First Half 2001 - "Against the Trend"

Significant Increase in Sales and Earnings during First Half 2001

In spite of a world economy characterised by recessionary fears and a growth deceleration of major national economies, Salzgitter AG succeeded to increase Group sales and earnings significantly during the first half of the fiscal year compared with the prior year.

Consolidated Group sales during the first half 2001 amounted to 2.28 billion. They were up 38% on sales of 1.65 billion in the equivalent period of last year when the Tube Division was not included in the consolidation yet. Income from ordinary operations came to 84.3 million. Compared with the equivalent period of the previous year, it was increased by a substantial 83%. Income after taxes of 70 million was even more than doubled compared with the first half 2000 (+119%). Salzgitter AG's most essential indicator of success, the ROCE (Return On Capital Employed) of 15.7% substantially exceeded the targeted mark of 12%.

The Steel Production Division achieved external sales of 774 million during the first half, up 23% on the equivalent period 2000. Income from ordinary operations amounted to 40.6 million, exceeding last year's value by 18%. Sales and earnings declined, however, between the first and the second quarter. Aside from economic impacts on tonnages and revenues, increased dollar-based purchasing prices for raw materials and energies also had their impacts.

During the first half, business development of the Tube Division was excellent. In particular the demand for oil and gas country tubular goods and line pipes benefited from the continuing high oil price. Consolidated sales of the Tube Division came to 490 million during the first half. Second quarter sales of 287 million exceeded the first quarter (203 million) by 41%. Second quarter income from ordinary operations was 22 million, an increase of more than 53% on the first quarter, leading to the encouraging first-half result of 36 million.

Steel Trading Division's first half was characterised by declining shipments. External Division sales amounted to 842 million and were only 7% below last year's volume as the market price level was still above the equivalent period of 2000. Division income before taxes of 3.5 million was below last year's comparable figure.

There were hardly any changes in the sales figures of the Raw Materials and Services Division and of the Industrial Shareholdings Division compared with the prior year. The Raw Materials and Services Division achieved 8.3 million earnings before taxes; the Industrial Shareholdings Division, comprising a number of industrial start-up companies, practically broke even. It is envisioned to further expand Group automotive activities by acquiring another major shareholding. Subject to the approval of the Supervisory Board, future operations of Salzgitter Automotive GmbH will be extended by Kurt Matzner GmbH & Co KG, Osnabrück. With 350 employees, Matzner achieved sales of 35 million in 2000 in the sector automotive components, tools and small series.

Although there are isolated signs suggesting a brighter economic climate in the world and in Europe, reduced volumes and diminishing revenues will continue to have their effects on the results of the Steel Production Division during the second half of the fiscal year. The very encouraging trend of the Tube Division will, however, continue during the course of the year 2001 and it can be assumed that Division results will be maintained on quite a positive level during the quarters to come.

Depending on the further economic development, the Company keeps up its estimation that Group earnings of about 135 million are achievable in the current fiscal year. However, it remains to be seen how the measures on global trade flows of steel products announced by the US Government will have their effects on the EU steel market.