Salzgitter AG has assessed its nine-month results as presentable. In contrast to last year, profits have more than halved due to economic challenges, but the company is sticking to its Salcos plans. Salzgitter CEO Gunnar Groebler would like to see more political support.
The Salzgitter Group reported a presentable result in the first nine months of the financial year. The main drivers for this were the results of the Steel Production and Steel Processing divisions, which were still satisfactory in the first half of the year, and the performance of the Technology Division. The company confirmed its forecast with earnings before interest, taxes, depreciation and amortization (EBITDA) of € 576 million and thus continues to have a solid balance sheet and financial position. In the first nine months of 2022, earnings amounted to € 1,396.8 million EBITDA.
Finance Director Burkhard Becker commented on the result: “The economic situation in many of our most important sales markets is currently challenging. The recessionary trends in our home market of Germany in particular had a negative impact on profitability, especially in the summer quarter. In this respect, the result for the first nine months of the 2023 financial year is certainly presentable, albeit noticeably lower than in the exceptional year 2022.
We have vigorously pursued our internal efficiency measures in recent months. Our “Performance 2026″ program of measures has now achieved a planned total effect of over € 200 million. We are sticking to our latest earnings forecast and the reduction in working capital and thus the reduction in net financial debt is progressing as planned.”
Earnings in figures
The Salzgitter Group’s external sales fell to € 8.4 billion in the first nine months of 2023 (9 months 2022: € 9.8 billion) due to lower shipment volumes compared with the previous year’s period and lower average selling prices for many rolled steel products. EBITDA of € 576.0 million (9M 2022: € 1,396.8 million) and earnings before taxes of € 254.3 million (9M 2022: € 1,145.3 million) were generated.
The result includes a contribution of € 20.0 million from the investment in Aurubis AG, which is accounted for using the equity method (IFRS accounting) (9M 2022: € 115.7 million). After-tax earnings of € 193.7 million (9M 2022: € 945.8 million) result in earnings per share of € 3.51 (9M 2022: € 17.40). Return on capital employed (ROCE) amounted to 6.5% (9M 2022: 22.9%). The equity ratio remained almost stable at 44.9% (9M 2022: 45.2%). Net financial debt decreased by around € 400 million compared to the previous year (€ – 400.8 million; 9M 2022: € – 802.4 million).
Outlook for the rest of the year
Salzgitter anticipates total sales of € 11 billion for the financial year 2023 due to the persistently weak development of the German economy and the extremely volatile political and economic environment. The Group estimates EBITDA of between € 650 million and € 700 million and earnings before taxes of between € 200 million and € 250 million as well as a return on capital employed (ROCE) that is noticeably below the previous year’s level. How the result actually turns out depends, among other things, on changes in raw material costs, precious metal prices and exchange rates.
Here to the quarterly statement of the nine-month resultsThe Chairman of the Executive Board of Salzgitter AG, Gunnar Groebler, explains:
“In these economically as well as politically quite turbulent times, we are continuing to work at full speed on the swift implementation of our SALCOS® decarbonization program. We will be producing green steel at the Salzgitter site from 2026. However, in order to further secure and accelerate the transformation of our company, we need a clear commitment from politicians to Germany as a business location and to a resilient basic materials industry. Green lead markets and competitive energy prices are important cornerstones here.
The agreement reached by the German government at the end of last week to reduce the electricity tax in Germany shows the political will to urgently reduce electricity prices in Germany. However, it should be noted that the solution essentially confirms the current status quo for energy-intensive industry. We cannot see any substantial protection for the industry, which is in the midst of both global competition and a capital-intensive transformation. Further efforts are needed here!”
