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Salzgitter Group delivers the best result for the last ten years

Steel News - Published on Thu, 28 Feb 2019

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The Salzgitter Group closed the financial year 2018 with the highest pre-tax profit for a decade. Along with the performance of the Strip Steel Business Unit and presentable contributions from the Trading and Technology business units, above all profit improvement potential amounting to around EUR 150 million, realized for the first time from internal programs of measures, contributed to this result. The financial basis and balance sheet of the Group remain sound with an equity ratio of 38.1 % and a net financial position of EUR 191.6 million. The Group’s external sales rose in the financial year 2018 mainly on the back of selling prices to EUR 9,278.2 million (2017: EUR 8,990.2 million). Earnings before taxes result increased to EUR 347.3 million, exceeding the year-earlier result (2017: EUR 238.0 million). The result comprises EUR –62.8 million on balance in burdens from special items (2017: EUR –82.9 million) and a contribution of EUR 44.0 million from the investment in Aurubis AG, a company included at equity (2017: UR 79.3 million, including effects from the convertible bond). An after-tax result that stood at EUR 277.7 million (2017: EUR 193.6 million)

Chief Executive Officer Prof Dr Ing Heinz Jörg Fuhrmann said “In 2018, key political powers have unwarrantedly called into question free trade maxims that have been in place for decades. In our industry, this has resulted in the feared redirection of trade flows and consequently to a new record for steel imports into Europe. Against this back-drop, we can be just that little bit proud of how our Group developed in the past financial year: Earnings before taxes of € 347.3 million represent the best result for the last ten years. It’s not often that you encounter something like this, especially as the sources of strength largely derive from our own endeavors, and not from more favorable market conditions. The profit improvement potential of around € 150 million realized from programs implemented since 2013 are proof that we focus on rigorously taking the Group forward, also in years when the economy is good. Given the likelihood of challenges increasing in the current year, it will be about resolutely continuing to chart this course.”

The external sales of the Strip Steel Business Unit rose to EUR 2,341.0 million, above all on the back of selling prices (2017: EUR 2,159.8 million). Shipments also increased. With earnings before taxes of EUR 205.8 million, the business unit reported notable growth thanks above all to better revenue quality (2017: EUR 182.0 million). In addition, the programs of measures had a positive impact, with a countereffect emanating from the higher cost of raw materials and energy.

In a market environment characterized by the sustained high level of heavy plate imports, the shipments of the Plate / Section Steel Business Unit reached the year-earlier level. The section steel segment was almost able to compensate for the downturn in volume in the heavy plate business. At EUR 1,026.4 million, external sales matched the previous year’s figure (2017: EUR 1,024.3 million). The business unit generated EUR 24.8 million in earnings before taxes, achieving a much higher result compared with the previous year (2017: EUR –57.7 million) that was impacted by impairment at Salzgitter Mannesmann Grobblech GmbH.

Against the background of a slight decline in shipment volumes, the Mannesmann Business Unit achieved stable external sales due to selling prices (EUR 1,118.6 million; 2017: EUR 1,093.5 million). The business unit reported a pre-tax result at the level of the previous year (EUR –5.4 million; 2017: EUR –5.6 million), which included special items of EUR –24.0 million on balance (2017: EUR –21.0 million in expenses for measures to achieve structural improvements).

The shipments of the Trading Business Unit fell somewhat short of the 2017 figure due to the lower volume of project business and the lack of large-scale contracts in international trading. The business unit’s external sales settled at the year-earlier level due to higher selling prices (EUR 3,267.7 million; 2017: EUR 3,229.9 million). At EUR 50.5 million, the Trading Business Unit again generated respectable earnings before taxes (2017: EUR 70.5 million).

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Posted By : Ratan Singh on Thu, 28 Feb 2019
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