Summary

The Salzgitter Group records an improvement in results in the third quarter of 2009

Since the general economic conditions started to brighten over the course of the first half year 2009, the Salzgitter Group achieved a notable improvement in results in the third quarter. The impact of the global financial crisis, however, was still evident so that the Group’s broad and equally sound business base has proven extremely advantageous against this backdrop. Positive contributions of the Tubes Division, the Aurubis participation and financial investments were unable to compensate for the results of the Steel, Trading and Technology divisions that were particularly hard hit. The extensive program of short-term cost-cutting measures had a notably easing effect.

Consolidated external sales dropped 38 % in the first three quarters and the pre-tax loss came to € 261.3 million, with a modest uptrend in the summer quarter. In interpreting the third-quarter pre-tax result, the fact that a number of larger plants in the Steel and Tubes divisions as well were shut down for a period of several weeks for planned maintenance and investment measures, along with lower capacity utilization due to market conditions, must be taken into account. From its first-time consolidation in January 2009, the 23 % stake in the copper producer Aurubis AG, a company consolidated at equity, contributed a gratifying € 38.7 million in profit to the consolidated after-tax result of € -232.1 million.

The unfavorable market environment placed the greatest burden on the companies of the Steel Division. In the first half-year, longer periods of significant underutilization of capacity in the mills had to be absorbed. The situation only improved from mid-year onwards after the excessive inventories of steel traders and processors had been pared down. The dramatic nosedive of selling prices across all product groups came to a halt, and it was possible to implement price increases in strip steel for the first time again on July 1, an effect only reflected by the figures with a time lag. As a result, external sales halved. The pre-tax results were negative.

The business performance of the Trading Division was also hugely hampered by the reticent demand of many steel processors, the ubiquitous reduction in inventories and falling selling prices. As from mid-year, product segments with a high inventory turnover showed the first signs of improvement. Consolidated external sales declined 44 % and a pre-tax loss was recorded.

The Tubes Division set a positive note, above all thanks to the continued stable course of the large-diameter tubes business. External sales fell by a mere 4 % despite the low level of capacity utilization in the precision tube segment. A sound pre-tax profit was achieved.

Braked by the economic environment, sales of the Services Division halved owing to lackluster demand of internal and third-party customers. The Division recorded a negative pre-tax result.

The severe reluctance of customers of the Technology Division to invest caused its external sales to contract by just under a third, with the result that together with risk provisioning for existing orders delivered a loss before tax ensued.

Guidance: Although an increasing number of sectors are showing signs of recovery from occasionally catastrophic base levels, applying caution is advisable in respect of the sustainability of some of these uptrends. The companies of Salzgitter Group will develop disparately over the next few months, as the economic recovery of the individual customer industries will occur at a different pace and to a varying degree. We assume that the consolidated pre-tax result of the last three months of the financial year will continue to move in the direction of breakeven. The moderate uptrend in one of the most difficult financial years in the 150 year history of the Group will therefore persist.