by Klaus Schachinger, Euro on Sunday
GMeasured by sales of 300 million euros, the thyssenkrupp subsidiary Uhde Chlorine Engineers (UCE), which specializes in electrolysis to split off hydrogen, is the dwarf in the group. The group in Essen earned 34 billion euros last year. However, with UCE’s stock market debut (IPO) planned for the second quarter, the chemical plant manufacturer from Dortmund could develop into a power dwarf and boost the stock market value of the parent company.
The virtual capital market day for the IPO next Thursday should provide arguments for this. Assuming a friendly mood on the stock markets, the prospects for a successful stock market debut are very good.
For the strategy of the traditional group, which has been undergoing major restructuring for some time and has had to put up with some major setbacks along the way, a stock market success for the subsidiary would be a big boost.
Bigger than the competitors
The thyssenkrupp holding UCE, a joint venture with the Italian electrode manufacturer Industrie De Nora, is larger in terms of sales than the British competitor ITM Power and the well-known NEL ASA from Norway, which recently generated almost 27 and 82 million euros respectively. Electrolysis, the technology for splitting off hydrogen, is key to the planned replacement of fossil fuels such as coke, oil and natural gas. The carbon dioxide-free energy source is to be used in many industries in the future, including steel production with its particularly high emissions of climate-changing CO2.
UCE boss Denis Krude expects global hydrogen consumption to increase eightfold from 2020 to 2050 to 21 terawatt hours per year. Around 110 billion dollars were sold worldwide in the hydrogen market in 2020.
The market for electrolysis, which is particularly interesting for UCE, is expected to increase to 40 billion euros in ten years. Hydrogen is also a megatrend on the stock exchange. Players like ITM and Nel are therefore highly valued. The market value of the Norwegians currently corresponds to 29 times the turnover of the past financial year.
Worth up to six billion euros
The market value of the thyssenkrupp subsidiary UCE is estimated at four to six billion euros, a value between 13 and 20 times sales. While ITM and Nel deliver smaller electrolysis systems, UCE builds large systems with outputs in the gigawatt range. Customers include chemical groups, as well as BASF and Covestro, as well as the manufacturer of industrial gases Air Products.
In an exclusive cooperation with the US group, UCE supplies the electrolysis technology and the service for the hydrogen systems operated by Air Products. The so-called cell hall of a plant provides an electrolysis capacity of around 100 megawatts – about the annual consumption of 600 households.
Originally, thyssenkrupp wanted to sell UCE, which is part of the Multi Tracks division. Then business picked up significantly, and the board led by Martina Merz stopped the sale. Now thyssenkrupp wants to retain a majority and long-term stake in UCE after the IPO. Most of the other businesses at Multi Tracks, with total proceeds of EUR 5.6 billion, are to be sold or brought into partnerships. Boss Merz has already achieved a lot on this path.
The engineer has a lot of experience with financial investors. During her time at Bosch, she oversaw areas that were sold to financial investors, with the new owners in a leading position to further develop the companies. “Financial investors trigger a healthy compulsion to change because they consistently focus on the essentials. I’ve learned a lot from it, and I try to apply that,” says Merz.
Steel division to go public
The new self-image of the traditional group, which as Germany’s largest steel group has written industrial history for decades, now also includes the fact that the Steel Europe division, which recently had sales of almost nine billion euros, is to be listed on the stock exchange as a spin-off in 2023. The company’s shares are booked in the custody accounts of thyssenkrupp shareholders.
A lot of capital is required to convert steel production to a hydrogen-based process. A plant with a capacity of 1.2 million tons of pig iron is to be built by 2025. In 2030, three million tons of steel are to be produced in an environmentally friendly manner. The investments are estimated at two billion euros. Employee representatives are therefore calling for good capital resources.
Thyssenkrupp’s prospects for the current fiscal year are good. For the first time in a long time there should be a dividend. Adjusted operating profit (EBIT) is expected to double to between EUR 1.5 and 1.8 billion. Thanks to its more efficient structures and higher volumes and margins, Steel Europe expects an increase in operating profit of at least one billion euros. Thus, the cyclical division is delivering the lion’s share of earnings this year.
Trading in steel and other materials and raw materials in the largest segment, Material Services, with sales of EUR 12.3 billion, accounts for a low three-digit million amount in the Group’s operating income. The situation is similar at Industrial Components with roller bearings and the automotive supply division. The three areas remain connected. ThyssenKrupp is also examining other options for Marine Systems, which also builds submarines.
Perspective: The IPO of the hydrogen division, the good prospects for the financial year and the favorable valuation bring an upswing.
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