We are shaping our future with the 360° Concept. The concept encompasses all aspects of corporate development, from the corporate policy and the strategic alignment derived from it through to the development of the Group and its business units and on to innovation management and corporate culture.
Independence at the core
Development of the business units
Developing potentials: growth programs
Motivation and qualification
The Salzgitter Group’s independence is a success story and without a doubt the right path for our company to follow. Our strategy is therefore geared, as before, to optimizing the value of the Group and its companies and to implementing our corporate policy that is anchored in self-determination.
The degree of liquidity determines the extent to which the Group can make decisions autonomously as well as its scope for flexibility. Against this backdrop, we fundamentally align our medium- and long-term liquidity goals with the two following principles: Financing from our own resources as well as creating sufficient financial headroom for investments in promising businesses in our locations and, beyond this, also in research and development. With a view to diversifying its sources of financing further, Salzgitter AG issued a new bonded loan of € 364 million in May 2019. In addition, the European Investment Bank (EIB) made funds of € 150 million available to Salzgitter AG at the end of 2019 in the context of the EU investment offensive. These monies are to be used to progress our intensive research and development activities for the promotion of sustainable steel production.
Launched in the autumn of 2016, the “Salzgitter AG 2021” corporate strategy defines the cornerstones of the Group’s development. The aim is to develop the Group’s de facto sales and value added portfolio with profitable growth of currently around 60 % from steel and 40 % from non-steel in a manner that both parts converge in the direction of balanced, equal proportions. After completion of affordable investments and R&D expenditure, an additional profit contribution from organic growth of more than € 200 million a year is to be generated over the period from 2017 to 2023.
This will be based on the following assumptions:
- Growth achieved in rolled steel production and part of tubes production can only be of a qualitative and not of quantitative nature. There are no realistic alternatives to this, neither a radical paring down of investments nor a spin-off or merger option with competitors.
- Quantitative growth is only possible in activities more removed from steel, particularly in the Technology Business Unit.
- External growth on a large scale is not necessarily essential for the positive development of our business units, but would nevertheless be very desirable for the Technology Business Unit, above all with a view to supplementing its range / technology.
We are taking the rigorous and ongoing improvement of our structures and processes forward with new impetus under the “FitStructure 2.0” optimization program that consists of around 700 measures in total. Following full completion, we aim to have raised more than € 240 million p.a. in earnings improvement potential – until then approximately € 60 million will be added each year. By year-end 2019, an improvement volume of around € 650 million a year had been realized from the extensive, in 2016 successfully concluded “Salzgitter AG 2015” reorganization program and the successor “FitStructure” program.
The further development of the business units is aligned first and foremost to organic growth. Bolstered by investment measures as well as research and development projects, the focus has been placed on growth areas that we identified and specified across all business segments as part of the “Salzgitter AG 2021” corporate strategy.
The Strip Steel Business Unit produces, processes and sells strip steel in various metallurgical analyses and dimensions. Its most important customers include vehicle manufacturers, their suppliers, standard and large-diameter tubes manufacturers, re-rollers and the construction industry. Salzgitter Flachstahl GmbH (SZFG) focuses on quality and special steels and strives for innovation leadership in its target product segments, above all in the fields of “automotive chassis” and “bodywork”, as well as “re-rollers” and “household appliances”. Investments that strengthen the premium segment for automotive customers facilitate the further optimization of the premium product portfolio. This includes the “Hot Dip Galvanizing Line 3” that extends the hot dip galvanizing capacities already available by another 500 ktons, thereby enabling growth in the special steels segment. The line that is due to be taken into operation at the end of 2022 allows us to produce additional volumes of ultra-high strength steel grades for use in bodywork and chassis that play an important role in automotive lightweight construction and in vehicle security. The configuration of the facilities as a whole offers the structural and technical prerequisites for realizing further innovative materials concepts. We use the affiliated Steel Service Center in the Strip Steel Business Unit to serve the prefabrication requirements of our customers. The two processing companies extend the value chain within the business unit by manufacturing customized products for the automotive and construction industries.
The Plate / Section Steel Business Unit combines three innovative producers of high quality steel products with a rich tradition. These companies primarily serve the construction industry and infrastructure customers. Along with the energy sector, yellow goods and offshore, as well as tank and plant engineering, are important fields of application with growth potential for the heavy plate companies, especially in the high-end grade segment. The RH plant that was taken into operation in 2017 at the SZFG site for the purpose of supplying Ilsenburger Grobblech GmbH (ILG) with vacuum treated semi-finished material used for the production of higher-end grades. The aim is to position the company as a full-line supplier of heavy plate applications. The current investment in ILG’s energy efficient heat treatment line also contributes to this undertaking. With its 5.1 meter wide “quarto” rolling mill, Salzgitter Mannesmann Grobblech GmbH specializes in large-diameter pipe grades. The overriding aim is to adjust the structures to the highly volatile business and to market conditions. Following the extensive reorganization program that was successfully completed, beam producer Peiner Träger GmbH continues to focus on rigorous cost management and enhancing efficiency.
The pipe and tube activities of the Salzgitter Group are largely combined under the Mannesmann Business Unit. A substantial part of these activities targets infrastructure projects in the energy industry. The portfolio is supplemented by leading suppliers of precision steel tubes in automotive, construction and industrial applications, as well as stainless steel and nickel-based tubes. The companies in the large and medium line pipe segment meet the challenges of the volatile project business by building more flexibility into production and resources and optimizing market development. The EU business of the precision tubes segment concentrates primarily on developing the product portfolio in terms of its quality. As part of the internationalization strategy that targets growth markets such as North America, the Mexican production site was extended. The stainless steel segment with its locations in Germany, France, Italy and the US is reinforcing its market position by expanding its product range. Measures include the acquisition of a French specialist supplier of cold finished seamless stainless steel tubes in the premium segment for the industries of aerospace, power plants as well as oil and gas. Our 50 % EUROPIPE participation intends to strengthen its role as a leading manufacturer of large-diameter pipes through its production sites in Germany and the US.
The global network of the Trading Business Unit is the link between our production companies and the sales and procurement markets. With its well-developed European organization of stockholding steel trading subsidiaries, including heavy plate specialists, and international trading, the Trading Business Unit is an important distribution arm for the Group’s own rolled steel and tubes products. In addition, the Salzgitter Mannesmann Handel Group supports the Group companies in acquiring project business and semi-finished products. With the introduction of the “e-World” digital sales platform in 2016, the Trading Business Unit has proven itself a pioneer of Internet-based steel trading. In the future, it will also be focusing on digitalizing customer business as one of its key development areas. We see further opportunities for growth through stepping up our activities in Eastern Europe and expanding our finishing capacities.
Three high-profile manufacturers of special machinery are grouped within the Technology Business Unit. As the business unit’s largest entity, the KHS Group ranks among the world’s three leading suppliers of filling and packaging machinery for the beverage industry. KHS maintains production sites in all the principal markets and commands a customer-oriented global service and sales network. The comprehensive “KHS Future” efficiency and growth program was launched at the KHS Group at the start of 2018, with the measures up until that time being perpetuated. Emphasis is placed on reducing costs, expanding the service business and growth in foreign markets. Klöckner Desma Elastomertechnik GmbH and Klöckner Desma Schuhmaschinen GmbH (KDS) are global market leaders in their respective growth markets. The two companies strive for organic sales growth by offering innovative products and expanding their service business. A production and office building is being erected at KDS as part of the “Factory of the Future” investment in line with state-of-the-art workflow principles. The aim is to optimize production sequences, thereby enabling more effective and productive processes.
The Salzgitter Group's research and development (R&D) philosophy extends well beyond the conventional development of existing products and processes: Innovations are the result of systematically controlled processes. These processes range from trend analysis in clearly defined product and technology clusters, generating ideas and evaluating their strategic and financial significance, intellectual property analysis, the R&D activities themselves and right on through to the actual implementation of the results at an operational level. Customer benefit has been placed at the heart of all activities.
A cornerstone of our innovation activities consists of reducing the CO2 emissions of the integrated steel production at the Salzgitter site. Together with the Fraunhofer Institutes and other partners, we are expediting the SALCOS® (Salzgitter Low CO2 Steelmaking) project. The engineering approach of SALCOS® targets the direct avoidance of CO2 emissions in the production process itself through using hydrogen to gradually replace the carbon necessary for steel production based on iron ore. The unique selling proposition of SALCOS® consists of the innovative combination of the technologies available today and established in the industry that can therefore be implemented quickly from a technical standpoint as soon as the requisite framework conditions for sustainable operation have been set in place by policymakers and society. In the first stage of development (technically implementable by 2025), SALCOS® would be capable of reducing CO2 emissions from steel production at the Salzgitter location by around one quarter and, in the final stage of implementation (going forward, in the year 2050), by up to 95 %.
The sustainable competitive and innovative capability of the Salzgitter Group is especially dependent on having motivated and well qualified employees. Consequently, forward-looking further training, the systematic fostering of the workforce, and attracting highly qualified junior staff has always held a high strategic priority for us. Our "YOUNITED – Achieving More Together" mission statement reflects our groupwide identity, thereby strengthening the long-term alignment of the Group. Building on the “Values of the Year” that focused on one value from the corporate mission over the period from 2014 to 2019, 2019 marks the start of “YOUNITED 2.0” with the main emphasis placed on quality.
At 31. December 2019