By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF (Reuters) - Crisis-hit Thyssenkrupp (DE:TKAG), looking for a new CEO and chairman, on Thursday set out mid-term profit margin targets for its four divisions but activist investors are likely to demand a more substantial turnaround plan.
Guido Kerkhoff, who has taken charge until a permanent replacement for former CEO Heinrich Hiesinger has been found, said that all of Thyssenkrupp's businesses needed to improve significantly following a profit warning last week.
"The bottom line is that we are not satisfied with the current results," Kerkhoff said after releasing the new targets as well as third-quarter results. "There's no point in sugar-coating it."
Shares in the German industrial group, whose products include car parts, steel, elevators and warships, slipped 0.7 percent by 0954 GMT, with brokerages saying the new targets for 2020/21 were broadly as expected.
Frustrated with the sprawling conglomerate's weak performance, which includes a 31 percent share price decline since 2011, investors have repeatedly called for ambitious margin targets to revive its fortunes.
Cevian and Elliott, which together hold about a fifth of Thyssenkrupp and have led calls for a significant improvement in operating performance, declined to comment on Thursday.
The group has been in crisis mode since the sudden resignation of Hiesinger and Supervisory Board Chairman Ulrich Lehner last month, with both citing a lack of support from key stakeholders.
The turmoil at Thyssenkrupp, which has a history stretching back over two centuries, poses fundamental questions about a company that was long run not only for profit, but also with the aims of upholding the legacy of its founding family and preserving jobs for its 160,000 workers.
It is now aiming for free cash flow before M&A of at least 1 billion euros (932.3 million pounds) by 2020/21, compared with a negative 855 million euros in its last financial year.
Its 2020/21 goals also include a margin target of at least 13 percent for its elevators business, up from 12 percent last year, and a margin of more than 7 percent for its automotive business, up from 5 percent.
By 2020/21 corporate costs, which have been a focus for shareholder criticism, are expected to fall significantly below 400 million euros from 535 million last year.
"There is actually a neutral impact to our numbers," Jefferies analyst Seth Rosenfeld wrote in a note, keeping a "buy" rating on the stock.
Kerkhoff, who served as chief financial officer before taking over from Hiesinger, also poured cold water on speculation that the company could be broken up, adding he had a clear mandate to develop the group with all its businesses.
He said a structured process for finding a long-term replacement for Hiesinger was currently under way but declined to comment on whether he was a candidate.