DGAP-News: Salzgitter AG: Half-yearly result burdened by structural crisis in the European steel industry - 'Salzgitter AG 2015'

DGAP-News: Salzgitter AG: Half-yearly result burdened by structural crisis in 
the European steel industry - 'Salzgitter AG 2015' generates profit potential 
of EUR 200 million p.a.

DGAP-News: Salzgitter AG / Key word(s): Half Year Results
Salzgitter AG: Half-yearly result burdened by structural crisis in the
European steel industry - 'Salzgitter AG 2015' generates profit
potential of EUR 200 million p.a.

14.08.2013 / 07:30


In the first half of 2013, the performance of the Salzgitter Group was
largely determined by the structural crisis in the European steel industry.
Severe competition resulting from the ongoing capacity underutilization of
numerous producers in southern Europe pushed the selling prices achievable
for most rolled steel products below the manufacturing costs. The sectional
steel products processed by the construction industry were the hardest hit.
Against this backdrop, the Steel Division reported a high loss owing
primarily to impairment of the assets of Peiner Träger GmbH (PTG). This
impairment had become necessary due to the persistently unsatisfactory
earnings outlook of the section business. Additional profit burdens
emanated from the dramatic lack of orders in the Tubes Division's
large-diameter pipes business.

Consolidated external sales fell by 7 % to EUR 4,977.3 million (first half
of 2012: EUR 5,378.5 million), which was mainly attributable to the
unfavorable selling price trend for rolled steel products. The pre-tax
result of EUR -298.7 million (first half of 2012: EUR -17.9 million)
comprises impairment of EUR 185.0 million on the assets of PTG, as well as
EUR 54.2 million in negative after-tax contribution by the 25% holding in
Aurubis AG, a participation included at equity (first half of 2012: EUR
+34.6 million). The after-tax result stood at EUR -315.2 million (first
half of 2012: EUR -22.5 million). As before, an equity ratio of 39% and net
financial position of EUR 375 million continues to form a thoroughly sound
financial basis for mastering the current challenges.

External sales by Division (EUR million):

                                  H1 2013                        (H1 2012)

Steel                             1,334.4                        (1,406.8)

Trading                           2,031.5                        (2,398.4)

Tubes                               820.7                          (790.5)

Services                            204.4                          (212.2)

Technology                          568.4                          (548.5)

Other                                18.0                           (22.0)

Group                             4,977.3                        (5,378.5)

Earnings before tax (EBT) by Division (EUR million):

                                   H1 2013                       (H1 2012)

Steel                               -260.5                         (-97.8)

Trading                               19.6                          (27.6)

Tubes                                -25.0                           (8.3)

Services                               4.3                          (10.2)

Technology                             5.6                           (2.6)

Other                                -42.7                          (31.1)

Group                               -298.7                         (-17.9)

Negative influences on the result in the accounts of the first half of 2013
and the development of operations anticipated necessitated an adjustment of
guidance for the results. With regard to the 2013 financial year, the
Salzgitter Group now anticipates slightly lower sales in a year-on-year
comparison and a negative pre-tax result of around EUR 400 million. As
already announced, additional special, initially burdening, non-recurrent
effects may still arise as a consequence of implementing the 'Salzgitter AG
2015' Group project.

We make reference to the fact that opportunities and risks from currently
unforeseeable trends in selling prices, input material prices and capacity
level developments, as well as changes in the currency parity, may
considerably affect performance in the second half of the financial year
2013. The resulting fluctuation in the consolidated pre-tax result may be
within a considerable range, either to the positive or to the negative. The
dimensions of this range become clear if one considers that, with around 6
million tons of steel products sold by the Steel, Trading and Tubes
divisions over the remainder of the financial year, an average EUR 20
contraction in the margin per ton is sufficient to cause a variation in the
annual result of more than EUR 120 million. Moreover, the accuracy of the
company's planning is restricted by the volatilities and shorter
contractual durations, both on the procurement and on the sales side.

'Salzgitter AG 2015' program

In order to achieve an acceptable level of performance also under difficult
general conditions in the markets and competitive arena, a restructuring
program under the name of 'Salzgitter AG 2015' was initiated in the fall of
2012. Numerous specific measures geared toward improving the process and
organization structures have meanwhile been defined and are now on the
verge of implementation or already under way. For instance, Salzgitter
Flachstahl GmbH is investing EUR 70 million in building a coal injection
plant to reduce metallurgy costs. Under the current circumstances, the
amortization period will be a mere two years. The overall profit
improvement potential identified and backed by projects within the Group
amounts to more than EUR 200 million p.a. More than half of this amount is
attributable to the further development of technical processes and
initiatives in the areas of logistics, procurement and data processing,
along with reducing personnel through downsizing more than 1,500 positions.
For the purpose of personnel-related measures, a 'Pact for the Future'
(Zukunftsvertrag) between the company, the Group Works Council and IG
Metall has been negotiated as a framework agreement and is due for formal
signing in the near future. Along with the necessary adjustments to
capacity and streamlining of largely administrative processes, the
reorganization is aimed at significantly strengthening the innovation and
customer orientation of the Group and its companies.

Disclaimer: Some of the statements made in this report possess the
character of forecasts or may be interpreted as such. They are made upon
the best of information and belief and by their nature are subject to the
proviso that no unforeseeable deterioration occurs in the economy or in the
specific market situation pertaining to the division companies, but rather
that the underlying bases of plans and outlooks prove to be accurate as
expected in terms of their scope and timing. Notwithstanding prevailing
statutory provisions and capital market law in particular, the company
undertakes no obligation to continuously update any forward-looking
statements that are made solely in connection with circumstances prevailing
on the day of their publication.

More information can be found in the full press release and interim report
published today (please refer to: www.salzgitter-ag.com/en/).

Markus Heidler 

Deputy Head of Investor Relations

Salzgitter AG
Eisenhüttenstraße 99
38239 Salzgitter

Phone +49 5341 21-6105
Fax   +49 5341 21-2570
E-Mail ir@salzgitter-ag.de

End of Corporate News


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Language:    English                                                     
Company:     Salzgitter AG                                               
             Eisenhüttenstraße 99                                        
             38239 Salzgitter                                            
Phone:       +49 5341 21-01                                              
Fax:         +49 5341 21-2727                                            
E-mail:      info@salzgitter-ag.de                                       
Internet:    www.salzgitter-ag.de                                        
ISIN:        DE0006202005                                                
WKN:         620200                                                      
Listed:      Regulierter Markt in Frankfurt (Prime Standard), Hannover;  
             Freiverkehr in Berlin, Düsseldorf, Hamburg, München,        
End of News    DGAP News-Service  
225642 14.08.2013                                                      
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