September 30, the company suffered heavy losses, especially in the steel business. Profit before interest and taxes fell to minus 1.6 billion euros (minus 1.94 billion dollars), while the steel sector suffered losses of 946 million euros. In the previous financial year, Thyssenkrupp had a net loss of 110 million euros. Revenue fell 15% to 28.9 billion euros.
According to the forecasts of the company itself, Thyssenkrupp expects to receive a net loss of more than one billion euros in the 2020-2021 financial year.
Earlier this year, Thyssenkrupp undertook a strategic analysis of its steel business, with scenarios including full or partial sale, as well as possible sale of a stake in the business to the state.
Britain's Liberty Steel has submitted an optional bid for the group's steel division, Thyssenkrupp has also held talks with India's Tata Steel, Sweden's SSAB and Germany's Salzgitter on a possible consolidation.
Thyssenkrupp said they would decide the fate of the unprofitable steel division in March 2021.
“We also see significant upside potential for the value of our steel business in a stand-alone scenario,” Keisberg said.