23.03.2021. The Dillinger Group and the Saarstahl Group have experienced another very difficult financial year in 2020. Both companies found themselves in challenging structural and economic conditions in 2019 and early 2020 due to, among other things, global protectionism and related tariffs, high overcapacity, and declines in demand in core customer segments such as the automotive, energy, and mechanical engineering industries. The Coronavirus pandemic has dramatically intensified the existing crisis.
Dr. Karl-Ulrich Köhler, Chairman of the Board and CFO of Saarstahl and Dillinger, said: “The pandemic further exacerbated the already strained situation during the course of the year and led to a collapse in demand over the year, first at Saarstahl and, somewhat later, at Dillinger. For many months, we operated our production based on current conditions – sometimes at the lowest technically possible limits of the operating modes. Due to the high losses at both companies in the 2020 financial year, pressure to implement the recession-related cost-cutting program has intensified even further: we need to accelerate implementation of the program and accomplish the turnaround quickly, effectively and permanently.”
Demand collapsed, new orders have recovered since autumn
Demand for wire and rod at Saarstahl collapsed noticeably starting in April and reached its low point in August; since autumn, new orders have recovered significantly. This is primarily due to the restart of production in the automotive industry. Dillinger experienced lagging performance and increasingly weak demand over the course of the 2020 financial year from core consumer segments such as mechanical engineering, retail, and the oil and gas pipeline segment. The offshore wind segment, on the other hand, performed satisfactorily. Dillinger has experienced a recovery of its business since the beginning of 2021. In 2020, both companies made greater use of the instrument of short-time work and were thus able to adjust the operation of their plants to the downturn in orders. Throughout the year, rigorous crisis management was also employed, with a wide range of measures to protect the health of employees.
Sales revenues of the Saarstahl Group fell by 23.7 % to 1.684 billion € (previous year: 2.206 billion €). Consolidated EBITDA (earnings before interest, taxes, depreciation and amortisation) of the Dillinger Group amounted to -70.4 million € (2019: -18.5 million €) and the consolidated EBIT, i.e. earnings before interest and taxes, to -171.2 million € (2019: -127.6 million €). Investments in the Saarstahl Group amounted to 61.6 million € (2019: 105.2 million €).
Net sales of the Dillinger Group decreased by 21.2 % to 1.645 billion € (previous year: 2.087 billion €). Consolidated EBITDA (earnings before interest, taxes, depreciation and amortisation) of the Dillinger Group amounted to -68.9 million € (2019: 8.5 million €) and the consolidated EBIT, i.e., earnings before interest and taxes, to -192.8 million € (2019: -116.1 million €). Investments in the Dillinger Group amounted to 41.7 million € (2019: 72.4 million €).
A majority of the investments made by Saarstahl and Dillinger, which were reduced overall, related to measures to improve environmental protection and reduce carbon emissions: for example, in the new coke gas injection system, hydrogen was used as a reducing agent in regular operation in the blast furnaces for the first time in Germany. In addition, a new compressed gas storage facility was commissioned at the Saarstahl site in Neunkirchen and, more recently, the new circular cooler with heat recovery at the sintering plant of ROGESA Roheisengesellschaft Saar (ROGESA) – a joint subsidiary of Dillinger and Saarstahl – for a total investment of 28 million €.
Outlook for 2021
Dillinger and Saarstahl started 2021 with a considerably improved order situation and the companies anticipate an overall recovery in business activity and an improved earnings situation. Forecasts are cautiously optimistic and fraught with uncertainty, particularly regarding the duration of the recovery and the further consequences of the ongoing coronavirus pandemic.
(Source: SHS – Stahl-Holding-Saar)
