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 /  /  / 9 Monate 2018

First nine months of 2018

14.11.18 | Press release of Salzgitter AG

Ongoing dynamic earnings performance of the Salzgitter Group in the summer quarter

  • All business units deliver profits before taxes in the period under review
  • More than € 100 million in profit improvement potential realized
  • Guidance for the full financial year 2018 affirmed


The economic environment in the first three quarters was characterized by European steel producers’ good order book position, boosted by demand. At the same time, and as a consequence of US trade policy, imports from non-EU countries into the EU climbed to a record level, which therefore exerted a negative impact on the EU steel market’s volume structure. In order to avert the risk of endangering the balance of the European steel market in the future as well, the final implementation of the defense measures provisionally implemented by the EU Commission in July is imperative.

With earnings before taxes of € 284.6 million, the Salzgitter Group significantly outperformed the result achieved in the first nine months of 2017 (€ 174.5 million). Along with the dynamic earnings performance of the Strip Steel Business Unit, this outcome was attributable to the turnaround in the Plate / Section Steel Business Unit, in particular thanks to the gratifying improvement in the result of Peiner Träger GmbH. The Mannesmann and Technology business units increased their respective pre-tax earnings, while the Trading Business Unit delivered another very presentable contribution, although below the outstanding previous year’s figure.

“The result of the first nine months of 2018 underscores the validity of the way in which we have promoted the development of the Salzgitter Group. This consistent implementation is reflected by around € 100 million in additional profit improvement potential realized for the first time in the period under review. For this reason as well, we are looking at our Group’s fifth earnings increase in a row in the current financial year. We are largely optimistic about the framework conditions in the coming months while, however, not forgetting that forecasting reliability is likely to deteriorate given the manifold challenges,” says Chief Executive Officer Prof. Dr.-Ing. Heinz Jörg Fuhrmann.

In the first three quarters of the financial year 2018, the Salzgitter Group’s external sales remained virtually stable compared with the year-earlier figure (€ 6,931.2 million; 9M 2017: € 6,813.2 million). The growth in the sales of the Strip Steel Business Unit, above all on the back of selling prices, more than compensated for the decline in the Trading Business Unit. The pre-tax profit of € 284.6 million (9M 2017: € 174.5 million) includes € 29.2 million in after-tax contribution from a participating investment in Europe’s leading copper producer Aurubis AG, a company included at equity (9M 2017: contribution of Aurubis investment: €–8.7 million, incl. €–80.0 million in valuation effects from the bond convertible into Aurubis shares at the time). The after-tax result stood at € 194.0 million (9M 2017: € 112.6 million). Earnings per share therefore came in at € 3.51 (9M 2017: € 2.01) and the return on capital employed stood at 11.6 % (ROCE 9M 2017: 7.9 %). With an equity ratio of 36.4 % and a net financial position of € 177.9 million (2017/09/30: € 131.8 million), the Salzgitter-Group continues to enjoy a comfortable financial basis and sound balance sheet.

Outlook

Salzgitter AG affirms its guidance for the financial year 2018 that was revised upward on September 19, 2018. As before we anticipate:

  • a slight increase in sales to above the € 9 billion mark,
  • a pre-tax profit of between € 300 million and € 350 million and
  • a marginally higher return on capital employed of between 9 % and 11 % compared with the previous year (8.6 %).


The complete report released on the results of the nine months of 2018 can be viewed at: https://www.salzgitter-ag.com/en/investor-relations/news-and-publications.html

We make explicit reference to the fact that imponderables, including changes in the cost of raw materials, precious metal prices and exchange rates, may have a considerable impact over the course of the financial year 2018. The resulting fluctuation in the consolidated pre-tax result may be within a considerable range, either to the positive or to the negative. The dimensions of this range become clear if one considers that, with around 12 million tons p.a. of steel products sold by the Strip Steel, Plate / Section Steel, Mannesmann and Trading business units, an average € 25 change in the margin per ton is sufficient to cause a variation in the annual result of more than € 300 million.

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 business units' 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.

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