|Order intake||€ m||1,168||1,301|
|Order backlog as of 12/31||€ m||404||430|
|Crude steel production Hüttenwerke Krupp Mannesmann (30 %)||kt||1,150||1,392|
|Segment sales1)||€ m||1,333.0||1,496.4|
|Sales to other segments/Group companies||€ m||-333.6||-433.9|
|External sales2)||€ m||999.4||1,062.6|
|Earnings before taxes (EBT)||€ m||-22.4||2.2|
|EBIT before depreciation and amortization (EBITDA)3)||€ m||63.5||77.1|
|Earnings before interest and taxes (EBIT)3)||€ m||-9.7||17.3|
As of August 1, 2016, the Energy Business Unit that comprises the Salzgitter Group’s steel tubes producing companies was renamed as the Mannesmann Business Unit. This measure serves to underscore the quality aspiration associated with internationally renowned Mannesmann brand. The business unit is primarily geared to serving the international project business in the sectors of energy supply and infrastructure and covers a wide range of line pipe diameters. A leading supplier in Europe for precision steel tubes used in automotive construction, as well as a leading global manufacturer of seamless stainless steel and nickel-based tubes supplement the portfolio. Customer demand is driven by the megatrends of “water”, “energy” and “mobility”.
The business unit has its own supply of input material as well as the production of semi-finished materials for the manufacturing of seamless tubes in the form of a 30 % stake in Hüttenwerke Krupp Mannesmann GmbH (HKM), an integrated steelworks with an annual capacity of more than 5 million tons of crude steel. In addition, it makes extensive use of our trading organization to source semi-finished material and to sell its products.
The EUROPIPE Group (EP Group) is reported at 50 %, with the proportionate after-tax result (consolidated at equity). HKM is reported at 30 % on a proportionate basis and is included accordingly in the order intake, sales and the result of the business unit. HKM’s orders on hand and shipments are not reported as only tubes are disclosed here.
Global steel production declined somewhat again in 2016 for the first time since the crisis year of 2009 and, at 164 million tons, dropped 3 % below the record set in 2015. Production in North America, the CIS countries and China fell markedly below the year-earlier level, as opposed to the EU and Germany that reported an increase of 4 %.
Compared with the previous year, the production of welded steel tubes with external diameters of up to 16" remained unchanged. US output was significantly lower year on year, whereas in the EU it increased slightly for the third time in a row. The global output of large-diameter pipes and seamless tube producers both fell 8 % short of the year-earlier volumes, which also varied depending on the region: Large-diameter pipe production, especially in North America and the CIS countries, stood at a notably lower level whereas European output expanded by 6 % following the very weak previous year. The manufacturing of seamless steel tubes entered a downtrend on a global scale in particular due to the ongoing investment restraint in the energy sector. The sharpest decline was again reported in the US where the shortfall measured against the record figure achieved in 2014 stood at 60 %. EU producers reported a production downturn of 5 %, one quarter less than the all-time high achieved in 2014.
The order intake of the Mannesmann Business Unit dropped below the previous year’s figure for two reasons: Firstly, the Salzgitter Mannesmann Stainless Tubes Group (MST Group) reported a lower order intake by the European stockholding steel trade and only very few projects from the oil and gas business, and secondly Salzgitter Mannesmann Großrohr GmbH (MGR) was unable to achieve the above-average year-earlier figure, wich was in line with expectations. The business unit’s order backlog did not match the previous year’s figure in particular due to the development in the stainless steel segment. Outside the group of consolidated companies, new orders of the EP Group increased significantly thanks to the booking of the Nord Stream 2, TAP On- /Offshore and Zohr, bringing orders on hand to above the level posted in 2015.
Tubes shipments were higher year on year on the back of growth at MGR, as opposed to segment and external sales that nevertheless entered a downtrend caused by selling prices and structural aspects. The EP Group that is included at equity significantly outperformed the previous year mainly due to the delivery of several major projects.
Despite the improved result of MGR and the higher positive contribution to earnings of the EP Group included at equity, the Mannesmann Business Unit reported a pre-tax loss of € –22.4 million (2015: € +2.2 million). This figure includes € 6.0 million in expenses for structural measures, mainly at Salzgitter Mannesmann Line Pipe GmbH (MLP), to respond to the challenge of the weak international oil and gas business and fierce priceled competition through a restructuring program to adjust capacity and reduce costs further. In addition, impairment of € –15.0 million was carried out on MLP’s assets.
The Mannesmann Business Unit focused first and foremost on replacement and supplementary investments. This also included the blast furnace relining necessary at HKM. In France, the MST Group successfully commissioned a state-of-the-art leveling machine for large diameters in the third quarter of 2016. Along with organizational and logistic optimizations, investment measures to enhance the efficiency of the facilities at the Hamm location of Salzgitter Mannesmann Precision Group (SMP Group) were implemented.