Strategic Direction of the Group

Our Group strategy is geared towards sustaining independence through profitability and growth and has been crafted to deliver a steady increase in enterprise value. There are no plans to change our fundamental business policy in the years ahead. In this context, organizational development, above all with regard to proven and profitable structures, enjoys a higher priority at the moment than external growth through acquisitions.

Against the backdrop of the global economic crisis, decisions on large financial commitments are particularly critical due to the uncertainty concerning their potential economic benefits, as their sustained economic viability cannot be ascertained without a considerable measure of doubt. Ensuring a sound balance sheet and financial stability of our Group takes top priority for us, especially in such times.

As a matter of principle, the business activities of the companies in the various divisions will concentrate on established sales markets. This process may involve a shift in the focus at a regional or sectoral level. The shape that this will take will ultimately depend on market developments, the positioning of the companies and short-term responsiveness. Opportunities in markets not frequented to date are being reviewed and exploited if there is commercial or technical potential.

Along with the customer proximity that is characteristic of a group of our dimensions, our flexible organization, combined with a balanced customer and sector structure, is one of our key success factors when compared with other steel companies.

In order to reinforce their market position as manufacturers of market high-grade rolled steel products and steel tubes, the companies of the Steel and the Tubes divisions intend to invest in modernizing the various production stages. The primary aim, alongside reducing costs, is product qualification and quality enhancement, tenets also valid for the Technology Division. With this in mind, the portfolio of the Salzgitter Group in the coming two years will comprise numerous ”new” products that offer a qualitative step forwards and additional application possibilities through ongoing developments. In addition, we will continue to expand the range of services offered to our customers in many areas. In this context, we refer to the sections on ”Research and Development”, see page 68, and ”Investments”, see page 64.

Of special importance, particularly given the difficult economic environment, is the systematic recording and control of projects and measures aimed at reducing costs, as well as the improving of productivity, product qualification and quality assurance. To this end, we will forge ahead with consistently implementing the groupwide Profitability Improvement Program.

It is basically feasible that the Salzgitter Group may purchase further holdings in steel-related areas or build on its existing portfolio of holdings. The aim of such measures is to achieve a broader strategic base for the Salzgitter Group as part of its corporate strategy.