Summary

2008 off to a great start with new record sales and excellent earnings in the first quarter

In the first quarter of 2008, the Salzgitter Group benefited from the noticeable recovery in demand in the European steel market, the expansion of business activities in the precision tubes segment and from the contribution by the new Technology Division.

The external sales of the Group grew 22 %. This result was mainly attributable to the acquisition such as that of Klöckner Werke AG and other companies of the Tubes Division which, on the relevant 2007 reporting date, had not yet been included in the group of consolidated companies, and the positive development of the Steel, Trading and Tubes divisions. Despite the increase in the cost of raw materials and energy, pre-tax profit remained at an excellent level. The Group’s after-tax profit almost matched the previous year’s level due to a reduction in the corporate tax rate.

The high levels of capacity utilization in the steel processing sector brought the new orders of the Steel Division to a new record high and ensured rising prices for all rolled steel products. However, the increase in the cost of raw materials, above all for iron ore and alloys, burdened the results of a number of product segments.

The Trading Division showed a disparate picture in the first quarter of 2008: Whereas steel stockholding companies in Germany and Europe were able to raise shipment volumes and sales owing to a recovery in demand and rising selling prices, international trading was burdened mainly by the poor conditions prevailing in the North American market.

Persistently strong demand for tubes by the oil and gas industries and international power plant construction gave the companies of the Tubes Division an outstanding start to the new financial year.

The Services Division benefited in particular from the turnaround in its automotive engineering activities. The other companies continued to operate at a high level.

The new Technology Division, which mainly comprises a majority holding in the Klöckner-Werke Group, performed well. The filling and packaging technology segment contributed the major share to this development.

Sales of the Others segment, based on the semi-finished product business with subsidiaries and customers outside the Group, improved both in terms of volumes and selling prices in the reporting period. The pre-tax result was impacted by reporting date-related changes in the value of derivatives.

Forecast: The environment in which the Salzgitter Group operates can currently be described as very satisfactory overall. For this reason, business as a whole should generally hold the level achieved. The prerequisite is, however, that economic growth in Germany and Europe remains stable on a long-term basis. New turmoil in the international financial markets or continued strength of the euro might well put a damper on the economy. As before, we are striving to achieve significant growth within the Group in the financial year 2008. More than 50 % of this growth is to be generated from the first-time full-year inclusion of the companies of the Klöckner Group in our new Technology Division. Associated with this growth, we anticipate operating profit before tax in excess of € 900 million.