Increase During First Quarter of New Fiscal Year 2001
During the first quarter of the fiscal year 2001, Salzgitter AG again increased its sales and earnings significantly. Income before tax amounted to 47 million, a boost of more than 38% as compared with the previous quarter - which, identical with the short fiscal year 2000, included the first-time consolidation of the new Group subsidiary Mannesmannröhren-Werke AG. External sales of the Lower Saxon steel-making Group were stepped up by 12% to 1.14 billion.
Business development of the Tube Division was particularly encouraging: Mannesmannröhren-Werke AG contributed 14 million to Group income before tax and increased its sales by 18% to 203 million.
Sales increases of the Steel Production Division, the Group's core business unit, were also substantial; at 426 million, sales revenues rose by 25% on the previous quarter and even by 29% on the comparable period of the prior year. Income before tax of 25 million remained on the high level of the previous quarter and thus improved by no less than 50% as compared with the reference period of last year. Crude steel production remained unchanged at 1.3 million metric tons. Business development of the Steel Production Division is entirely satisfactory considering the current economic scenario of the European steel industry.
Sales of the Steel Trading Division reached 419 million and diminished slightly (- 1%) compared with the previous quarter and by - 4% against the year-earlier period. Division income before tax was again positive, namely 3 million, but last year's result could not be repeated due to the pricing situation and the decline in volume.
The Raw Materials and Services Division and the Industrial Shareholdings Division reported only insignificant changes in sales revenues and prior tax income compared with the previous quarter and the respective year-earlier period.
Altogether all divisions of Salzgitter AG recorded profits.
Group income after tax in accordance with IAS almost tripled compared with the short fiscal year and amounts to 36 million.
The most important financial performance indicator of Salzgitter AG, the return on capital employed, again substantially exceeded the self-imposed target of 12% to reach an annualized 18.2% level.
After the first quarter of the fiscal year 2001 already, it is becoming evident that the encouraging development of Salzgitter AG's Tube Division will compensate for the cooling off of the European steel activities. While slightly reduced shipments and a comparatively lower price level of some products will lead to diminishing earnings of the Steel Production and Steel Trading Divisions during the further course of the fiscal year, the tube business is enjoying a continued excellent order situation and rising sales revenues. There are, however, also sustained indications of a positive turning point in steel production and steel trading.
Salzgitter AG's earnings performance during the coming quarters will differ from the one of other steel producers because of the overlapping of various economic cycles in its Steel Production and Tube Divisions. In this connection, the Company has noticed with satisfaction that Salzgitter AG's share price is taking this sustained positive trend into account. In order to make the Salzgitter share particularly attractive, the Company has in recent months made successful joint efforts with its partners in the capital markets to expand a widespread share ownership. Starting with a free float of approximately 32% after going public in 1998, a level of nearly 50% has been reached in the meantime including the treasury stock scheduled for placement.