Preface by the Executive Board

Ladies and Gentlemen,

We do not wish to importune you with the platitude ”we were unable to escape the effects of the crisis” which is commonplace in virtually all information released by companies nowadays. You will most likely feel that we are stating the obvious. And you are also aware of how the crisis came about and know that we were not responsible for it. What may be of interest to you, however, is how we mastered the challenges it presented.

As repeatedly mentioned in previous years at this point, we have not been anticipating decades of a steady steel boom, but have factored in a cyclical downturn of considerable proportions. We did not succumb to the temptation of entering into extremely complex and risky commitments far removed from our core activities, but have chosen instead to put our cards on modernizing our existing locations and making selective acquisitions which will diversify our Group portfolio. Thanks to our financial stability and sound balance sheet structure we were not forced, like many other industrial enterprises, to take out loans and issue corporate bonds at high interest rates.

In response to the crisis, we initiated an extensive program of measures to stabilize profit and liquidity at the turn of the year 2008/2009 which was then swiftly and successfully implemented. This program was instrumental in helping our Group companies to actively save costs totaling € 276 million. This amount is even more than originally planned and does not include the effect of market price fluctuations outside our scope of influence, such as that of commodities, for instance. We have acted prudently; adjusting personnel expenses to capacity utilization was made mainly through using the tools of short-time work and time accounts, and investments to secure the future were generally realized without delay. Anything else would have meant that we would have saved at the cost of our future.

Nonetheless, we consider it our duty to take a critical look at our activities ourselves. Wherever achieving our targeted results involved ongoing organizational and streamlining measures, which went beyond the short-term program of immediate measures, they were initiated. The largest portion of funds amounting to € – 73 million necessitated by these measures have been absorbed by our 2009 annual financial statements, along with € 263 million in unscheduled write-downs which have no effect on liquidity. The effects of these measures will already serve to ease the burden on the results of the current financial year.

After elimination of these non-recurrent expenses, the Group’s remaining operating pre-tax result comes to € – 160 million. Seen in absolute terms this result is not good but is acceptable when compared with that of numerous competitors in Germany and abroad and also in view of the difficulties experienced in many customer industries which buy our products. With an aftertax contribution of € 60 million, our stake in Aurubis AG has made a gratifying contribution to our consolidated result; this investment, which we made shortly before the crisis in the financial market spread to the rest of the economy, is still delivering a genuinely positive performance.

This step, which initially drew negative comments from a number of observers, also highlights one thing: achieving competitive differentiation is the first move towards being better. Otherwise you are nothing more than just as good – in the best case scenario.

But it is not always the decisions of huge import with far-reaching consequences which make that special difference – often it is just small things. This is the insight illustrated by the images and accompanying stories in the 2009 Annual Report. Here you can find out what an impartial look, a new approach to a known topic, an alloy particle, or a little bit of appreciation in our dealings with one another can do.

This approach must have had some effect; otherwise our share would not have multiplied its value many times over in the last decade, leaving the competitor average far behind. May we ask you to remember this when you come to assess the dividend of € 0.25 per share which we intend to distribute despite the huge loss sustained by the Group. The last time we paid dividend in this amount was the financial year 2003 that was, after all, a year which closed with a profit.

Although the sales and procurement markets are still exposed to erratic fluctuation and the economy is not showing any clear signs of firming up, we nonetheless anticipate an improvement in the Group’s results in 2010.

On this note, we would like to extend our thanks to you as the shareholders and business partners of Salzgitter AG, also on behalf of our committed employees, for the trust that you vest in our company.

Sincerely,