Presentation of the Group - Salzgitter AG
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english
Presentation of the Group
SZAG Investor Relations
1 Salzgitter Group
2 Market Situation
3 Business Units
4 Strategy
SZAG Investor Relations
5 Guidance
english
Overview
Global Presence
Strip Steel
Mannesmann Trading Technology
Plate / Section Steel
SZAG Investor Relations
Crude steel production 2017: 7.0 million tons; trading volume: 4.7 million tons;
Among the top 3 producers of beverage filling and packaging machinery
english
3
Salzgitter Group
Diversified product portfolio
Steel and Technology
Strip products Line pipes
Steel Service Center Precision tubes
Heavy plates Stainless tubes
Sections Stockholding trading
Engineering services International trading
Injection molding machinery Beverage filling plants
SZAG Investor Relations
english
4
Salzgitter Group
Group structure and key data FY 2017
Salzgitter AG Group
External Sales cons.: € 9.0 billion Employees: 23,139
EBT: € 238 million
Plate /
Strip Steel Mannesmann Trading Technology
Section Steel
External Sales: External Sales: External Sales: External Sales: External Sales:
€ 2.2 billion € 1.0 billion € 1.1 billion € 3.2 billion € 1.3 billion
EBT: EBT: EBT: EBT: EBT:
€ 182 million € -58 million € -6 million € 71 million € 7 million
Employees: Employees: Employees: Employees: Employees:
6,092 2,479 4,638 1,959 5,386
SZAG Investor Relations
english
All data about employees as per 12/31 5
Salzgitter Group
Group structure
Salzgitter AG
Salzgitter Mannesmann / Salzgitter Klöckner-Werke
Strip Steel Plate / Section Steel Mannesmann Trading Technology Industrial Participations /
BU BU BU BU BU Consolidation
Salzgitter Ilsenburger Salzgitter Mannesmann Verkehrsbetriebe Peine-
Mannesmannröhren-Werke KHS
Flachstahl Grobblech Handel Salzgitter
Salzgitter Salzgitter Mannesmann Salzgitter Mannesmann
Europipe KHS Corpoplast Hansaport
Europlatinen Grobblech 50% Stahlhandel 51%
Peiner Salzgitter Mannesmann Klöckner DESMA Gesis Gesellschaft für
Salzgitter Bauelemente Mannesmann Line Pipe
Träger International Elastomertechnik Informationssysteme
Salzgitter Mannesmann DEUMU Deutsche Universal Eisen
Mannesmann Grossrohr DESMA Schuhmaschinen Telcat
Stahlservice Erz- und Metall-Union und Stahl
Salzgitter Mannesmann
Mannesmann Precision Tubes
Forschung
Salzgitter Automotive
Mannesmann Stainless Tubes
Engineering
Hüttenwerke Krupp
Salzgitter Hydroforming
Mannesmann 30%
SZAG Investor Relations
Borusan
Aurubis
Mannesmann Boru 23% 20%
BU = Business Unit
english
As of April 2018
6
Salzgitter Group
External sales 2017 by customer industries
13% 15%
Other Vehicle construction
13% 12%
Food and beverage industry Construction industry
4% 4%
Mechanical engineering White goods,
electrical equipment
5% 5%
Re-rollers Energy sector and utilities
6% 23%
Tubes producers Traders, Steel-Service-Centers
Only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE Group
SZAG Investor Relations
Broad customer base
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7
Salzgitter Group
External sales 2017 by regions
6%
Other
7%
Asia
12%
Americas 48%
Germany
4%
Other Europe
23%
Other EU
Sales by consignee (only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE-Group)
SZAG Investor Relations
Share of ex-Germany sales by consignee 52%
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8
Salzgitter Group
Key data per 2017/12/31
FY 2017 FY 2016 Δ 2017 – 2016
Crude steel production kt 6,955.2 6,804.4 150.8
Consolidated Sales € million 8,990.2 7,905.7 1,084.5
Earnings before tax € million 238.0 53.2 184.8
Earnings after tax € million 193.6 56.8 136.8
Earnings per share (undiluted) € 3.52 1.00 2.5
ROCE % 8.6 2.7 5.9
Core workforce (12/31) 23,139 23,152 -13
SZAG Investor Relations
Salzgitter Group closes the financial year 2017 with the highest pre-tax profit since the financial market crisis
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9
Salzgitter Group
Balance sheet per 2017/12/31
€ million
8,318 8,318
Equity ratio:
Goodwill: 0 €
Property, plant and 35.9% Equity
2,990
equipment and other 3,566
non-current assets
Assets to equity: 84%
Pension
2,440 provisions
Inventories 2,085
€ 820 m € 409 m Other non-current
Cash and liabilities
756 Net position due to banks: 881
securities
€ 381 m
Other current € 200 m € 230 m Current liabilities
1,911 2,007
assets
Aktiva Passiva
SZAG Investor Relations
Sound financial basis
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10Salzgitter Group
Salzgitter Group Investments and Depreciation / Amortization
185
43 15 49
411
359 345 339 340 352 342 342
270 287
2
2013 2014 2015 2016 2017
Investments1 Scheduled depreciation Unscheduled depreciation
1 Property, plant and equipment and intangible assets, excluding financial assets | 2 restated because of first time adaption IFRS 11
SZAG Investor Relations
Focus on expansion investments
Outlook 2018 / 2019: € 70-100 million above depreciation
english
11Salzgitter Group
History
Strip Steel BU 1998 Salzgitter AG Mannesmann BU Technology
1937 Construction 1989 Name change to
Hüttenwerk Salzgitter 2017 Relaunch of 2007 Integration into SZAG
(Part of Reichswerke) Preussag Stahl AG the brand presence
First broad-flanged 1964 2000 Liquidation of 1992 - 1995
1970 Merger
beam mill in Peine, 1914 Salzgitter Hüttenwerk AG to form Stahlwerke Mannesmann Group, Insolvency, restructuring Cross-rolling process sketch of
(since 1961 part of state-owned
Salzgitter AG old) Peine-Salzgitter AG Integration Tubes into SZ and end of steel production Max Mannesmann, pre 1885
Plate / Section Steel BU 1912 first attempts with
stainless steel tubes 1977
1880 Acquisition of Peiner
1897 Start of production First acquisition of part. in
llsenburg: est. 1595, Walzwerk, est.1872
welded steel tubes filling technology (H & K)
plate since 1948
Mülheim an der Ruhr:
plate since 1882 1886 First process 1923
1858 Foundation
for the rolling of Foundation of steel group
Demonstrations to save Ilseder Hütte AG
Peine: Sections since 1876 seamless steel tubes Klöckner-Werke AG
the smelting works in Bottle filling line Phönix
Salzgitter, c. 1950 c. 1936
SZAG Investor Relations
Privatization and acquisition
of the Ilsenburg rolling mill, 1992
english
1989 privatization with the First blast furnace in Ilsede, 1861 Stock listing 1998
sale to Preussag AG 121 Salzgitter Group
2 Market Situation
3 Business Units
4 Strategy
SZAG Investor Relations
5 Guidance
englishMarket Situation
Economy in the European Union
Industrial production in selected countries of the EU (Jan. 2007 = 100)
120
110 110%
100
94%
94%
90
83%
80
79%
70
60
Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18
Germany UK France Italy Spain
Source: Eurostat, own research, last figure from February 2018
SZAG Investor Relations
The trend of the previous year continues: Slightly improving EU industrial production, Germany remains strong
english
14Market Situation
Raw materials
Iron ore Coking coal Steel scrap
(62% Fe CFR China, US$/dmt) (FOB Australia, US$/t) (grade 2/8, €/t)
100 350 300
90 270
300
80 240
250
70 210
60 200 180
50 150
150
40 120
100
30 90
20 50 60
SZAG Investor Relations
Raw materials markets marked by high volatility
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15Market Situation
Steel prices
Spot prices Northern Europe Hot-rolled coil prices international
(€/t) (€/t)
850 850
750 750
650 650
05/18
05/18
550 550
450 450
350 350
250 250
Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jan 16 Jul 16 Jan 17 Jul 17 Jan 18
HRC EXW Ruhr Plate EXW Ruhr Medium sections Northern Europe EXW Ruhr USA EXW Indiana China Schanghai
SZAG Investor Relations
Following a period of recent rises, steel prices are stabilizing at the moment;
different trading policies result in regional price variations
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16Market Situation
EU trade defense actions relevant for Salzgitter AG
Product/Type of investigations Against … Filed on… Status Results / Next steps
Cold-rolled strip China, March 31, 2015 August 4, 2016 Final duties exceed provisional tariffs.
Anti-dumping investigation Russia Final AD-duties adopted Noteworthy: retroactive application of
China: 20-22% duties
Russia: 19-36%
Hot-rolled strip China December 23, 20151/ June 8, 2017 Positive: EU-Commission finds
Anti-dumping investigation1 March, 31 20162 Final duties dumping (96-107%) and subsidies
(Threat of injury) and China: 18-36% (5-39%)
anti-subsidy investigation2 Negative: Lesser Duty Rule limits
duties to injury margin (18-36%)
Heavy plate China Dezember 23, 2015 March 1, 2017 Risks of circumvention under review
Anti-dumping investigation Final duties
China: Ø 70%!
Hot-rolled strip Russia, Ukraine, May 20, 2016 October 6, 2017 Best final result among the possible
Anti-dumping investigation Brazil, Serbia Final measure: fixed Euro per ton alternatives (after veto of member
and Iran duties; range between €/t 17.60 and states against a minimum import
€/t 96.50; Ø €/t 55. price).
SZAG Investor Relations
Corrosion resistant (non-auto) China October 24, 2016 February 8, 2018 Final duties after application of Lesser
Anti-dumping investigation Final duties Duty Rule on the level of provisional
China: 17-29% tariffs. Risks of circumvention under
review
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17Market Situation
Environment
International trade policy Steel imports into the EU-28
Import of finished steel products (1,000 t/month)
40% of all global 2,500
trade defense
measures
2,000
concern steel
products
1,500
1,000
500
-
2015 2016 2017 Q1 2018
China Ukraine Russia Turkey India South Korea Rest
SZAG Investor Relations
The steel sector is of paramount importance for industrial value chains;
European AD-measures against China having impact – steel imports into the EU remain at a high level
english
181 Salzgitter Group
2 Market Situation
3 Business Units: Strip Steel
4 Strategy
SZAG Investor Relations
5 Guidance
englishStrip Steel Business Unit
Overview
Capabilities External sales by customer industry 2017
Integrated steel works with three blast 2% 4%
furnaces Mechanical engineering Other
Approx. 4.7 mt/year crude steel capacity 13% 37%
Modern production plants Re-rollers Vehicle construction
2%
High processing competence (SSC)
Tube producers
Core competences and products 5%
High-quality steel grades for sophisticated 31% Construction industry
applications Traders 7%
Custom made solutions, e.g., hot-rolled only from entities within the group of
White goods,
and cold-rolled coil, galvanized and consolidated companies of Salzgitter Group electrical equipment
coated sheet, laser-welded tailored Key data FY 2017
blanks, corrugated sheets, coffers,
sandwich and acoustic elements
Consolidated Sales €m 2,160
Customer focus through local presence
Earnings before taxes €m 182
Core workforce (12/31) 6,092
SZAG Investor Relations
Established supplier of the demanding German automotive industry
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20Strip Steel Business Unit
Strip Products
Salzgitter Flachstahl GmbH
Germany; shareholder: SZAG 100%
Hot-rolled coil, cold-rolled coil, electrogalvanized, hot dip
galvanized and organic coated sheet Supplier of premium OEMs
Integrated steel works with 3 blast furnaces
Around 4.7 mt yearly crude steel capacity
Top modern production plants
High-tech downstream facilities
3% market share in the EU28
2016 2017
Shipments kt 4,331 4,154
SZAG Investor Relations
Sales €m 2,204 2,652
Employees 12/31 5,563 5,587
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21Strip Steel Business Unit
Processing
Salzgitter Europlatinen GmbH
Germany; shareholder: SZAG 100%
Custom-made solutions: Laser welded
Tailored Blanks for lighter car bodies
2016 2017
Sales €m 63 77
Employees 12/31 109 117
Salzgitter Bauelemente GmbH
Germany; shareholder: SZAG 100%
Corrugated sheets, coffers, sandwich a. acoustic elements for wall and
roof constructions of commercial buildings
2016 2017
SZAG Investor Relations
Sales €m 43 46
Employees 12/31 66 67
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22Strip Steel Business Unit
Steel Service Center
Salzgitter Mannesmann Stahlservice GmbH
Germany; shareholder: SZAG 100%
Two locations
Excellent position in the heart of
Modern plants and processes Europe
600,000 t/year processing capacity
2016 2017
Shipments kt 605 598
SZAG Investor Relations
Sales €m 326 402
Employees 12/31 324 321
english
231 Salzgitter Group
2 Market Situation
3 Business Units: Plate / Section Steel
4 Strategy
SZAG Investor Relations
5 Guidance
englishPlate / Section Steel Business Unit
Overview
Capabilities External sales by customer industry 2017
Section steel: 2%
15%
− Top-modern mini mill with two electric Vehicle construction
arc furnaces Other 11%
− Annual crude steel capacity 1 mt 2% Construction industry
Mechanical engineering 5%
− Two rolling mills for medium and heavy
sections White goods,
electrical equipment
Plate:
31%
34%
− Two rolling mills for plate with Tube producers
Traders
1.6 mt annual capacity only from entities within the group of
− Plate width up to 4,800 mm consolidated companies of Salzgitter Group
Core competences and products Key data FY 2017
High-strength, wear resistant and
specialized steel grades Consolidated sales €m 1,024
Medium and heavy sections, heavy plate
incl. offshore and tube grades Earnings before taxes €m -58
Core workforce (12/31) 2,479
SZAG Investor Relations
Plate: Broad range of high quality plate products
Section Steel: Efficient production
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25Plate / Section Business Unit
Heavy Plate
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
6% market share in the EU28
State of the art facilities, one of the most modern water
quenching plants
2016 2017
Shipments kt 673 682
SZAG Investor Relations
Sales €m 415 501
Employees 12/31 763 739
english
26Plate / Section Steel Business Unit
Heavy Plate
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
2016 2017
Shipments kt 473 584
SZAG Investor Relations
Sales €m 292 394
Employees 12/31 689 607
english
27Plate / Section Steel Business Unit
Sections
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
2016 2017
Shipments kt 1,009 997
SZAG Investor Relations
Sales €m 489 523
Employees 12/31 778 783
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28Plate / Section Steel Business Unit
Other Companies
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
2016 2017
Sales €m 489 627
Employees 12/31 332 378
SZAG Investor Relations
english
291 Salzgitter Group
2 Market Situation
3 Business Units: Mannesmann
4 Strategy
SZAG Investor Relations
5 Guidance
englishMannesmann Business Unit
Overview
Capabilities External sales by customer industry 2017
Own crude steel supply via 30%
25%
participation in Hüttenwerke Krupp
40% Vehicle construction
Mannesmann GmbH
Other
Plant for the production of semis for the 2%
seamless tubes business Construction industry
Core competences and products 10%
14%
Line Pipe: participation (50%) in the world Mechanical engineering
Energy sector
market leader EUROPIPE; international 6% and utilities
presence Tube producers 3%
Precision Tubes: European market leader only from entities within the group of Traders
Seamless Stainless Tubes: top player in consolidated companies of Salzgitter Group, excluding EUROPIPE Group
the world market Key Data FY 2017
Longitudinal and spiral welded large-
diameter pipes, medium line pipes, Consolidated Sales €m 1,093
seamless and welded precision tubes,
stainless tubes
Earnings before taxes €m -6
Core workforce (12/31) 4,638
SZAG Investor Relations
Global player in the high quality segment of the global tubes market
english
31Mannesmann Business Unit
Line Pipes
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
2016 2017
Shipments kt 1.003 1.099
SZAG Investor Relations
Sales €m 1.148 1.042
Employees 12/31 1.112 1.031
english
32Mannesmann Business Unit
Line Pipes
Mannesmann Line Pipe GmbH
Germany; shareholder: SZAG 100%
HFI-welded medium line pipes incl.
plastic- and cement coatings
2016 2017
Sales €m 139 261
Employees 12/31 441 385
Mannesmann Großrohr GmbH
Germany; shareholder: SZAG 100%
Spiral-welded large-diameter pipes made of hot-rolled coil
2016 2017
SZAG Investor Relations
Sales €m 79 78
Employees 12/31 129 124
english
33Mannesmann Business Unit
Precision Tubes
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
2016 2017
Shipments kt 264 282
SZAG Investor Relations
Sales €m 430 477
Employees 12/31 2,314 2,313
english
34Mannesmann Business Unit
Seamless Stainless Tubes
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
7% market share in the world
4 locations in D, F, I, USA
2016 2017
Shipments kt 24 25
SZAG Investor Relations
Sales €m 228 237
Employees 12/31 943 935
english
35Mannesmann Business Unit
Significant shareholdings
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 > 5 million tons
2016 2017
SZAG Investor Relations
Sales €m 1,824 2,515
Employees 12/31 2,977 2,907
english
361 Salzgitter Group
2 Market Situation
3 Business Units: Trading
4 Strategy
SZAG Investor Relations
5 Guidance
englishTrading Business Unit
Overview
Capabilities External sales by customer industry 2017
103 sites in 43 countries 5% 13%
Mechanical engineering Other
Own distribution network for steel products
with warehousing sites in Europe 4% 4%
Re-rollers Vehicle construction
Processing group specialized on heavy 3%
27%
plate products Tube producers
Construction industry
International trading 31% 4%
Core competences and products Traders White goods,
electrical equipment
Global presence in all relevant regions with 9%
own representation only from entities within the group of Energy sector and utilities
consolidated companies of Salzgitter Group
Distribution channel for Salzgitter Group
products Key Data FY 2017
Procurement channel for Salzgitter Group
works Consolidated Sales €m 3,230
Value add services for customers
Earnings before taxes €m 71
Core workforce (12/31) 1,959
SZAG Investor Relations
High customer and market orientation through a global sales organization
english
38Trading Business Unit
Salzgitter Mannesmann Handel Group
Salzgitter Mannesmann Handel
Shipments 2017: 4.4 mt Sales 2017: € 3.1 billion
Trading Stockholding Agencies
International Salzgitter Mannesmann
Salzgitter Mannesmann Stahlhandel Europa Europa
10 Companies Stahlhandel GmbH, Düsseldorf
GmbH, Düsseldorf (SMSD) 7 Companies 4 Agencies
2 Rep. offices (SMSD)
15 Branches with warehouses
20 Branches with warehouses and
Salzgitter Mannesmann International and further processing (incl. 4
further processing (incl. 4 flame
GmbH, Düsseldorf (SMID) flame cutting plants), 4 Sales
cutting plants), 4 Sales offices
offices
Salzgitter Mannesmann International Stahl-Center Baunatal
Stahl-Center Baunatal GmbH,
GmbH,
(USA) Inc., Houston (SMIH) Baunatal (SCB)
Baunatal (SCB)
Salzgitter Mannesmann International
(Canada) Inc., Vancouver (SMIV)
SZAG Investor Relations
77 locations in 33 countries with 1,593 employees
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39Trading Business Unit
Universal Eisen und Stahl Group
Universal
Shipments 2017: 0.2 mt Sales 2017: € 0.2 billion
North America Europe
Universal
UNIVERSAL STEEL AMERICA, Inc., Houston, USA Universal Aciers Sarl, Couzon au Mont d'Or, France
Eisen und Stahl GmbH, Neuss (UES)
UNIVERSAL STEEL HOLLAND B.V., SK
1 Branch in Chicago 5 Branches
Papendrecht, Netherlands
UNIVERSAL-Stal Sp. z o.o, Gliwice, Poland
UNIVERSAL OCEL spol. s.r.o., Prague,
Czech Republic
SZAG Investor Relations
17 locations in 11 countries with 366 employees
english
401 Salzgitter Group
2 Market Situation
3 Business Units: Technology
4 Strategy
SZAG Investor Relations
5 Guidance
englishTechnology Business Unit
Overview
Capabilities External sales by customer industry 2017
17 Production plants worldwide 6% 3%
60 Service sites
Vehicle White goods,
> 90% of sales outside of Germany construction electrical equipement
Core competences and products
KHS: among the top 3 global suppliers for 3%
filling and packaging machines; technology 88%
Mechanical engineering
and innovation leadership Food and beverage
DESMA Elastomertechnik: Global leader industry
for rubber and silicon injection molding
machines only from entities within the group of
consolidated companies of Salzgitter Group
DESMA Schuhmaschinen: World market
leader for the production of machines for Key data FY 2017
the production of shoes and shoe soles
Turn-key lines, single machines and Consolidated Sales €m 1,285
service
Earnings before taxes €m 7
Core workforce (12/31) 5,386
SZAG Investor Relations
Top 3 producer for filling and packing industry, world market leader for rubber and
silicon injection molding as well as direct soling machines
english
42Technology Business Unit
Filling and packaging
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
2016 2017
SZAG Investor Relations
Sales €m 1.180 1.138
Employees 12/31 4.565 4.648
english
43Technology Business Unit
Special machinery
Klöckner DESMA Elastomertechnik Group
World market leader for rubber and silicone injection molding
machinery
2016 2017
Sales €m 88 100
Employees 12/31 505 530
DESMA Schuhmaschinen GmbH
World’s largest producer of machines for the fabrication of
shoes and shoe soles
2016 2017
SZAG Investor Relations
Sales €m 39 47
Employees 12/31 199 208
english
441 Salzgitter Group
2 Market Situation
3 Industrial Participations
4 Strategy
SZAG Investor Relations
5 Guidance
englishIndustrial Participations
Engineering
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
SZAG Investor Relations
english
46Industrial Participations
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
SZAG Investor Relations
1 SZAG share: 51%
english
47Industrial Participations
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
GESIS Gesellschaft für Informationssysteme
Integration of business processes into one uniform IT-solution
that reflects the entire workflow, Electronic data processing
center capacities and
the internet-based eService platform as a unified hub for order
processing are offered for group companies and external clients
SZAG Investor Relations
english
48Industrial Participations
Aurubis-Participation
Aurubis Dividend (€/Share)
1.60
1.45
1.40 1.35 1.35
1.25
1.20
1.20 1.10
1.00 1.00
1.00 SZAG shareholding: 20.00%
(per April 9, 2018)
0.80
0.65 Net dividend received since
0.60 2009: € 92.2 million
(per FY16/17)
0.40
0.20
0.00
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
2016/2017
SZAG Investor Relations
Since 2008 successful shareholding in the leading European copper producer
english
491 Salzgitter Group
2 Market Situation
3 Business Units
4 Strategy
SZAG Investor Relations
5 Guidance
englishStrategy
360° Concept
360°
MISSION STATEMENT
Motivation & Qualification
CORPORATE POLICY
Independence at the core
INNOVATIONS EFFICIENCY PROGRAMS
Stabilize competitiveness
Open up new opportunities
Salzgitter AG 2015
FitStructure SZAG
DEVELOPMENT OF BUSINESS UNITS
Developing potential: Growth programs
SZAG Investor Relations
… we are helping ourselves!
english
51Strategy
Programs of measures I
Group Strategy SZAG 2021
Growth Organic growth in product areas with
programs high contribution margins
Develop potential through
investments and R&D initiatives
Expansion of the share of non-steel sales from
currently 40% to 50%
2018 – 2021
around € 240 million p.a.
additional profit contributions
2012-2017 2018-2021
SZAG 2015 Other programs FitStructure Focus on cost savings and efficiency
(since end of 2016 combined SZAG enhancement
under FitStructure SZAG) Substantial part from
Mannesmann and Technology
business units
2012 – 2016 2018 – 2021
SZAG Investor Relations
260 Mio. € p.a. € 240 million p.a. around € 140 million p.a. earnings
improvement potential
€ 450 million p.a. earnings improvement potential
english
52Strategy
Programs of measures II
FitStructure SZAG SZAG 2021 Growth Programs
€ million earnings improvement potential € million additional profit contribution
160 250
140
~30 200 ~60
120
100 150
80
~50 ~90
100
60
40
~40
50
~60
20
~50
0 0
2018 2019 2020 ff. 2018 2019 2020 2021
SZAG Investor Relations
All in all more than € 350 million in additional effects planned – the dynamism started in 2012 will be maintained
englishStrategy
“Salzgitter AG 2021” growth strategy
Goal: Stipulations:
Rolled steel production and parts of the tubes
Steel-related Less steel-related production can only grow qualitatively, not
quantitatively.
2016 60% 40% Quantitative growth is possible exclusively in activities
apart from steel – especially in the Technology Business
Unit.
External growth on a larger scale is not mandatorily
necessary for the development of the business units –
can, however, be desirable for the Technology Business
Unit, especially for product and technology expansion.
2021 50% 50%
SZAG Investor Relations
Strategic cornerstones for the development of the Group
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54Strategy
“Salzgitter AG 2021” – example Hot-Dip Galvanizing Line 3
Strategy SZAG 2021 – focus on growth
Satisfaction of rising quality requirements by customers
Reinforcement of the market position in the
automotive segment
Expansion of the galvanizing capacity
FitStructure SZAG – cost cutting and efficiency
improvement
Shortening of retooling standstills due to greater
specialization of the lines within the galvanizing shop
along distinct product divisions
Goal:
Compensation of the market-induced lower demand for
elo-galvanized steel
Satisfaction of higher demand for high- and ultra high-
strength hot-dip galvanized steels
SZAG Investor Relations
Key component in the group’s “Salzgitter AG 2021” strategy
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55Strategy
“Salzgitter AG 2021” – example Plate / Section Steel BU
Measures at the Ilsenburg site
Strategy SZAG 2021 – focus on qualitative growth
Investment into a modern and competitive heat treatment line
Commissioning: 2020
FitStructure SZAG – cost cutting and efficiency
improvement
Capacity reduction to 700 kt p.a. with corresponding 52%
workforce adjustment 44%
Temporary decrease of weekly working time to 36%
32 hours without wage compensation
Goal: Profitability improvement of the company
Optimization of the product portfolio
Strengthening of the market position and volume 2016 2018* 2020*
expansion for higher value grade segments such as high Volume development of
higher value grades
strength and wear resistant, water tempered steel
SZAG Investor Relations
Restructuring and future orientation go hand in hand
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* planned volumes 56Strategy
“Salzgitter AG 2021” – example Precision Tubes
Strategy SZAG 2021 – focus on growth
Expansion of the plant in Mexico
Construction of a production line for thick-walled tubes
Upgrade of the existing finishing line
FitStructure SZAG – cost cutting and efficiency
improvement
Realignment of Mannesmann Precision Tubes Group as a Pump case
Structural
technology provider
Airbags
tube Stabilizers
Program comprising 180 individual measures Suspension
components
Engine-
Goal: Sustainable pre-tax margin of 5% as of 2021 components
Growth with profitable products Seat belt-
fixings
IHU/IHV
Extension of the value chain Camshafts
Growth through internationalization
Drive shafts
Drivetrain and steering components
SZAG Investor Relations
Key component in the group’s “Salzgitter AG 2021” strategy
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57Strategy
SALCOS – SAlzgitter Low CO2 Steelmaking
Utilization of hydrogen (H2) instead of carbon (C) for the reduction of iron
Use of H2 for Iron ore Use of already established
reduction with pellets (direct reduction using natural
Direct reduction plant
natural gas
gas) as well as innovative
(hydrogen generation and use)
technologies
Integration into existing and
optimized steel works
Directly
Further utilization reduced iron as gradual reduction of CO2-
of renewable energy: energy storage
additional use of H2
emissions: between 10% and
80% CO2 savings!
SZAG Investor Relations
Having an eye on the future of CO2-reduced steel production
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Source: Fraunhofer-Gesellschaft/SZAG 581 Salzgitter Group
2 Market Situation
3 Business Units
4 Strategy
SZAG Investor Relations
5 Guidance
englishGuidance
Business Units – Forecast 2018
Strip Steel Plate / Section Steel Mannesmann Trading Technology
very good start to the year Plate: continuing difficult Large-diameter pipe mills: international trading will not KHS Group: continuing fierce
2018 thanks to the increase market environment with high good utilization in Germany, fully compensate the weaker competitive pressure in the
in selling prices level of imports order situation in North sales of the first quarter global project business
continuing robust demand Section steel: burdened by America remains earnings level continues to positive impact of the
unsatisfactory
expected increase in other material return to more normal levels measures to raise efficiency
Medium line pipes: Demand
costs compared to the previous KDS and KDE Group:
from North America is likely
year that was impacted by the
nevertheless, capacity to be lower than year before positive prospects
temporary widening of
utilization will remain largely Precision and stainless
margins
sound at all three plants tubes: positive development
Business Unit
significantly higher sales moderate sales growth sales on previous year’s level slight downturn in sales Based on a high order backlog:
EBT likely higher than significant reduction in pre- significantly improved again gratifying pre-tax profit , moderate increase in sales
originally forecast albeit tax loss positive pre-tax result nevertheless considerably tangible increase in pre-tax
clearly below the outstanding below the previous year’s
profit
year-earlier result outstanding figure
SZAG Investor Relations
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60Guidance
Salzgitter Group – Guidance from May 15, 2018
Given the good start to the year, the generally positive business outlook, as well as the planned further effects of the programs of measures and to
promote growth, Salzgitter AG lifted its earnings forecast at the end of April for the financial year 2018. We now anticipate:
a marginal increase in sales to above € 9 billion,
a pre-tax profit of between € 250 million and € 300 million and
a return on capital employed that is stable compared with the previous year's figure.
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, may have a considerable impact over the course of the financial year 2018.
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.
SZAG Investor Relations
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.
englishBACKUP
1 Financials
2 Pensions
3 Investor Relations
SZAG Investor Relations
englishFinancials
Key data per 2018/03/31
Q1 2018 Q1 2017 Δ
Crude steel production kt 1,773.8 1,739.6 34.2
External sales1 € million 2,307.5 2,353.9 -46.4
Earnings before tax € million 95.9 77.1 18.8
Earnings after tax € million 65.2 48.7 16.5
Earnings per share (undiluted) € 1.18 0.87 0.31
ROCE % 11.6 10.3 1.3
Core workforce2 23,333 23,287 46
1 only from entities within the Group of Consolidated Companies of Salzgitter Group 2 per reporting date
SZAG Investor Relations
Salzgitter Group off to a strong start to the year
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63Financials
Income statement
Income Statement (€ million) Q1 2018 Q1 2017
Sales 2,307.5 2,353.9
Increase/decrease in finished goods/own work capitalized 18.9 16.0
Total output 2,326.4 2,369.9
Other operating income 55.8 76.1
Cost of materials 1,505.0 1,576.2
Personnel expenses 422.4 414.7
Amortization and depreciation 84.6 85.0
Other operating expenses 270.7 303.9
Income from shareholdings 0.1 0.7
Profit or loss of associates and joint ventures accounted for using the equity method
9.5 33.1
Finance income 3.6 5.3
Finance expenses 16.9 28.4
Earnings before taxes (EBT) 95.9 77.1
SZAG Investor Relations
Income tax 30.7 28.4
Consolidated result 65.2 48.7
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64Financials
Consolidated balance sheet
Assets (€ million) 2018/03/31 2017/12/31 Δ
Non-current assets 3,586.2 3,565.9 20.3
Intangible assets, property, plant and equipment 2,412.1 2,433.3 -21.2
Investment property 21.4 21.5 -0.1
Financial assets 81.0 84.1 -3.1
Investments accounted for using the equity method 653.0 577.5 75.5
Trade receiveables 20.6 25.6 -5.0
Other receivables and other assets 20.2 26.0 -5.8
Income tax assets 2.8 4.5 -1.7
Deferred income tax assets 375.1 393.2 -18.1
Current assets 4,821.5 4,751.8 69.7
Inventories 2,075.8 2,084.5 -8.7
Trade receivables 1,428.0 1,492.2 -64.2
Contract assets 193.0 0.0 193.0
Other receivables and other assets 401.8 394.2 7.6
Income tax assets 28.6 24.9 3.7
Securities 70.6 76.6 -6.0
SZAG Investor Relations
Cash and cash equivalents 624.0 679.4 -55.4
Balance sheet total 8,407.7 8,317.7 90.0
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65Financials
Consolidated balance sheet
Equity and liabilities (€ million) 2018/03/31 2017/12/31 Δ
Equity 3,103.5 2,989.7 113.8
Subscribed capital 161.6 161.6 0.0
Capital reserve 257.0 257.0 0.0
Retained earnings 2,995.8 2,854.6 141.2
Other reserves 22.6 51.1 -28.5
Unappropriated retained earnings 27.1 27.1 0.0
Treasury shares -369.7 -369.7 0.0
Minority Interest 9.2 8.1 1.1
Non-current liabilities 3,204.5 3,321.5 -117.0
Provisions for pensions and similar obligations 2,338.2 2,440.5 -102.3
Deferred tax liabilities 41.9 41.9 0
Income tax liabilities 98.2 97.6 0.6
Other provisions 299.9 303.5 -3.6
Financial liabilities 422.0 433.8 -11.8
Other liabilities 4.3 4.1 0.2
Current liabilities 2,099.6 2,006.5 93.1
Other provisions 225.8 232.3 -6.5
Financial liabilities 245.7 237.8 7.9
Trade payables 1,103.0 1,169.0 -66.0
90.9 0.0 90.9
SZAG Investor Relations
Liability contracts
Income tax liabilities 32.4 28.2 4.2
Other liabilities 401.9 339.2 62.7
Balance sheet total 8,407.7 8,317.8 89.9
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66Financials
Cash flow statement
(€ million) Q1 2018 Q1 2017 Δ
Cash and cash equivalents at the start of the period 679.4 818.1 -138.7
Cash flow from operating activities 100.6 -29.6 130.2
Cash flow from investment activities -147.0 -95.4 -51.6
Cash flow from financial activities -7.0 -7.7 0.7
Changes in cash -53.4 -132.8 79.4
Cash and cash equivalents at the end of the period 624.0 686.7 -62.7
SZAG Investor Relations
Operating cash flow characterized by lower working capital increase
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67Financials
Bonds
Convertible Bond
Volume: € 167,900,000
Coupon: 0.0 % p.a.
Issue date: June 5, 2015
Maturity date: June 5, 2022
Denomination: € 100,000
Conversion ratio: 2,116.5141 Shares per Bond1
Conversion price: € 47.24751
Underlying shares: 3,553,6271
Conversion right period: July 25, 2015 to May 26, 2022
Early redemption at the option of the Issuer: On or after June 5, 2018, and upon giving not less than 30 nor more than 40 calendar days notice,
only possible if the volume adjusted average XETRA-quotation on at least 20 of the 30 consecutive trading days directly prior to the notification
date exceeds 130% of the then applicable conversion price
SZAG Investor Relations
1 Most recently adjusted per 2017/06/07
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68Financials
Strip Steel Business Unit
Q1 2018 Q1 2017 Δ
External sales € million 609.4 548.9 60.5
Order bookings kt 1,240.3 1,195.1 45.2
Order backlog1 kt 944.6 903.0 41.6
EBITDA € million 117.9 107.2 10.7
EBT € million 62.5 53.7 8.8
Core workforce1 6,148 6,133 50
SZAG Investor Relations
Gratifying increase of pre-tax profit boosted by higher selling prices for strip steel products
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1 per reporting date 69Financials
Plate / Section Steel Business Unit
Q1 2018 Q1 2017 Δ
External sales € million 286.6 265.5 21.1
Order bookings kt 629.2 586.1 43.1
Order backlog1 kt 380.8 373.3 7.5
EBITDA € million 20.6 22.7 -2.1
EBT € million 9.3 9.4 -0.1
Core workforce1 2,467 2,585 -118
SZAG Investor Relations
Pre-tax result at year-earlier level due to the good performance of Peiner Träger GmbH
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1 per reporting date 70Financials
Mannesmann Business Unit
Q1 2018 Q1 2017 Δ
External sales € million 271.0 289.3 -18.3
Order bookings kt 382.8 411.9 -29.1
Order backlog1 kt 539.7 457.7 82.0
EBITDA € million 19.0 14.9 4.1
EBT € million 1.6 -3.0 4.6
Core workforce1 4,651 4,711 -60
SZAG Investor Relations
Improved result, now positive again
english
1)per reporting date 71Financials
Trading Business Unit
Q1 2018 Q1 2017 Δ
External sales € million 759.8 861.8 -102.0
Shipments kt 1,122.7 1,258.8 -136.1
EBITDA € million 17.9 24.4 -6.5
EBT € million 13.8 21.6 -7.8
Core workforce1 1,991 1,935 56
SZAG Investor Relations
Improved margin situation of the stockholding steel trade business and the UES-Group largely offsets shortfall in volumes;
gratifying pre-tax profit
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1 per reporting date 72Financials
Technology Business Unit
Q1 2018 Q1 2017 Δ
External sales € million 327.7 335.1 -7.6
Order bookings kt 305.9 290.0 15.9
Order backlog1 kt 686.1 627.6 58.5
EBITDA € million 15.9 18.4 -2.5
EBT € million 11.2 13.1 -1.9
Core workforce1 5,425 5,337 88
SZAG Investor Relations
Pre-tax-profit dropped due to the weaker result of KHS, smaller special machinery producers with earnings increase
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1 per reporting date 73Financials
Industrial Participations / Consolidation
Q1 2018 Q1 2017 Δ
External sales € million 52.9 53.4 -0.5
EBITDA € million 1.8 -2.8 4.6
EBT € million -2.4 -17.8 15.4
Core workforce1 2,616 2,586 30
SZAG Investor Relations
Earnings before taxes enhanced, previous year impacted by valuation effect from the bond exchangeable into Aurubis shares
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1 per reporting date 74BACKUP
1 Financials
2 Pensions
3 Investor Relations
SZAG Investor Relations
englishPensions
Mechanics of internal pension commitment funding
Internal funding over lifetime of employee
... ...
Joins 5 years Retirement
company
Pension provision (non-cash) Contribution by SZAG (non-cash) Pension payment (cash)
SZAG Investor Relations
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
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76Pensions
Funding of pension commitments
(2017/12/31) € bn (2017/12/31)
5
Projected Benefit Obligation (PBO): Balance sheet: pension provisions
€ 2,515 m1 € 2,441 m
4
According to IAS 19: Assets held by external funds:
− Discount rate of 1.75%2 € 74.3 m
3
– in line with market average Non-current assets: € 3,556 m
− Trend in salaries: 2.75% p.a. 2 Net position due to banks:
− Trend in pensions: € 381 m
1
1.75% p.a.
− Staff turnover: 1% p.a. 0
− Valuation based on the actuarial
provisions
assets + cash
PBO
Non-current
Pension
principles
1 thereof € 74.3 million covered by assets held by external funds 1 adjusted in Q1/2018, previously 1.50%
SZAG Investor Relations
Pension obligations completely covered by internal funds!
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77BACKUP
1 Financials
2 Pensions
3 Investor Relations
SZAG Investor Relations
englishInvestor Relations
Dividend proposal
€ Financial year 2017 € million
Dividend per share: 0.45 €
0.50 400
0.40 0.45 300
238
0.30 200
0.30
0.20 0.25
0.20 0.20 53 100
0.10 -15 4
0
0.00
1 1
2013 2014 2015 2016 2017 -100
-0.10
-200
-0.20
-0.30 -300
-0.40 -400
-0.50 -500
-483
1 restated
SZAG Investor Relations
Dividend increased by 50% compared to the previous year
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79Investor Relations
Shareholder structure and share turnover
Shareholder structure Daily turnover in thousand shares
600
Other shareholders Salzgitter AG
10.0%
19.6%
Inst. shareholders
– other Regions 400
0.7%
State of
Inst. shareholders
5.8% 26.5% Lower Saxony
– other Europe
2.8%
Inst. shareholders 200
– UK + Ireland 17.2% Inst. Shareholders
– Germany
17.6%
Inst. shareholders – North America 0
1Q 12 4Q 12 3Q 13 2Q 14 1Q 15 4Q 15 3Q 16 2Q 17 1Q 18
Free float: 63.5%
Treasury shares: as of July 8, 2010; other information is based on the external
shareholder identification as of January 2018
SZAG Investor Relations
Balanced shareholder structure High liquidity
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80Disclaimer
Legal Note
To 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.
Copyrights
This 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
SZAG Investor Relations
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
english
the respective user, and may not be used within the framework of other depictions, in particular websites, without our express prior written consent.
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