New Group Organization and Excellent Perspectives on Results

With a New Group Organization and Excellent Perspectives on Results on Course towards a Successful Future

A new corporate structure of the Salzgitter Group went into effect as of July 1, 2001. Salzgitter AG, as a Management Holding, is positioned at the top level. It manages the five largely independent Divisions: Steel, Tubes, Trading, Processing and Services. The Holding will be focusing on strategy, corporate planning, coordination and controlling functions together with counselling and support of its subsidiaries on administratice and Group-wide issues. All market, product, process and location related questions will, in future, be dealt with by the induvidual operative companies in their own decentralized responsibilities. The necessity for such a functional division was the logical and inevitable result of the strong growth in the fiscal year 99/00 during which the Salzgitter Group took over Mannesmannröhren-Werke AG.

A closer customer support, the decentralization of responsibility and a stronger orientation towards established income targets shall continue to strengthen the performance of the Group and its operative subsidiaries. Achieving a return on capital employed of 12% through the steel cycle for the Group - corresponding approximately to a profit to sales ratio before tax of 4 to 5 percent - will have top priority.

The reorganized Group Executive Board around its Chairman Wolfgang Leese believes to have taken the right course, verified by the earnings outlook for the current fiscal year 2001: even if the bottom of the current steel cycle does not seem to have been passed through yet for flat rolled steel products, the excellent business development of the Tube Division gives every reason for a comparatively optimistic overall assessment: the expectation worded in April this year, namely that a pretax profit on the fourfold level of the short fiscal year 2000 - approximately 135 million - would be achievable, depending on the further economic development, is confirmed. However, it remains to be seen if the threatened import restrictions for steel products into the US will have any effects.

Salzgitter AG can show a further positive perspective for its share: the free float increased in comparison with the situation after the public offering in 1998 by two thirds to currently more than 52 percent. These measures, requested particularly by institutional investors with the objective to increase the liquidity, also had a lasting positive effect on stock exchange turnovers. Salzgitter thus underlined its position as a major candidate for the promotion to the MDAX-segment.