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Preface by the Executive Board
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Dear Shareholders,
The year 2003 was marked by weighty differences in the economic and social developments in the relevant regions. While the boom in China not only uplifted that country’s economy, but also generated positive momentum reaching as far as export-oriented industries in Germany, the European economy struggled to gather pace. Macroeconomic factors, such as debt-laden public sector finances that are discouraging investment and the high level of unemployment, are incurring lasting effects. In spite of this, the fact that the German stock market in particular has staged a relatively strong recovery since reaching the lowest point in March 2003 is an indicator of the value perceived and the confidence felt by both domestic and international investors.
Salzgitter AG also experienced this trend, with the price of our stock rising by almost fifty percent, exceeding even the remarkable development in the DAX. Moreover, Salzgitter shareholders have participated in the performance of their company not only through the development in the share price, but also – as in previous years – by way of an above-average dividend.
Nevertheless, we have no wish to conceal the fact that the €42.5 million pre-tax profit for the financial year 2003 does not correspond with our aims and objectives for the Group. When we qualify the result as “still satisfactory in general terms”, we do so as Salzgitter AG has once again succeeded in remaining in the black during the third year in which our principal European markets have stagnated. Moreover, the annual financial statements for 2003 include some significant non-recurrent expenses, both for the closure of a loss-making Europipe plant in France and in the form of the exceptional depreciation of fixed assets at two processing companies which have suffered under the desolation of the German construction sector. These measures will strengthen the present and future operational profitability of the Group and make it easier for us to exercise strategic options addressing persisting problematic activities, as required.
In comparison with 2003, the current year has started on a more promising note. Despite various administrative obstacles to entrepreneurial action, not just in Germany, the somewhat reticent upturn here and on European markets is gaining strength. On the other hand, the remarkable strength of the euro against practically all relevant foreign currencies favors neither the earnings position of the Salzgitter Group, nor the profitability of many of our manufacturing customers based in the euro zone.
While the macroeconomic picture remains mixed, in recent months the situation in the specific markets served by the Salzgitter Group has, almost without exception, developed along positive lines. Some steel products have come close to becoming scare commodities, though the same may also be said for raw materials, energy resources and sea freight capacities. This is a situation that we have not encountered in recent decades. We are confident – not least in view of the broad portfolio of products and services delivered by the Salzgitter Group – that we will be able to utilize the opportunities which present themselves and keep the risks within bounds.
We regard the consistent implementation of the Group-wide profitability improvement program as a long-term corporate duty. Likewise, in times of economic recovery, a disciplined approach to costs and financial stability will safeguard the necessary scope for action.
The world needs steel! This is the story told by the pictures that illustrate this report – and the present mood of the market underscores the accuracy of this assertion. With a discretely understated use of optical effects, these illustrations reveal the breadth of applications and – working backwards from the product itself – also outline the stages in the process of manufacturing steel.
In our own name and on behalf of the committed men and women who comprise our workforce, we would like to thank you, our shareholders and business partners, for your confidence in our company.
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