SALZGITTER AG ended its fiscal year 1999/2000 (Oct. 1 to Sept. 30) with a very satisfactory result.
Previous year’s profit (31 million euros) was tripled to reach 97 million euros before tax. These results were established by applying the IAS (International Accounting Standards). For the first time, SALZGITTER AG will publish its consolidated annual financial statements at September 30, 2000 in accordance with these internationally accepted accounting methods. The change-over was effected smoothly and on time.
In order to improve the transparency during the transition period, earnings were also determined according to the previously applied. German accounting principles (German Commercial Code) and amounted to 96 million euros versus 50 million euros during the previous year.
While the steel markets were characterized by rising sales revenues together with high volume, the continued devaluation of the euro versus the US dollar created accelerated price increases for raw materials and energy dragging earnings down.
Moreover, non-recurrent charges from the fire damage to the two galvanizing lines and from the participation in the compensation fund of the German industry were absorbed in these annual financial statements.
All consolidated subsidiaries contributed positively to the year-end result and that also goes for Hoesch Spundwand und Profil GmbH (HSP), included in the consolidation for the first time.
During the fourth year since its introduction, more than 500 projects of the Earnings Improvement Program contributed considerably to the Company’s success. An updated version of the program is presently being compiled using the proven systematics.
As a consequence of the changes in the corporate structure, the Executive Board is proceeding on the assumption that the taxation ratio will be reduced decisively as early as of September 30, 2000, particularly for retained earnings.
Total Group sales for the fiscal year are amounting to 3.3 billion euros (according to IAS) and are thus 22 percent above the year-earlier period (2.7 billion euros). This is primarily due to higher prices and increased volumes of steel production and steel trading.
During the past fiscal year, decisive measures for the implementation of the growth strategy, adopted during 1999, were put into effect. The acquisitions of Mannesmannröhren-Werke AG, of HSP and of further shareholdings in Germany and abroad are opening up a new dimension of entrepreneurial strategies for SALZGITTER AG.
As its consequence, the introduction of a Group Holding Organization is being set up. SALZGITTER AG is thus aiming at supporting its operating corporate entities towards more flexibility and initiative.
In order to adjust to the current tax legislation, the special shareholders‘ meeting on December 20, 2000 will decide on the change-over of the fiscal year to the calendar year. It is planned to introduce a short fiscal year from October 1 to December 31, 2000. Mannesmannröhren-Werke will be included in the consolidated financial statements for the first time at December 31, 2000.
While the phase of significant price increases for most steel products is over, SALZGITTER AG is benefitting from the upturn on the plate and tubing sectors. This will have a impact on earnings during the next months.