First quarter of 2021

12.05.2021 | Salzgitter AG


Salzgitter AG – encouraging start to the year

  • Pre-tax profit of € 117.3 million in the first quarter
  • Steady increase in the monthly results across almost all segments
  • Earnings forecast revised upward: profit before taxes of between € 300 million and € 400 million
  • SALCOS®: consistently forging ahead as a pioneer of low CO2 steel production

The Salzgitter Group generated earnings before taxes of € 117.3 million in the first quarter of the financial year 2021. Against the backdrop of a sustained recovery in the market and an uptrend in steel prices, this performance was especially attributable to the gratifying results of the Strip Steel and Trading business units, as well as a contribution of € 42.5 million from Aurubis AG, a participating investment included at equity (IFRS accounting) (Q1 2020: € –18.7 million). Almost all segments reported a steady increase in their monthly results over the course of the quarter.

The Salzgitter Group’s external sales remained stable compared with the year-earlier level (€ 2,094.1 million; Q1 2020: € 2,108.3 million). Earnings before taxes came in at € 117.3 million (Q1 2020: € –31.4 million). An after-tax result that stood at € 76.6 million (Q1 2020: € –43.7 million) brings earnings per share to € 1.38 (Q1 2020: € –0.83) and return on capital employed to 13.2 % (Q1 2020: –2.4 %). The equity ratio amounted to 33.0 % (Q1 2020: 35.3 %). In addition, – compared with the respective costs of procurement – the hidden reserves not evident from the balance sheet from the acquisition of our participating investment in Aurubis AG and the CO2 allowances purchased as a precautionary measure for the fourth period of the EU greenhouse gas emission trading scheme that commenced on January 1, 2021, meanwhile amount to over one billion euros.

Chief Executive Officer Prof. Dr.-Ing. Heinz Jörg Fuhrmann on the current situation:

“With Salzgitter AG remaining on track in the challenging past year through drawing on its own resources thanks to rigorous coronavirus management and the measures taken at an early stage to secure earnings and liquidity, I am pleased with the successful start to the year 2021! The quarterly results and improved business activity give us every reason to be optimistic about how the year will develop going forward. The key foundations have also been laid for the Salzgitter Group’s long-term success: The company is robustly positioned in terms of its financial position and balance sheet, even as the coronavirus crisis diminishes. We have a well-diversified and balanced product portfolio in place. We will consistently forge ahead as a pioneer in low CO2 steel production. As part of the “Wind Hydrogen (WindH2)” project that enables us to gain valuable experience in the important field of “hydrogen from renewable energies” essential to SALCOS®, we commissioned a 2.5 MW PEM electrolysis plant in March 2021. Germany’s only cross-sector project at present will produce green hydrogen with electricity generated by wind power on the site of the steelworks in Salzgitter. Next week will already set another milestone: a groundbreaking ceremony to mark the start of the construction of a demonstration plant, that will realize the world’s first direct reduction process making flexible use of natural gas and hydrogen.”

Outlook

In view of the good start to the year and the dynamic increase in rolled steel prices – nevertheless also with explicit reference to the still imminent risk of the coronavirus pandemic – we now anticipate the following for the Salzgitter Group in the financial year 2021:

  • an increase in sales to more than € 8.5 billion,
  • a pre-tax profit of between € 300 million and € 400 million, as well as
  • a return on capital employed (ROCE) that is tangibly above the previous year's figure.

We also make reference to the fact that further opportunities and risks from currently unforeseeable trends in selling prices, input material prices and capacity level developments, as well as changes in the exchange rates, may considerably affect performance in the course of the financial year 2021. The resulting fluctuation in the consolidated pre-tax result may be within a considerable range, either to the positive or to the negative.


Disclaimer: Some of the statements made in this report possess the character of forecasts or may be interpreted as such. These are made to the best of the Company’s knowledge and judgment, and by their nature are subject to the proviso that no unforeseeable deterioration occurs in the economy or in the specific market situation pertaining to the division companies, but rather that the underlying bases of plans and outlooks prove to be accurate as expected with regards to their scope and timing. Notwithstanding prevailing statutory provisions and capital market law in particular, the Company accepts no obligation to continuously update any forward-looking statements that are made solely in connection with circumstances prevailing on the day of their publication.