Trading Division

1) Incl. sales in own segment and to other corporate divisions

The prospering global economy had a positive impact on international steel trading in the first half of 2007 as well. Concerns, that Chinese steel exports could have a detrimental effect on the structure of steel prices, did not materialize in the first two quarters of the year. Moreover, the economic upswing in Europe has proven to be stable so far and, accordingly, the demand for steel as well. Together with the positive development in Africa, the Middle East and other regions of Asia, the slight downturn of the North American economy was compensated for.

Against this background, Salzgitter Mannesmann Handel Group (SMHD) performed outstandingly in the first six months of 2007. Impetus for the steel stockholding companies was provided by the persistently brisk construction activity in particular. Although supply in the domestic market grew steadily due to imports, above all for flat steel products, shipments of the Salzgitter steel trading companies were higher than in the previous year. Sales and pre-tax profit grew noticeably. In the period under review, international trading raised shipments and sales in most markets in comparison with the first two quarters of 2006 and achieved a very satisfactory result. However, the business activities of international trading were slightly lower in the second quarter of 2007 in comparison with the first. Above all, the demand for steel consolidated in North America, with the result that the SMHD-companies in this region were unable to keep pace with the excellent figures of preceding periods. Over the reporting period as a whole, new benchmarks were set for the shipments, sales and pre-tax profit of the SMHD Group.

Buoyed by the excellent market environment, the heavy plate specialist Universal Eisen und Stahl GmbH (UES) performed very well in the first half of 2007. Strong demand, particularly from the machine building and plant engineering sectors, in conjunction with the expansion of the preprocessing business, lifted sales considerably in comparison with the previous-year period. Pre-tax profit virtually doubled.

Despite the increase in inventories of traders and consumers in the first six months, the steel service center Hövelmann & Lueg GmbH raised shipments and sales in the reporting period. Profit before tax was boosted by higher selling prices for hot-rolled and coated plate, especially in the first quarter.

As per June 30, 2007, the external sales of the Trading Division rose 16 % to 2.05 € billion as against the first six months of 2006. As a result of the positive development in the steel stockholding trade of the SMHD Group and UES, the pre-tax result soared 55 % to a record level of € 121 million.