Opportunities

The corporate planning of the Salzgitter Group, which ultimately documents the future business development of the company, is geared to strategic goals and comprises its own set of entrepreneurial measures for action embedded in the general economic environment. The short- and medium-term economic trend to date appears to fulfill realistic expectations in Germany as well as abroad. If the general conditions should develop more favorably, there could well be opportunities for the development of the Group which can only be briefly highlighted and outlined here.

If GDP growth in 2006 exceeds expectations, this would have an impact on the construction sector and thus improve the sales potential of beams, profiles and elements for roofing and cladding. Positive stimulus could also emanate from premature buying in the run-up to the VAT increase planned for 2007. Consequently, the automotive industry and its suppliers expect volumes to rise which, in turn, could favorably impact sales and prices of SZFG in particular. There could, however, be a concurrent negative effect in the following year.

Oil prices still on the rise and brisk demand for energy could lead to increased exploration and production of oil and gas in the short term, which could boost pipeline construction in the long term. There would then be opportunities concentrated in the segments of OCTG (oil country tubular goods), medium line pipes and large-diameter pipes.

The principal strategic objective of Salzgitter AG consists in preserving its independence through profitability and growth. Experience has shown that, against the backdrop of the swifter globalization of the steel markets and suppliers, a company of our size can also safeguard its position as a specialized niche supplier. The Group considers opportunities for growth to be those, which reinforce its market and competitive position. Investments in Group companies, consistent development of products, if expedient together with other companies, and targeted acquisitions of ”suitable” companies are also measures towards achieving this. Acquisition opportunities are reviewed critically, taking into account the current vendor market, and only set in motion if they serve to underpin the achieving of our goals.

Deriving additional positive impetus from opportunities which enhance performance and other aspects is, in our opinion, currently more of a speculative nature than a ”sound” assessment of their potential to improve the development of the Group.

The last two years have seen sea changes on our global sales and procurement markets. In addition to risks, these changes also harbor opportunities which can be utilized if appropriate leading indicators allow short-term developments to be identified with sufficient surety. Our company is working on models which can be used to identify and exploit any opportunities which arise.