In the first six months of the financial year 2013, investments in property, plant and equipment and intangible assets amounted to € 139.2 million, which is lower compared with the previous year's period (€ 149.6 million). Overall, depreciation and amortization amounted to € 359.6 million, including € 185 million in Impairment. The ordinary depreciation and amortization stood at € 174.6 million and were thus slightly higher than the year-earlier figure (€ 170.6 million), thereby also significantly exceeding the capital expenditure of the period under review.
In 2013 the investment activities of Salzgitter Flachstahl GmbH (SZFG) were concentrated on optimizing existing facilities to secure availability and on environmental protection measures. To this end, progress was made with the following projects in the first half year:
In order to reduce metallurgy costs SZFG is investing € 70 million in the construction of a coal grinding, drying and injection plant. The amortization period has been estimated at around two years under the current circumstances. The high level of economic viability is based on substituting more cost-effective pulverized coal for oil and coke sourced externally. The coal is produced in the coal grinding and drying plant and subsequently injected into the blast furnaces. The plant is due for commissioning in 2015.
The tandem mill was supplemented by an inlet system comprising strip storage and a welding machine. The measure permits partly continuous rolling, thereby optimizing both the mill's efficiency and the quality of the products produced. The required machinery was installed and functional tests carried out. Trial operation of the mill is currently running in parallel with the existing tandem mill in preparation for seamless connection in the fourth quarter.
Manufacturing the components for the "Converter A Renewal" project has been concluded. The preparations for conversion in the third quarter are proceeding according to plan. The measure entails enlarging the vessel by around 50 m³ and improving the drive concept. The aim is to optimize output volumes while reducing operating costs.
At Peiner Träger GmbH (PTG), only replacement investments necessary to keep operations running smoothly were made in the reporting period.
The "ILG 2015" investment project of Ilsenburger Grobblech GmbH (ILG), aimed at raising the volume of thick slabs, is still being implemented at present. The majority of measures will have been concluded by the end of 2013.
The Trading Division concentrated its investments on measures to modernize existing facilities and on making new acquisitions in the financial year 2013. In addition, construction work began on a building at the Friesland location of Dutch Salzgitter Mannesmann Staalhandel B.V. (SMNL) to secure its sections business as well as to expand trading in flat products. Completion has been scheduled for the second half of 2013.
Aside from replacing facilities, the investments of the Tubes Division in 2013 are focused first and foremost on optimizing product quality. At Salzgitter Mannesmann Grobblech GmbH (MGB) the new cross cut shear has commenced mass production to schedule. The ramping up phase has been delayed by a couple of weeks owing to short-time work introduced on a temporary basis. The new machinery has, however, already fulfilled the specific expectations placed on product quality.
Services Division: VPS Verkehrsbetriebe-Peine-Salzgitter GmbH ((VPS) has already taken receipt of 18 of a total of 40 locomotives ordered in previous years to standardize and modernize its fleet of engines. Another eight locomotives have been planned for 2013, while four have arrived in the meantime.
In 2013, the investment activities of the Technology Division were channeled into replacement and streamlining measures geared to promoting the sustainable competitiveness of the KHS Group. IT projects in Germany and at the international companies are currently being carried out to further optimize processes.
An extensive project for the software-based configuration of KHS products and packaging lines under the name of "Product Configurator" was already launched in 2012. This measure is aimed at enabling an even more efficient tendering of quotations and processing of orders based in future on products and processes that are standardized to a higher degree. Implementation is being carried out in close reconciliation with the Customer Relationship Management (CRM) system. The Competence Centers have begun to initial product and relationship data. The first machine configurations are due for completion toward the end of 2013.
Following the successful introduction of a continuous production line at the Kleve site of KHS GmbH that considerably cuts assembly times and logistic costs, this production concept is now being adopted by the Worms plant.