Excellent Business Development During First Half-Year 1999/2000

SALZGITTER AG‘s earnings during the first half of fiscal 1999/2000 tripled as compared with the previous year to 46.5 million euros (14 million euros). Non-Consolidated Group sales increased by 16 % to 1,933 million euros (1,666 million euros). After allowing for internal sales, consolidated sales amounted to 1,501 million euros (+ 15 %). Fundamental expectations of the Group were thus fulfilled.

The continuing general economic recovery accelerated the positive business development of SALZGITTER AG which is marked by a strong increase in terms of volume and improved revenues.

Barring special influences, an even better result would have been achieved. Non-recurrent effects can mainly be attributed to the voluntary participation in the compensation fund of the German industry, the scheduled conversion of the continuous pickling line, and the stoppage of the electro-galvanizing line due to damage caused by fire. Furthermore, price increases for raw materials, intensified by the stronger US-dollar, had an adverse effect on earnings.

Brisk demand for steel products led to excellent new order bookings (+ 11 %) and to a substantially higher order backlog (+ 25 %) compared to the previous year.

This is a sound basis for a continued high capacity utilization.

SALZGITTER AG‘s crude steel production was stepped up from 2.181 million tonnes to 2.515 million tonnes. This represents the best production output of the last 25 years.

Sales of the Steel Production Division thus reached 825 million euros (+ 6 %) versus 781 million euros during the same period of the previous fiscal year. Highest increases were achieved for hot rolled flat products and beams.

The other Divisions of SALZGITTER AG also recorded positive business developments. Sales of the Steel Trading Division increased to 864 million euros (+ 22 %), led by and exceptional performance in international trading. The Raw Materials and Services Division improved ist sales by 38 % over the previous year to 244 million euros.

On March 31, 2000 SALZGITTER AG had a total workforce of 12,419. The year-on-year increase of 932 employees is resulting mainly from including Verkehrsbetriebe Peine-Salzgitter GmbH in the scope of consolidation.

Group growth strategy is aiming at a sustained qualitative and quantitative expansion of the Company‘s performance. 69 million euros (previous year 39 million euros) were invested in property, plant, and equipment. In the area of external growth, the acquisition of HSP Hoesch Spundwand und Profil GmbH is scheduled to take place shortly. The Company will thus establish a strong market position in the sheet piling sector within the European Union. SALZGITTER AG is also consistently continuing its successful Earnings Improvement Program.

The Company is expecting a further rise in profits during the second half as compared with the first half of the current fiscal year.

Comparison of first Half-Year 1999/2000 (October 1999 - March 2000)