Presentation of the Group · 2020. 8. 20. · Strip Steel External Sales: ... € -62,3 million...

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Presentation of the Group

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1 Salzgitter Group2 Market Situation3 Business Units4 Strategy5 Guidance

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Global Presence

3

Salzgitter Group

Strip SteelPlate / Section Steel

Mannesmann

Trading

Crude steel production 2019: 6.6 million tons; trading volume: 3.8 million tons;Among the top 3 producers of beverage filling and packaging machinery

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Technology

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Diversified product portfolioSalzgitter Group

Steel and Technology

Stainless tubes

Stockholding trading

International trading

Strip products

Steel Service Center

Heavy plates

Sections

Engineering services

Injection molding machinery Beverage filling plants

Line pipes

Precision tubes

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Group structure and key data FY 2019Salzgitter Group

Salzgitter AG Group

External Sales cons.: € 8.5 billion EBT: € -253 million

Employees: 23,354

External Sales:€ 2.2 billion EBT:

€ -42.8 million Employees:

6,090

Strip Steel

External Sales:€ 0.8 billion EBT: € -124.0 million Employees:

2,352

Plate / Section Steel


€ -41.5 million Employees:

4,643

Mannesmann


€ 32.7 million Employees:

5,557

Technology


€ 31.0 million Employees:

2,066

Trading

5All data about employees as per 12/31

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Salzgitter AG

Salzgitter Mannesmann / Salzgitter Klöckner-Werke

Strip Steel BU

Plate / Section Steel BU

MannesmannBU

TradingBU

TechnologyBU

Salzgitter Flachstahl

Ilsenburger Grobblech Mannesmannröhren-Werke Salzgitter Mannesmann

Handel KHS

Salzgitter Mannesmann Grobblech Europipe Salzgitter Mannesmann

StahlhandelSalzgitter Europlatinen

Peiner Träger

Mannesmann Grossrohr

Salzgitter Mannesmann International

KHS Corpoplast

Salzgitter Bauelemente

DEUMU Deutsche Erz- und Metall-Union

Mannesmann Line Pipe

Universal Eisen und Stahl

Mannesmann Precision Tubes

Salzgitter Mannesmann Stahlservice

Mannesmann Stainless Tubes

Hüttenwerke Krupp Mannesmann

BorusanMannesmann Boru

50%

30%

23%

Industrial Participations / Consolidation

Verkehrsbetriebe Peine-Salzgitter

Hansaport

Gesis Gesellschaft für Informationssysteme

Salzgitter Automotive Engineering

Telcat

Aurubis

Salzgitter Hydroforming

Salzgitter Mannesmann Forschung

51%

Klöckner DESMA Elastomertechnik

DESMA Schuhmaschinen

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BU = Business UnitAs of December 2019

Group structureSalzgitter Group

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29.99%

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3%Tubes producers

12%Other

15%Food and beverage industry

6%Mechanical engineering

5%Re-rollers

3%Energy sector and utilities

15%Vehicle construction

24%Traders, Steel-Service-Centers

13%Construction industry

4%White goods,

electrical equipment

External sales 2019 by customer industriesSalzgitter Group

Broad customer base

7Only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE Group

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Share of ex-Germany sales by consignee 54%

External sales 2019 by regionsSalzgitter Group

5%Other

8%Asia

12%Americas

3%Other Europe

26%Other EU

46%Germany

8Sales by consignee (only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE-Group)

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Result of Salzgitter Group impacted by a total of € -396.0* million in special effects

*) € -62,3 million restructuring provisions, € -192,9 million impairment as awell as € -140,8 Mio. € other special effects (cartell fine)

Key data per 2019/12/31

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Salzgitter Group

FY 2019 FY 2018 Δ

Crude steel production kt 6,613.4 7,039.4 -426.0

Consolidated Sales € million 8,547.3 9,278.2 -730.8

Earnings before tax € million -253.3 347.3 -600.6

Earnings after tax € million -237.3 277.7 -515.0

Earnings per share (undiluted) € -4.46 5.06 -9.52

ROCE % -5.8 10.3 -16.1

Core workforce (12/31) 23,354 23,523 -169

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Balance sheetSalzgitter Group

Property, plant and equipment and other

non-current assets

Inventories

Cash and securities

Other current assets

Equity

Pension provisions

Other non-currentliabilities

Current liabilities

€ million

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Continuing sound financial basis

FY 2018 FY 2019 FY 2019 FY 2018

1,971 1,5192,225 2,389

623751

1,098 760

2,3282,248

2,356 2,276

3,836 4,0992,939 3,332

8,6188,757 8,618 8,757

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Focus on expansion investments

Salzgitter Group Investments and Depreciation / Amortization

11

Salzgitter Group

Investments1 Scheduled depreciation Unscheduled depreciation

1 Property, plant and equipment and intangible assets, excluding financial assets

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411340 352 342

287342 338 340

593

348

15 49 44

193

2015 2016 2017 2018 2019

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History

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Salzgitter Group

Stock listing 1998First blast furnace in Ilsede, 1861

First broad-flanged beam mill in Peine, 1914

1989 privatization with the sale to Preussag AG

Demonstrations to save the smelting works in Salzgitter, c. 1950

Privatization and acquisitionof the Ilsenburg rolling mill, 1992

Cross-rolling process sketch ofMax Mannesmann, pre 1885

Bottle filling line Phönixc. 1936

llsenburg: est. 1595,plate since 1948Mülheim an der Ruhr: plate since 1882Peine: Sections since 1876

1989 Name change toPreussag Stahl AG

1970 Mergerto form StahlwerkePeine-Salzgitter AG

1937 Construction Hüttenwerk Salzgitter

(Part of Reichswerke)2007 Integration into SZAG

1880 Acquisition of PeinerWalzwerk, est.1872

1923Foundation of steel group

Klöckner-Werke AG

1886 First processfor the rolling of

seamless steel tubes1858 FoundationIlseder Hütte AG

1912 first attempts withstainless steel tubes

1897 Start of productionwelded steel tubes

2017 Relaunch ofthe brand presence

1977 First acquisition of part. infilling technology (H & K)

2000 Liquidation ofMannesmann Group,

Integration Tubes into SZ

1992 - 1995Insolvency, restructuring

and end of steel production

Strip Steel BU Mannesmann BU Technology

Plate / Section Steel BU

1964Salzgitter Hüttenwerk AG(since 1961 part of state-owned

Salzgitter AG old)

1998 Salzgitter AG

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Economic development in the European UnionMarket Situation

Industrial production in selected countries of the EU (Jan. 2007 = 100)

France Italy SpainGermany GB

14

40

50

60

70

80

90

100

110

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Eurostat, own research, last figure from May 2020

Slight uptrend of the EU industrial production since 2013, followed by consolidation starting in 2018;deep slump after the start of the corona pandemic

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Iron ore: dramatic price surge in the first half of 2019; after rapid decrease recently high volatilityCoking coal: global demand can be satisfied completely at the moment – with a corresponding effect on pricing

Raw materials pricesMarket Situation

Iron ore(62% Fe CFR China, US$/dmt)

Coking coal(FOB Australia, US$/t)

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100

110

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140

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150

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250

300

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Following periods of rises, steel prices consolidated since mid 2018 and recovered from the end of 2019 until Q1/2020 – the current price development is only conclusive to a limited extent due to the ongoing special situation

Steel pricesMarket Situation

Spot prices Northern Europe

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Hot-rolled coil prices international

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(€/t) (€/t)

Northern Europe EXW Ruhr USA EXW Indiana China SchanghaiHRC EXW Ruhr Plate EXW Ruhr Medium sections

300

400

500

600

700

800

900

Jan. 18 Jul. 18 Jan. 19 Jul. 19 Jan. 20 Jul. 20300

400

500

600

700

800

900

Jan. 18 Jul. 18 Jan. 19 Jul. 19 Jan. 20 Jul. 20

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0%

4%

8%

12%

16%

20%

0

500

1,000

1,500

2,000

2,500

2014 2016 2017 2018 2019 Q1 2020 Q2 2020China Ukraine RussiaTurkey India South KoreaIran Brazil OtherMarket share imports

EU steel importsMarket Situation

The market share of steel imports is set to increase;import volumes do not mirror the dramatic slump of steel demand from April onwards

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Source: Eurofer, own calculations, based on the scenario of a slow return to normality

Forecast steel demand EU-28 2020 (versus previous year‘s quarter) Rolled steel imports into the EU-28 (in t/month)

-2%

-54%

-27%

-13%

-24%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Q1/2020 Q2/2020 Q3/2020 Q4/2020 Ø 2020

Expected market share imports

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1 Salzgitter Group2 Market Situation3 Business Units: Strip Steel4 Strategy5 Guidance

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Overview

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Strip Steel Business Unit

Capabilities Integrated steel works with three blast

furnaces Approx. 4.7 mt/year crude steel capacity Modern production plants High processing competence (SSC)Core competences and products High-quality steel grades for sophisticated

applications Custom made solutions, e.g., hot-rolled

and cold-rolled coil, galvanized and coated sheet, laser-welded tailored blanks, corrugated sheets, coffers, sandwich and acoustic elements

Customer focus through local presence

Key data FY 2019

Consolidated Sales €m 2,209

Earnings before taxes €m -43

Core workforce (12/31) 6,090

Established supplier of the demanding German automotive industry

External sales by customer industry 2019

only from entities within the group of consolidated companies of Salzgitter Group

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5%Other



7%White goods,


34%Traders

1%Tube producers

14%Re-rollers


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Strip ProductsStrip Steel Business Unit

Salzgitter Flachstahl GmbH

Supplier of premium OEMs

Germany; shareholder: SZAG 100% Hot-rolled coil, cold-rolled coil, electrogalvanized, hot dip

galvanized and organic coated sheet Integrated steel works with 3 blast furnaces Around 4.7 mt yearly crude steel capacity Top modern production plants High-tech downstream facilities 4% market share in the EU28

2018 2019

Shipments kt 4,341 4,239

Sales €m 2,887 2,758

Employees 12/31 5,666 5,58720en

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ProcessingStrip Steel Business Unit

Salzgitter Europlatinen GmbH

Germany; shareholder: SZAG 100%Custom-made solutions: Laser welded Tailored Blanks for lighter car bodies

2018 2019

Sales €m 71 62

Employees 12/31 122 116

2018 2019

Sales €m 52 51

Employees 12/31 71 70

Germany; shareholder: SZAG 100%Corrugated sheets, coffers, sandwich a. acoustic elements for wall and roof constructions of commercial buildings

Salzgitter Bauelemente GmbH

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Steel Service CenterStrip Steel Business Unit

Salzgitter Mannesmann Stahlservice GmbH

Germany; shareholder: SZAG 100% Two locations Modern plants and processes 600,000 t/year processing capacity

Excellent position in the heart of Europe

2018 2019

Shipments kt 584 532

Sales €m 415 369

Employees 12/31 323 31722en

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1 Salzgitter Group2 Market Situation3 Business Units: Plate / Section Steel4 Strategy5 Guidance

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Overview

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Plate / Section Steel Business Unit

Capabilities Section steel:

− Top-modern mini mill with two electric arc furnaces

− Annual crude steel capacity 1 mt− Two rolling mills for medium and heavy

sections Plate:

− Two rolling mills for plate with 1.1 mt annual capacity

− Plate width up to 4,800 mmCore competences and products High-strength, wear resistant and

specialized steel grades Medium and heavy sections, heavy plate

incl. offshore and tube grades

Consolidated sales €m 805



Key data FY 2019

Plate: Broad range of high quality plate products Section Steel: Efficient production

External sales by customer industry 20191%

Vehicle construction11%

Construction industry

10%

8%White goods,


46%Traders

Tube producers

Mechanical engineering

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21%Other

3%

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Heavy PlatePlate / Section Steel Business Unit

Ilsenburger Grobblech GmbH

Germany; shareholder: SZAG 100% Broad diversified heavy plate steel grades Construction plate, fine grained construction plate, alloyed

and unalloyed boiler plate, offshore and tube grades High-strength and wear resistant grades 7% market share in the EU28 State of the art facilities, one of the most modern water

quenching plants

2018 2019


Sales €m 534 494


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Heavy PlatePlate / Section Steel Business Unit

Salzgitter Mannesmann Grobblech GmbH

Germany; shareholder: SZAG 100% Heavy plate mill specialized in plate for longitudinally

welded line pipe and similar applications, especially for EUROPIPE GmbH Pipe bending plant for seamless and welded steel tubes

in carbon, alloyed, and high-alloy steels Test Center with a wide range of mechanical and

technological tests

2018 2019


Sales €m 378 256


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SectionsPlate / Section Steel Business Unit

Peiner Träger GmbH

Germany; shareholder: SZAG 100% Medium and heavy steel beams, Peine sections Progressive and flexible mini mill Two top-modern electric arc furnaces Adjusted crude steel capacity 1.0 mt/year 13% market share in the EU28 (plus N, CH) Two of the most efficient section mills worldwide with

comprehensive range of products

2018 2019

Shipments kt 1,022 953

Sales €m 619 553


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Other CompaniesPlate / Section Steel Business Unit

Deutsche Erz- und Metall-Union-Gruppe

Germany; shareholder: SZAG 100%Specialist trader for ferrous scrap, non-ferrous scrap, new metals and ferro alloys, as well as rolled steel products

2018 2019

Sales €m 678 571

Employees 12/31 378 380

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1 Salzgitter Group2 Market Situation3 Business Units: Mannesmann4 Strategy5 Guidance

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Overview

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Mannesmann Business Unit

Capabilities Own crude steel supply via 30%

participation in Hüttenwerke Krupp Mannesmann GmbH

Plant for the production of semis for the seamless tubes business

Core competences and products Line Pipe: participation (50%) in the world

market leader EUROPIPE; international presence

Precision Tubes: European market leader Seamless Stainless Tubes: top player in

the world market Longitudinal and spiral welded large-

diameter pipes, medium line pipes, seamless and welded precision tubes, stainless tubes




Key Data FY 2019


Global player in the high quality segment of the global tubes market

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only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE Group


5%

15%Energy sector

and utilities

35%Other

6%Traders

Tube producers


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Line PipesMannesmann Business Unit

EUROPIPE Group

Germany; shareholder: SZAG 50%, Dillinger Hüttenwerke 50% Longitudinal and spiral welded large-diameter pipes for

transcontinental and underwater pipelines In-house coating activities World market leader (7% market share) 3 locations in D, USA Since January 1, 2014 reported at equity

2018 2019


Sales €m 953 777

Employees 12/31 1,047 1,08331en

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Line PipesMannesmann Business Unit

Mannesmann Line Pipe GmbH

Germany; shareholder: SZAG 100%HFI-welded medium line pipes incl. plastic- and cement coatings

2018 2019

Sales €m 285 254

Employees 12/31 364 357

2018 2019

Sales €m 67 58

Employees 12/31 125 124

Germany; shareholder: SZAG 100%Spiral-welded large-diameter pipes made of hot-rolled coil

Mannesmann Großrohr GmbH

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Precision TubesMannesmann Business Unit

Mannesmann Precision Tubes Group

Germany; shareholder: SZAG 100% Seamless and welded cold drawn precision tubes for the

automotive and engineering industries as well as the energy sector State of the art push bench plant for the production of hollows Market leader in the EU28 (24% market share) 10 locations in D, F, NL and Mexico

2018 2019


Sales €m 497 458

Employees 12/31 2,287 2,25633en

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Structural tube

AirbagsPump case

Stabilizers

Suspension components

Seat belt- IHU/IHVfixings

Engine-components

Drive shaftsDrivetrain and steering components

Camshafts

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Seamless Stainless TubesMannesmann Business Unit

Salzgitter Mannesmann Stainless Tubes Group

Germany; shareholder: SZAG 100% Seamless hot- and cold finished stainless tubes

for the chemical- and engineering industries, as well as for the energy sector 6% market share in the world 5 locations in D, F, I, USA

2018 2019

Shipments kt 23 23

Sales €m 245 290

Employees 12/31 1,000 1,02134en

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Significant shareholdingsMannesmann Business Unit

Hüttenwerke Krupp Mannesmann GmbH

Germany; shareholder: ThyssenKrupp 50%, SZAG 30% + Vallourec 20% (Pool) Steel works with two blast furnaces Production of slabs and round steel bars Up to 1,000 different steel grades Yearly crude steel production of > 4 million tons

2018 2019

Sales €m 2,468 2,496

Employees 12/31 2,980 2,94735en

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1 Salzgitter Group2 Market Situation3 Business Units: Trading4 Strategy5 Guidance

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6%

Vehicle construction

Overview

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Trading Business Unit




Capabilities 74 sites in 30 countries Own distribution network for steel products

with warehousing sites in Europe Processing group specialized on heavy

plate products International tradingCore competences and products Global presence in all relevant regions with

own representation Distribution channel for Salzgitter Group

products Procurement channel for Salzgitter Group

works Value add services for customers

Key Data FY 2019


High customer and market orientation through a global sales organization

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12%

Other

31%

Construction industry4%

White goods,electrical equipment

31%

Traders

2%

Tube producers

3%

Re-rollers

3%

Energy sector and utilities

8%

Mechanical engineering


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International10 Companies2 Rep. offices

Europa7 Companies

Europa4 Agencies

Salzgitter Mannesmann Handel Group

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Salzgitter Mannesmann Handel

Shipments 2019: 4.0 mt Sales 2019: € 2.7 billion

Trading AgenciesStockholding

Salzgitter Mannesmann International GmbH, Düsseldorf (SMID)

Salzgitter Mannesmann International (USA) Inc., Houston (SMIH)

Salzgitter Mannesmann International (Canada) Inc., Vancouver (SMIV)

63 locations in 27 countries with 1,861 employees

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Salzgitter Mannesmann Stahlhandel GmbH, Düsseldorf (SMSD)

Stahl-Center Baunatal GmbH, Baunatal (SCB)

19 Branches with warehouses and further processing (incl. 4 flame cutting plants), 4 Sales offices

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Universal Eisen und Stahl Group

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Universal

Shipments 2019: 0.2 mt Sales 2019: € 0.2 billion

North America Europe

5 Branches

Universal Eisen und Stahl GmbH, Neuss (UES) Universal Aciers Sarl, Couzon au Mont d'Or, France

UNIVERSAL STEEL HOLLAND B.V., SK Papendrecht, Netherlands

UNIVERSAL-Stal Sp. z o.o, Gliwice, Poland

UNIVERSAL OCEL spol. s.r.o., Prague, Czech Republic

UNIVERSAL STEEL AMERICA, Inc., Houston, USA

2 Branches

11 locations in 6 countries with 365 employees

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1 Salzgitter Group2 Market Situation3 Business Units: Technology4 Strategy5 Guidance

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Overview

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Technology Business Unit

Capabilities 17 Production plants worldwide 60 Service sites > 90% of sales outside of GermanyCore competences and products KHS: among the top 3 global suppliers for

filling and packaging machines; technology and innovation leadership

DESMA Elastomertechnik: Global leader for rubber and silicon injection molding machines

DESMA Schuhmaschinen: World market leader for the production of machines for the production of shoes and shoe soles

Turn-key lines, single machines and service

Consolidated Sales €m 1.390

Earnings before taxes €m 33

Core workforce (12/31) 5.557

Top 3 producer for filling and packing industry, world market leader for rubber and silicon injection molding as well as direct soling machines

Key data FY 2018


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1%White goods,

electrical equipement

90%


Food and beverageindustry



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Filling and packagingTechnology Business Unit

KHS Group

Germany; shareholder: SZAG 100% A global leader and solution provider of first choice in the packaging

industry Among the Top 3 producers Focus on beverage applications Supplier of single machines and turnkey solutions (one-stop-shop

supplier) Leadership in technology and innovation 11 production sites: 5 in Germany, 2 in the US, and 1 each in Mexico,

Brazil, China and India

2018 2019

Sales €m 1,161 1,260

Employees 12/31 4,714 4,79342en

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Special machineryTechnology Business Unit

Klöckner DESMA Elastomertechnik Group

World market leader for rubber and silicone injection molding machinery

2018 2019

Sales €m 116 79

Employees 12/31 552 540

2018 2019

Sales €m 62 52

Employees 12/31 224 224

World’s largest producer of machines for the fabrication of shoes and shoe soles

DESMA Schuhmaschinen GmbH

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1 Salzgitter Group2 Market Situation3 Industrial Participations4 Strategy5 Guidance

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Overview

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Industrial Participations

Comprises activities that are not directly allocated to a business unit

Core competences and participations Services:

− Research and development for the Group and external customers

− Information technology− Engineering services− Real estate- and facility development as

well as management− Freight traffic

Shareholdings:− Aurubis− Hansaport

Consolidated sales €m 178



Key data FY 2019

Gratifying contribution from the service companies and the Aurubis investment

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EngineeringIndustrial Participations

Salzgitter Mannesmann Forschung GmbH

Germany; shareholder: SZAG 100%Research and development for the Group and external customers with a focus on: Processes for the manufacture, processing

and application of metallic materials and products made of them Development of new materials Development of application areas Material and component characterization including testing

techniques Application and engineering technology from component design

through forming and assembly to corrosion protection Automation and testing techniques, as well as the construction

of non-destructive testing facilities

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Raw Materials and Logistics

Glückauf Immobilien, RSE

Companies specialized in real estate- and facility development as well as management

Hansaport1

Germany's largest seaport terminal for handling dry bulk goods (coal and ores), annual capacity of approximately 15 million tons

Verkehrsbetriebe Peine-Salzgitter

Commercial transportation provider with an annual freight volume of approximately 43 million tons

1 SZAG share: 51%47en

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Data Processing and Communications

Telcat Multicom/Telcat Kommunikationstechnik

Systems for decentralized communication, Broad array of information solutions ranging from office communication and video technology to network services

Integration of business processes into one uniform IT-solution that reflects the entire workflow, Electronic data processing center capacities andthe internet-based eService platform as a unified hub for order processing are offered for group companies and external clients

GESIS Gesellschaft für Informationssysteme

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Aurubis-Participation

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Aurubis Dividend (€/Share)

Since 2008 successful shareholding in the leading European copper producer

SZAG shareholding: 29.99% (per May 23, 2019)

Net dividend received since 2009: € 119.4 million (per FY18/19)

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0.65

1.00

1.20

1.35

1.101.00

1.351.25

1.451.55

1.25

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2008/2009

2009/2010

2010/2011

2011/2012

2012/2013

2013/2014

2014/2015

2015/2016

2016/2017

2017/2018

2018/2019

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Management of the COVID-19 impactsStrategy

• Comprehensive risk-minimizing precautions and guidelines• Creation of transparency in regards to occurrences of

infection in the whole Group and detailed continuous monitoring

• Assumption of social responsibility also at our foreign locations

• Highest priority for liquidity management• Temporary reduction of production• Short-term work in many parts of the Group• Saving without endangering the future: restrictive handling

of new investments, but continuation of strategic investment projects

Through the crisis with consistency, transparency and stringent liquidity management!

Ensuring operating abilityProtecting employee health

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“Salzgitter AG 2021” growth strategy – goals and stipulationsStrategy

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Goals

Diversification strategy proves to be right especially now!

Quantitative growth is possible exclusively in activities apart from steel – especially in the Technology Business Unit.

Stipulations

Rolled steel production and parts of the tubes production can only grow qualitatively, not quantitatively.

External growth on a larger scale is not mandatorily necessary for the development of the business units – can, however, be desirable.

1. Qualitative Growth

2. Quantitative Growth

3. External Growth

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40%Start 2016

Ziel 50%

50%H1 2020 50%

60%

50%

Steel-related Less steel-related

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53

1. Qualitative growth in steel-related areas

2. Quantitative growth in less steel-related activities

3. External growth

Ilsenburger Grobblech GmbH: New heat treatment line Optimization of the product portfolio Commissioning: 2021

Salzgitter Flachstahl GmbH: Hot-Dip Galvanizing Line 3 Strengthening of the premium segment for

automotive customers Commissioning: 2022

DESMA Schuhmaschinen GmbH:“Factory of the Future” Capacity expansion Inauguration in July 2020

Mannesmann Precision Tubes:Expansion of the plant in Mexico Precision steel tubes for the USMCA area Commissioning: Q3 2019

Aurubis AG Increase of the

participation to 29.99 %

KHS GmbH Cooperation with Ferrum AG

for can seaming

Mannesmann Stainless Tubes Acquisition of the stainless

steel tube producer SOTEP

Salzgitter Hydroforming GmbH Joint Venture with Baolong

for the production of hydroformed components

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“Salzgitter AG 2021” growth strategy – implementationStrategy

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5

10

15

20

25

30

35

40

45

50

2017 2018 2019 2020 2021 2022 2023 2024 2025

Challenge: CO2 emission allowances are continuously cut backStrategy

54

Price forecast CO2 allowances

Source: ICIS, own calculations

€/t C

O2

Price for CO2 emission allowances has surged since 2018 – further increase is highly likely!

Price CO2 allowances

Third trading period Fourth trading period

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Estimates price CO2 allowances

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The Salzgitter Group acts decisively! CO2 emission allowances for the Fourth Trading Period purchased as a precaution

SALCOS® – technological concept for CO2-reduced steel production55

Our path towards a low-CO2, hydrogen-based steel production Strategy

CO2- emission allowances acquired as a precaution

We are in control… …and pioneer at the same time

• Shortfall in CO2 allowances has been compensated for the most part until 2030

• Current market value of the CO2allowances acquired for this purpose exceeds the figure accounted for in the balance sheet by around € 300 million*

• Significant, gradual reduction of the CO2 emissions of Salzgitter AG

• Target: Reduction of up to 95 % of the CO2 emissions of Salzgitter Flachstahl until 2050

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*) Per ad-hoc release from June 14, 2019; the difference between recorded value and market value per August 6, 2020 is higher than € 300 million

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We are committed to the current climate targets of the EU and are actively participating

56

Ready for the future: transformation towards a low-CO2 business location Strategy

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“With our ‘SALCOS® – Salzgitter Low CO2 Steelmaking’ project, our

Group is pioneering CO2-low steel production of the future. We willingly

contribute our experience from discussions to date about the necessary

framework conditions from the sphere of politics and energy to the

foundation’s work.” Professor Dr.-Ing. Heinz Jörg Fuhrmann

12/12/2019

Salzgitter AG has joined the “Foundation 2 Degrees – German CEOs for

Climate Protection” as a promoting company and, being representative of the

energy intensive industry, sets down an important marker for corporate climate

protection.

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Strategy

Arguments for

1. Biggest CO2 reduction potential per MWh of renewable energies used in a processual as well as industry and sector comparison

2. The Salzgitter AG has the leading concept. The required individual technical components are available in the market

3. Lower Saxony has the best preconditions to be the No. 1 transformation state in Germany:high level of electricity production from renewable sources and required hydrogen infrastructure

4. No relocation of production, no carbon leakage5. Economical, ecological and social concept6. Integration with local industrial sectors possible (among others automotive); important component of

a holistic CO2-free product lifecycle

Green steel with SALCOS® – sensible and realisable!

Technical solution approach: assessment

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Strategy

SALCOS® – Gradual conversion to a H2-based steel production

We are ready!Gruadual technical implementation possible as soon as the neceddary framework conditions are realized

58Individual stages may technically also be realized in combination. The actual implementation time depends on the economic and political framework.*with the use of 55% H2 in the Direct Reduction Plants (DRP) / **with the use of 100% H2 in the DRPs

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First steps of SALCOS® were already implementedStrategy

Weltweit erste Dampf-Elektrolyse im MW-Maßstab bei der Salzgitter Flachstahl ab 2020

Wind-H2 – SektorkopplungProduktion von elektrischer Energie via Windkraft und elektrolytischem Wasserstoff auf dem Werksgelände

MACOR: SALCOS-feasibility study Analysis of framework conditions Numerical modelling of melt shop

and direct reduction plant Results of cost-effectiveness analysis

by 2021

World‘s first steam electrolysis on MW scale at Salzgitter Flachstahl as from 2020

Wind-H2 – sector integrationProduction of electrical energy via wind power and electrolytic hydrogen on the works premises

2017 2018 2019 2020 2021

“Mini-SALCOS®”Project planning of a demonstration plantfor direct reduction in Salzgitter

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Feasibility studyIron ore direct reduction plantin Wilhelmshaven

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• Production of electricity via wind power and electrolytic hydrogen at the plant site

• Erection of seven wind turbines with an overall output of 30 megawatt on the grounds of Salzgitter Group

• Completion of all seven turbines is scheduled for the third quarter of 2020

• Construction of a 2.5 MW PEM electrolysis plant until end of 2020

“Salzgitter Wind Hydrogen”Strategy

Important building block on the way towards climate-friendly steel production

First industrial sector coupling of “renewable power – hydrogen production – industrial consumption” at one location in Germany!

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Another tangible step towards a low-CO2 hydrogen-based steel production on the basis of SALCOS®

61

Study• Construction of a direct reduction plant with an upstream

hydrogen electrolyzer as well as• Developing necessary infrastructure for supplying it with raw

materials, natural gas and hydrogen at the deepwater port of Wilhelmshaven

• Results to be available by March 31, 2021 at the latestGoal• Production of 2 mt p.a. directly reduced iron for the

processing into high-grade, environmentally compatible strip steel products in Salzgitter Flachstahl GmbH’s integrated steelworks

Feasibility study for the direct reduction of iron ore at Wilhelmshaven agreed uponStrategy

Project partners

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Sustainable strategy:Realization of major investment projects also in less comfortable phases!

Update investment projects

62

Strategy

Salzgitter Flachstahl: Hot-Dip Galvanizing Line 3

Qualitative growth in the strip steel business Reinforcement of the market position in the automotive segment Strengthening of the premium segment for auto customers

Commissioning: 2022

Current status: Construction of the building

Ilsenburger Grobblech: New heat treatment line Optimization of the product portfolio Expansion of the market position and volume expansion for higher

value grade segments such as high strength and wear resistant, water tempered steel Commissioning: 2021

Current status: Installation of the plant

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Salzgitter Group – GuidanceGuidance

We anticipate that the second and third quarter will likely mark the bottoming out of the current crisis. At the same time, thestrength and the timescale of a feasible macroeconomic recovery in the second half of the year are subject to great uncertainty.Against this backdrop, we anticipate the following for the Salzgitter Group in the current financial year 2020:

a negative pre-tax result in the low to mid-triple digit million euro range and

a return on capital employed (ROCE) that is tangibly below the previous year's figure.

a notable reduction in sales,

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Legal Note and other remarks

We make explicit reference to the fact that imponderables, including changes in the cost of raw materials, precious metal prices and exchange rates, along with global trade policy measures and their possible impact may still exert a considerable influence over the course of the financial year.

To the extent that this presentation contains statements oriented towards or related to the future, such statements are based on our current state of knowledge and the estimates based on such knowledge made by the management of Salzgitter AG. However, as is the case with any forecasts or prognosis, such statements are also subject to uncertainties and risks. Notwithstanding prevailing statutory provisions and capital market law in particular, we are not obligated to update this data. In particular, we shall not assume liability of any kind for knowledge and statements, as well as any acts resulting on the basis of such knowledge or statements that emanate directly or indirectly from the analysis of the data, content and correlations of this document. The information and data made available do not represent an encouragement or invitation to buy, sell or conduct any other type of trade in securities. Salzgitter AG shall neither assume liability for direct nor indirect damages, including lost profits, arising as a result of the utilization of the information or data contained in this document.

For computational reasons, rounding-off differences of +/– one unit (€, % etc.) may occur in the tables. This document is also available in German language. In the event of any discrepancy, the German version shall prevail.

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BACKUP1 Financials2 Pensions3 Investor Relations

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Key data per 2020/06/30

66

Financials

Salzgitter Group with decline of sales and earnings due to lower demand as a result of the corona pandemic

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1 only from entities within the Group of Consolidated Companies of Salzgitter Group 2 per reporting date

H1 2020 H1 2019 Δ Q2 2020 Q1 2020

Crude steel production kt 2,952.7 3,412.1 -459.4 1,271.2 1,681.5

External sales1 € million 3,631.0 4,526.2 -895.2 1,522.7 2,108.3

Earnings before tax € million -127.8 145.3 -273.1 -96.4 -31.4

Earnings after tax € million -144.7 96.4 -241.1 -101.0 -43.7

Earnings per share (undiluted) € -2.70 1.73 -4.43 -1.88 -0.83

ROCE % -6.3 7.9 -14.2 -10.0 -2.4

Core workforce2 23,009 23,639 -630 23,009 23,308

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Income statement

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Financials

Income Statement (€ million) H1 2020 H1 2019 Δ

Sales 3,631.0 4,526.2 -895.2Increase/decrease in finished goods and work in process/other own work capitalized -57.2 1.7 -58.9

3,573.8 4,527.9 -954.1

Other operating income 132.9 91.4 41.5

Cost of materials 2,373.3 2,938.1 -564.8

Personnel expenses 846.0 890.7 -44.7Amortization and depreciation of intangible assets and property, plant and equipment 148.7 176.4 -27.7

Other operating expenses 462.1 496.6 -34.5Result from impairment losses and reversal of impairment losses of financial assets -8.9 0.6 -9.6

Income from shareholdings 2.1 1.4 0.8

Result from investments accounted for using the equity method 33.3 55.1 -21.8

Finance income 3.9 10.0 -6.0

Finance expenses 34.8 39.2 -4.4

Earnings before taxes (EBT) -127.8 145.3 -273.1

Income tax 16.9 48.9 -32.0

Consolidated result -144.7 96.4 -241.1

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Consolidated balance sheet

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Financialsen

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h

Assets (€ million) 30.06.2020 31.12.2019 ΔNon-current assets 4,128.0 4,099.0 29.0Intangible assets, property, plant and equipment 2,385.5 2,343.0 42.5

Investment property 81.3 82.0 -0.7

Financial assets 59.5 64.7 -5.2

Investments accounted for using the equity method 1,097.1 1,072.9 24.1

Trade receivables 8.3 18.4 -10.1

Other receivables and other assets 23.2 25.6 -2.4

Income tax assets 0.1 0.0 0.1

Deferred income tax assets 473.0 492.3 -19.3

Current assets 3,996.3 4,518.6 -522.2Inventories 2,047.0 2,248.1 -201.1

Trade receivables 1,019.1 1,118.4 -99.3

Contract assets 257.2 186.3 70.9

Other receivables and other assets 204.5 191.8 12.7

Income tax assets 24.4 22.6 1.9

Securities 38.9 50.9 -12.0

Cash and cash equivalents 401.5 700.5 -299.0

Assets available for sale 3.7 0.0 3.7

Balance sheet total 8,124.4 8,617.5 -493.2

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Consolidated balance sheet

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Financialsen

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h

Equity and liabilities (€ million) 30.06.2020 31.12.2019 ΔEquity 2,795.5 2,938.7 -143.2Subscribed capital 161.6 161.6 0.0Capital reserve 257.0 257.0 0.0Retained earnings 2,726.6 2,845.2 -118.5Other reserves 0.8 23.0 -22.2Unappropriated retained earnings 12.1 12.1 0.0Treasury shares -369.7 -369.7 0.0Minority Interest 7.1 9.6 -2.4Non-current liabilities 3,564.2 3,453.6 110.6Provisions for pensions and similar obligations 2,298.5 2,356.1 -57.6Deferred tax liabilities 72.5 72.0 0.5Income tax liabilities 36.5 36.6 -0.1Other provisions 328.8 334.9 -6.1Financial liabilities 808.5 637.1 171.4Other liabilities 19.4 16.8 2.6Current liabilities 1,764.7 2,225.3 -460.7Other provisions 198.7 224.6 -25.9Financial liabilities 287.0 430.1 -143.2Trade payables 785.0 915.2 -130.3

Liability contracts 186.4 200.7 -14.2Income tax liabilities 6.7 8.6 -1.9Other liabilities 300.8 446.0 -145.2Balance sheet total 8,124.4 8,617.5 -493.2

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Cash flow statement

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Financials

Negative cash flow from operating activities characterized by the pre-tax loss;Cash flow from investment activities reflects the progress of the two large strategic projects

€ million

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700.5

-121.5

-161.1

-12.5 -3.9

401.5

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200

400

600

800

Cash and cashequivalents at start

of period

Cash flowfrom operating

activities

Cash flowfrom investment

activities

Cash flowfrom financing

activities

Other Cash and cashequivalents at end

of period

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Strip Steel Business Unit

71

Financials

Slump of order intake in the second half of March;noticeably lower shipments drive decline in sales and pre-tax loss

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1 per reporting date

H1 2020 H1 2019 Δ Q2 2020 Q1 2020

External sales € million 902.8 1,175.5 -272.7 336.6 566.2

Order bookings kt 1,834.0 2,282.4 -448.4 640.9 1,193.1

Order backlog1 kt 779.4 932.4 -153.0 779.4 917.8

EBITDA € million 12.4 168.2 -155.9 -22.3 34.6

EBT € million -69.2 60.3 -129.5 -62.4 -6.8

Core workforce1 6,040 6,192 -152 6,040 6,113

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Plate / Section Steel Business Unit

72

Financials

External sales below previous year’s figure to volumes and prices;insufficient earnings of the heavy plate companies were the cause of the negative result of the business unit

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H1 2020 H1 2019 Δ Q2 2020 Q1 2020

External sales € million 363.2 442.3 -79.0 168.7 194.5

Order bookings kt 965.5 1,035.2 -69.7 381.7 583.8

Order backlog1 kt 274.2 314.6 -40.4 274.2 369.4

EBITDA € million -12.7 24.7 -37.4 -14.9 2.2

EBT € million -27.0 0.6 -27.5 -22.8 -4.2

Core workforce1 2,347 2,425 -78 2,347 2,353

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Mannesmann Business Unit

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Financials

Dramatic decline of the demand for steel tubes from the oil, gas and automotive sectors;Loss of the precision tubes segment defines the earnings of the business unit

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1) Tubes, per reporting date

H1 2020 H1 2019 Δ Q2 2020 Q1 2020


Order bookings € million 497.8 686.0 -188.1 178.3 319.5

Order backlog1 € million 347.8 461.1 -113.3 347.8 402.3

EBITDA € million 8.1 44.1 -36.0 -2.4 10.5

EBT € million -22.7 9.0 -31.8 -18.1 -4.6

Core workforce1 4,511 4,696 -185 4,511 4,609

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Financials

Lower volumes especially in international trading;Decreased shipments and unsatisfactory pricing situation cause decline in external sales and loss before taxes

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H1 2020 H1 2019 Δ Q2 2020 Q1 2020

External sales € million 1,229.2 1,578.3 -349.0 525.8 703.4

Shipments kt 1,724.4 2,090.7 -366.4 746.9 977.5

EBITDA € million -5.1 18.4 -23.5 -10.8 5.8

EBT € million -15.8 4.1 -19.9 -16.1 0.3

Core workforce1 1,990 2,121 -131 1,990 2,036

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Technology Business Unit

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Financials

Sharp decline in demand from customers as a result of the COVID-19 pandemic;Pre-tax profit of KHS Group is unable to compensate the losses of the plastics machinery producers

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H1 2020 H1 2019 Δ Q2 2020 Q1 2020


Order bookings kt 558.4 682.0 -123.6 221.2 337.3

Order backlog1 kt 618.2 724.0 -105.8 618.2 739.3

EBITDA € million 4.5 28.4 -24.0 -8.1 12.6

EBT € million -10.6 16.1 -26.7 -15.8 5.2

Core workforce1 5,504 5,556 -52 5,504 5,568

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Industrial Participations / Consolidation

76

Financials

Profit before taxes includes € 34.0 million contribution from the participating investment in Aurubis AG accounted for using the equity method

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H1 2020 H1 2019 Δ Q2 2020 Q1 2020


EBITDA € million 42.5 69.7 -27.2 51.0 -8.5

EBT € million 17.4 55.1 -37.7 38.8 -21.3

Core workforce1 2,617 2,649 -32 2,617 2,629

* thereof € 27.8 million income from an accounting adjustment through profit and loss in connection with Aurubis AG shares acquired in the first six months of 2019 at an average price below the market value of the pro rata equity of the shares

*

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Mechanics of internal pension commitment fundingPensions

Internal funding over lifetime of employee

Provision is determined by development of individual salary, time in employment at SZAG, actuarial life expectancy and inflation Contribution as personnel expense and interest element (both non-cash) Monthly payout from operating cash flow

Pension provision (non-cash) Contribution by SZAG (non-cash) Pension payment (cash)

Joinscompany

5 years Retirement

... ...

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Funding of pension commitmentsPensions

(2019/12/31) (2019/12/31)

Pension obligations completely covered by internal funds!

Projected Benefit Obligation (PBO): € 2,422 m1

According to IAS 19:− Discount rate of 1.50%2

– in line with market average− Trend in salaries: 2.75% p.a.− Trend in pensions:

1.75% p.a.− Staff turnover: 1% p.a.− Valuation based on the actuarial

principles

Balance sheet: pension provisions € 2,356 m Assets held by external funds:

€ 65.6 m Non-current assets: € 4,099 m Net position due to banks:

€ -140 m

1 thereof € 65.6 million covered by assets held by external funds 1 per 2020/06/30, previously 1.80% per 2020/03/31, previously: 1.40%

0

1

2

3

4

5

PBO

Pens

ion

prov

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Non

-cur

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asse

ts +

cas

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€ bn

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Inst. shareholders – other Regions

Shareholder structure and share turnoverInvestor Relations

Balanced shareholder structure

Shareholder structure Daily turnover in thousand shares

Salzgitter AG

State ofLower Saxony

Inst. Shareholders – Germany

Inst. shareholders – North America

Inst. shareholders– UK + Ireland

Inst. share-holders –other Europe

Other shareholders

High liquidity

81

0

200

400

600

1Q 14 4Q 14 3Q 15 2Q 16 1Q 17 4Q 17 3Q 18 2Q 19 1Q 20

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Free float: 63.5%Treasury shares: as of July 8, 2010; other information is based on the external shareholder identification as of January 2020

10.0%

26.5%

8.5%22.7%

2.8%4.8%

0.9%

23.9%

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Disclaimer

82

Legal NoteTo the extent that our Internet pages contain statements oriented towards or related to the future, such statements are based on our current state of knowledge and the estimates based on such knowledge made by the management of Salzgitter AG. However, as is the case with any forecasts or prognosis, such statements are also subject to uncertainties and risks. Notwithstanding prevailing statutory provisions and capital market law in particular, we are not obligated to update this data. In particular, we shall not assume liability of any kind for knowledge and statements, as well as any acts resulting on the basis of such knowledge or statements that emanate directly or indirectly from the analysis of the data, content and correlations of this document. The information and data made available do not represent an encouragement or invitation to buy, sell or conduct any other type of trade in securities. Salzgitter AG shall neither assume liability for direct nor indirect damages, including lost profits, arising as a result of the utilization of the information or data contained in this document.

CopyrightsThis data file and the data contained on these pages (including, among others, texts, images and graphics) are subject to copyright and other laws on the protection of intellectual property. To the extent that nothing contradicting or deviating is stated, all trademarks bear legal trademark protection. This applies in particular for Salzgitter company logos and product names. The brands and design elements used on our web pages are the intellectual property of Salzgitter AG. We therefore reserve all rights as such. The document serves to provide non-binding information regarding our company to the respective user, and may not be used within the framework of other depictions, in particular websites, without our express prior written consent. engl

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Presentation of the Group · 2020. 8. 20. · Strip Steel External Sales: ... € -62,3 million...

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Transcript of Presentation of the Group · 2020. 8. 20. · Strip Steel External Sales: ... € -62,3 million...