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
Salzgitter Group
Global Presence
Strip Steel
Plate / Section Steel
Mannesmann
Trading
Technology
SZAG Investor Relations
Crude steel production 2018: 7.0 million tons; trading volume: 4.5 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 2018
Salzgitter AG Group
External Sales cons.: € 9.3 billion Employees: 23,523
EBT: € 347 million
Plate /
Strip Steel Mannesmann Trading Technology
Section Steel
External Sales: External Sales: External Sales: External Sales: External Sales:
€ 2.3 billion € 1.0 billion € 1.1 billion € 3.3 billion € 1.3 billion
EBT: EBT: EBT: EBT: EBT:
€ 205.8 million € 24,8 million € -5,4 million € 50,5 million € 43,1 million
Employees: Employees: Employees: Employees: Employees:
6,182 2,451 4,675 2,109 5,490
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% >25%
BU = Business Unit
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As of December 2018
6
Salzgitter Group
External sales 2018 by customer industries
13% 15%
Other Vehicle construction
12% 12%
Food and beverage industry Construction industry
6% 4%
Mechanical engineering White goods,
electrical equipment
6% 3%
Re-rollers Energy sector and utilities
5% 24%
Tubes producers Traders, Steel-Service-Centers
SZAG Investor Relations
Broad customer base
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Only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE Group 7
Salzgitter Group
External sales 2018 by regions
5%
Other
7%
Asia
13%
Americas 48%
Germany
3%
Other Europe
24%
Other EU
SZAG Investor Relations
Share of ex-Germany sales by consignee 52%
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Sales by consignee (only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE-Group) 8
Salzgitter Group
Key data per 2018/12/31
FY 2018 FY 2017 Δ 2018 – 2017
Crude steel production kt 7,039.4 6,955.2 84.2
Consolidated Sales € million 9,278.2 8,990.2 288.0
Earnings before tax € million 347.3 238.0 109.3
Earnings after tax € million 277.7 193.6 84.1
Earnings per share (undiluted) € 5.06 3.52 1.54
ROCE % 10.3 8.6 1.7
Core workforce (12/31) 23,523 23,139 384
SZAG Investor Relations
Salzgitter Group delivers the best result for the last ten years
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9
Salzgitter Group
Balance sheet per 2018/12/31
€ million
8,757 8,757
Goodwill: Equity ratio:
Property, plant and €6m 38.0% Equity
equipment and other 3,332
non-current assets 3,836
Assets to equity: 87%
Pension
provisions
Inventories 2,275
2,327
€ 679 m € 269 m Other non-current
Cash and liabilities
761
securities Net position due to banks:
569
€ 192 m
Other current € 200 m € 418 m
2,389 Current liabilities
assets 2,025
Aktiva Passiva
SZAG Investor Relations
Sound financial basis
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10Salzgitter Group
Salzgitter Group Investments and Depreciation / Amortization
52 15 49 44
411
330 340 352 342 342 338 340
270 287
2014 2015 2016 2017 2018
Investments1 Scheduled depreciation Unscheduled depreciation
SZAG Investor Relations
Focus on expansion investments
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1 Property, plant and equipment and intangible assets, excluding financial assets 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
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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
Economic development in the European Union
Industrial production in selected countries of the EU (Jan. 2007 = 100)
120
110
100
90
80
70
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Germany GB France Italy Spain
SZAG Investor Relations
Following the slight uptrend since 2013, the EU industrial production recently stagnated;
Germany remains relatively strong despite deterioration since the second half of 2018
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Source: Eurostat, own research, last figure from October 2019 14Market Situation
Raw materials prices
Iron ore Coking coal
(62% Fe CFR China, US$/dmt) (FOB Australia, US$/t)
140 300
130
120 250
110
100
200
90
80
150
70
60
50 100
SZAG Investor Relations
Iron ore: dramatic price surge in the first half of 2019; after rapid decrease recently high volatility
Coking coal: global demand can be satisfied completely at the moment – with a corresponding effect on pricing
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15Market Situation
Steel prices
Spot prices Northern Europe Hot-rolled coil prices international
(€/t) 900 (€/t)900
800 800
700 700
600 600
500 500
400 400
300 300
Jan. 18 Jul. 18 Jan. 19 Jul. 19 Jan. 20 Jan. 18 Jul. 18 Jan. 19 Jul. 19 Jan. 20
HRC EXW Ruhr Plate EXW Ruhr Medium sections Northern Europe EXW Ruhr USA EXW Indiana China Schanghai
SZAG Investor Relations
Following periods of rises, steel prices consolidated since mid 2018 –
has the trough been reached at the end of 2019?
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16Market Situation
EU import quotas for steel products
Safeguard quotas are already based
on record levels of imports
Developing countries are exempt from
the measures even though their import
volumes were included in the quota
calculation
Quota increases in February and July
of 2019 as well as July 2020 do not
reflect the actual market growth
Imports of developing countries
increase the record level even further
SZAG Investor Relations
As part of the first review, the EU Commission only adopted a marginal adjustment of the quota increases in July
2019 and 2020 from +5 to +3% despite decreasing demand for steel – a second review started in February 2020
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171 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 2018
Integrated steel works with three blast 1% 4%
furnaces Mechanical engineering Other
Approx. 4.7 mt/year crude steel capacity 16% 35%
Modern production plants Re-rollers Vehicle construction
1%
High processing competence (SSC)
Tube producers
Core competences and products 4%
High-quality steel grades for sophisticated 32% 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 2018
blanks, corrugated sheets, coffers,
sandwich and acoustic elements
Consolidated Sales €m 2,341
Customer focus through local presence
Earnings before taxes €m 206
Core workforce (12/31) 6,182
SZAG Investor Relations
Established supplier of the demanding German automotive industry
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19Strip 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
4% market share in the EU28
2018 2017
Shipments kt 4,341 4,154
SZAG Investor Relations
Sales €m 2,887 2,652
Employees 12/31 5,666 5,587
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20Strip Steel Business Unit
Processing
Salzgitter Europlatinen GmbH
Germany; shareholder: SZAG 100%
Custom-made solutions: Laser welded
Tailored Blanks for lighter car bodies
2018 2017
Sales €m 71 77
Employees 12/31 122 117
Salzgitter Bauelemente GmbH
Germany; shareholder: SZAG 100%
Corrugated sheets, coffers, sandwich a. acoustic elements for wall and
roof constructions of commercial buildings
2018 2017
SZAG Investor Relations
Sales €m 52 46
Employees 12/31 71 67
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21Strip 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
2018 2017
Shipments kt 584 598
SZAG Investor Relations
Sales €m 415 402
Employees 12/31 323 321
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221 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 2018
Section steel: 1%
17%
− Top-modern mini mill with two electric Vehicle construction
arc furnaces Other 8%
− Annual crude steel capacity 1 mt 3% Construction industry
Mechanical engineering 5%
− Two rolling mills for medium and heavy
sections White goods,
electrical equipment
Plate:
25%
41%
− 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 2018
High-strength, wear resistant and
specialized steel grades Consolidated sales €m 1,026
Medium and heavy sections, heavy plate
incl. offshore and tube grades Earnings before taxes €m 24.8
Core workforce (12/31) 2,451
SZAG Investor Relations
Plate: Broad range of high quality plate products
Section Steel: Efficient production
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24Plate / 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
7% market share in the EU28
State of the art facilities, one of the most modern water
quenching plants
2018 2017
Shipments kt 697 682
SZAG Investor Relations
Sales €m 534 501
Employees 12/31 741 739
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25Plate / 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
2018 2017
Shipments kt 526 584
SZAG Investor Relations
Sales €m 378 394
Employees 12/31 539 607
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26Plate / 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
2018 2017
Shipments kt 1,022 997
SZAG Investor Relations
Sales €m 619 523
Employees 12/31 785 783
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27Plate / 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
2018 2017
Sales €m 678 627
Employees 12/31 378 378
SZAG Investor Relations
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281 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 2018
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 1%
seamless tubes business Construction industry
Core competences and products 10%
15%
Line Pipe: participation (50%) in the world Mechanical engineering
Energy sector
market leader EUROPIPE; international 5% and utilities
presence Tube producers 4%
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 2018
Longitudinal and spiral welded large-
diameter pipes, medium line pipes, Consolidated Sales €m 1,119
seamless and welded precision tubes,
stainless tubes Earnings before taxes €m -5,4
Core workforce (12/31) 4,675
SZAG Investor Relations
Global player in the high quality segment of the global tubes market
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30Mannesmann 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
2018 2017
Shipments kt 895 1.099
SZAG Investor Relations
Sales €m 953 1.042
Employees 12/31 1.048 1.031
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31Mannesmann Business Unit
Line Pipes
Mannesmann Line Pipe GmbH
Germany; shareholder: SZAG 100%
HFI-welded medium line pipes incl.
plastic- and cement coatings
2018 2017
Sales €m 285 261
Employees 12/31 364 385
Mannesmann Großrohr GmbH
Germany; shareholder: SZAG 100%
Spiral-welded large-diameter pipes made of hot-rolled coil
2018 2017
SZAG Investor Relations
Sales €m 67 78
Employees 12/31 125 124
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32Mannesmann 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 Structural
Pump case
Airbags
sector tube Stabilizers
State of the art push bench plant for the production of hollows Suspension
components
Market leader in the EU28 (24% market share) Engine-
components
10 locations in D, F, NL and Mexico Seat belt- IHU/IHV
fixings
Camshafts
Drivetrain and steering components Drive shafts
2018 2017
Shipments kt 276 282
SZAG Investor Relations
Sales €m 497 477
Employees 12/31 2,287 2,313
english
33Mannesmann 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
6% market share in the world
5 locations in D, F, I, USA
2018 2017
Shipments kt 23 25
SZAG Investor Relations
Sales €m 245 237
Employees 12/31 1.000 935
english
34Mannesmann 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 > 4 million tons
2018 2017
SZAG Investor Relations
Sales €m 2,468 2,515
Employees 12/31 2,980 2,907
english
351 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 2018
74 sites in 30 countries 7% 14%
Mechanical engineering Other
Own distribution network for steel products
with warehousing sites in Europe 5% 5%
Re-rollers Vehicle construction
Processing group specialized on heavy 2%
29%
plate products Tube producers
Construction industry
International trading 32% 3%
Core competences and products Traders White goods,
electrical equipment
Global presence in all relevant regions with 2%
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 2018
Procurement channel for Salzgitter Group
works Consolidated Sales €m 3,268
Value add services for customers
Earnings before taxes €m 51
Core workforce (12/31) 2,109
SZAG Investor Relations
High customer and market orientation through a global sales organization
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37Trading Business Unit
Salzgitter Mannesmann Handel Group
Salzgitter Mannesmann Handel
Shipments 2018: 4.3 mt Sales 2018: € 3.3 billion
Trading Stockholding Agencies
International
Salzgitter Mannesmann Stahlhandel Europa Europa
10 Companies
GmbH, Düsseldorf (SMSD) 7 Companies 4 Agencies
2 Rep. offices
20 Branches with warehouses and
Salzgitter Mannesmann International
further processing (incl. 4 flame
GmbH, Düsseldorf (SMID)
cutting plants), 4 Sales offices
Salzgitter Mannesmann International Stahl-Center Baunatal GmbH,
(USA) Inc., Houston (SMIH) Baunatal (SCB)
Salzgitter Mannesmann International
(Canada) Inc., Vancouver (SMIV)
SZAG Investor Relations
63 locations in 30 countries with 1,739 employees
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38Trading Business Unit
Universal Eisen und Stahl Group
Universal
Shipments 2018: 0.2 mt Sales 2018: € 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
11 locations in 6 countries with 370 employees
english
391 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 2018
17 Production plants worldwide 3% 1%
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 9%
filling and packaging machines; technology 87%
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 2018
the production of shoes and shoe soles
Turn-key lines, single machines and Consolidated Sales €m 1,338
service
Earnings before taxes €m 43.1
Core workforce (12/31) 5,490
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
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41Technology 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
2018 2017
SZAG Investor Relations
Sales €m 1,161 1,138
Employees 12/31 4,714 4,648
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42Technology Business Unit
Special machinery
Klöckner DESMA Elastomertechnik Group
World market leader for rubber and silicone injection molding
machinery
2018 2017
Sales €m 116 100
Employees 12/31 552 530
DESMA Schuhmaschinen GmbH
World’s largest producer of machines for the fabrication of
shoes and shoe soles
2018 2017
SZAG Investor Relations
Sales €m 62 47
Employees 12/31 224 208
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431 Salzgitter Group
2 Market Situation
3 Industrial Participations
4 Strategy
SZAG Investor Relations
5 Guidance
englishIndustrial Participations
Overview
Comprises activities that are not directly Derivation of pre-tax result 2018
allocated to a business unit
in € million
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 Key data FY 2018
Shareholdings: Consolidated sales €m 186
− Aurubis
Earnings before taxes €m 28
− Hansaport
Core workforce (12/31) 2,616
SZAG Investor Relations
Gratifying contribution from the service companies and the Aurubis investment
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45Industrial 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%
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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)
1.80
1.60 1.55
1.45
1.40 1.35 1.35
1.25
1.20
1.20 1.10 SZAG shareholding: 29.99%
1.00 1.00
1.00 (per May 23, 2019)
0.80
Net dividend received since
0.65 2009: € 106.5 million
0.60 (per FY17/18)
0.40
0.20
0.00
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
2016/2017
2017/2018
SZAG Investor Relations
Since 2008 successful shareholding in the leading European copper producer
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491 Salzgitter Group
2 Market Situation
3 Business Units
4 Strategy
SZAG Investor Relations
5 Guidance
englishStrategy
Review
Structural measures 2012-2018
“Salzgitter AG 2015” Other programs
(since end of 2016 combined
under FitStructure SZAG)
2012 – 2016
€ 260 million p.a. € 350 million p.a.
> € 600 million € p.a. earnings improvement potential realized
SZAG Investor Relations
Initial emphasis on restructuring and cost reduction measures
english
51Strategy
“Salzgitter AG 2021” growth strategy
Goals Stipulations Status implementation
Steel-related Less steel-related Rolled steel production and parts Development of the portfolio towards
of the tubes production can only high- and highest-strength grades: to
grow qualitatively, not this large-scale investments ILG and
quantitatively. SZFG
Quantitative growth is possible DESMA Achim “Factory of the Future”,
exclusively in activities apart Expansion precision tubes group in
from steel – especially in the Mexico
Technology Business Unit.
Start 2016 60% 40%
External growth on a larger scale Acquisition SOTEP,
2019 Q3 56% 44% is not mandatorily necessary for
the development of the business
Joint Venture Baolong Salzgitter
Hydroforming,
units – can, however, be Increase of the Aurubis AG
SZAG Investor Relations
desirable. shareholding
Target 50% 50%
english
52Strategy
Update investment projects
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
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
SZAG Investor Relations
Sustainable strategy:
Realization of major investment projects also in less comfortable phases!
english
53Strategy
Update programs of measures
FitStructure 2.0 (incl. remaining effects of FitStructure 1.0) SZAG 2021 Growth Programs
€ million earnings improvement potential € million additional profit contribution
300 180
160
250 ~20
140
~60 ~50
200 120
100
150
~80 80
~60
100 60
~50 40
50
20 ~45
~50
0 0
2019 2020 2021 2022 2023 2020 2021 2022 ff.
SZAG Investor Relations
All in all around € 400 million in additional effects from optimization programs planned
englishStrategy
We are developing the future: research project GrInHy2.0
Green Industrial Hydrogen via steam electrolysis (GrInHy2.0)
January 2019 February 2019 Currently
Start GrInHy2.0 with Sunfire, Successful conclusion of the GrInHy Construction of GrInHy2.0 system and
Paul Wurth and Tenova project with 10,000 hours of operation continuation of the GrInHy plant operation
This project has received
funding from the Fuel Cells
and Hydrogen 2 Joint
Undertaking (JU) under
grant agreement No
826350. The JU receives
support from the European
Union’s Horizon 2020
research and innovation
programme and Germany,
Luxembourg, Italy, France.
SZAG Investor Relations
GrInHy2.0 – efficient hydrogen production for a CO2-reduced steel production:
Salzgitter-Group is an important research partner for the highly efficient steam electrolysis technology
english
55Strategy
– SAlzgitter Low CO2 Steelmaking
Use of hydrogen (H2) instead of carbon (C) for iron ore reduction.
Use of already established
Standard DRP
(direct reduction with natural
gas) and novel (hydrogen
production and use)
technologies
Integration into existing and
optimized integrated iron-and-
steel works
Gradual reduction of CO2
Direct reduced iron emissions: between 25% and
as energy storage
95% CO2 savings!
Sustainable "Carbon Direct
Avoidance" approach: Reducing
instead of recycling!
SZAG Investor Relations
The future of CO2-reduced and sustainable steel production – in Salzgitter!
english
Source: Fraunhofer-Gesellschaft/SZAG 56Strategy
CO2 I
– Salzgitter Low CO2 Steelmaking
April 3, 2019 Currently
Memorandum of Understanding with Tenova on the mutual Discussions with relevant stakeholders about
cooperation for the realization of SALCOS ® the creation of suitable framework conditions
SZAG Investor Relations
We affirm our offer to politics and society to realize a low CO2 steel production in the near future
english
57Strategy
CO2 II
Price forecast CO2 allowances
50
Third trading period Fourth trading period
45
40
35
30
€/t CO2
25
20 Insider information from June 14, 2019
15 “[…] The market value of all CO2 allowances acquired
as a precautionary measure exceeds the figure
10
accounted for in the balance sheet as of today’s date
5 by around € 300 million.”
0
2017 2018 2019 2020 2021 2022 2023 2024 2025
Price CO2 allowances Estimates price CO2 allowances
SZAG Investor Relations
Medium-term shortfall in CO2 allowances has been compensated for the most part at the
subsidiaries of the Salzgitter Group by allowances purchased as a precautionary measure
english
Source: ICIS, own calculations 581 Salzgitter Group
2 Market Situation
3 Business Units
4 Strategy
SZAG Investor Relations
5 Guidance
englishGuidance
Business Units – Forecast 2019
Strip Steel Plate / Section Steel Mannesmann Trading Technology
Oversupply of the European Plate: continuing weakness Large-diameter pipe mills: Prospects in international KHS Group: selective order
steel market of the market unsatisfactory capacity utili- trading will remain under intake, expanding service
Higher raw material costs, Impact from the low zation in Germany – but pressure due to restrictive business and additional
especially for iron ore utilization of the large- better in the US trading policies everywhere positive effects from the
Medium line pipes: norma- and dampened market measures introduced to
diameter pipes segment
lization of demand conditions enhance efficiency
Section Steel: satisfactory
Precision tubes: weaker Expected margin decrease in Specialist mechanical
margins
development stockholding steel trade due engineering companies of
Stainless tubes: moderate to decreasing selling prices the DESMA Group:
improvement in the market decreasing earnings
ecreased
Business Unit
Decreasing sales Sales below previous year Sales slightly decreasing Lower sales Moderate increase in sales
Tangible reduction in the pre- Notable pre-tax loss Positive pre-tax result Marginally positive earnings Decline pre-tax profit
tax profit due to margins before taxes that will be
significantly lower than the
year-earlier figure
SZAG Investor Relations
english
60Guidance
Salzgitter Group – Guidance FY 2019
As part of preparing the consolidated financial statements for the financial year 2019, Salzgitter AG will include non-recurring,
non-cash writedowns amounting to almost € 200 million. We adjust our earnings forecast correspondingly and now anticipate:
a pre-tax loss of between € 250 million and € 280 million,
lower external sales of under € 9.0 billion compared with the previous year,
a return on capital employed (ROCE) that is tangibly below the year-earlier 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 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
SZAG Investor Relations
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.
englishGuidance
Salzgitter Group – Guidance FY 2020
The many economic and political uncertainties, including escalations of the kind seen
recently in the Middle East, are likely to accompany us in the new year as well.
Starting from a currently low level at present, we are seeing stabilizing tendencies on
the European steel market at present that should be reflected in rising results over the
course of the year.
Against this backdrop, we anticipate a pre-tax result approaching breakeven in the
current financial year 2020.
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
SZAG Investor Relations
result of the utilization of the information or data contained in this document.
englishBACKUP
1 Financials
2 Pensions
3 Investor Relations
SZAG Investor Relations
englishFinancials
Key data per 2019/09/30
9M 2019 9M 2018 Δ Q3 2019 Q2 2019 Q1 2019
Crude steel production kt 5,060.1 5,203.6 -143.5 1,648.0 1,672.3 1,739.8
External sales1 € million 6,637.3 6,931.2 -293.9 2,111.1 2,232.4 2,293.8
Earnings before tax € million 40.7 284.6 -243.9 -104.6 19.4 125.9
Earnings after tax € million -29.8 194.0 -223.8 -126.2 -0.3 96.7
Earnings per share (undiluted) € -0.63 3.51 -4.14 -2.36 -0.03 1.76
ROCE % 2.5 11.6 -9.1 -10.0 2.8 14.1
Core workforce2 23,562 23,338 224 23,562 23,639 23,683
1 only from entities within the Group of Consolidated Companies of Salzgitter Group 2 per reporting date
SZAG Investor Relations
The Salzgitter Group records pre-tax profit in a persistently challenging market environment
despite a net amount of € 92.2 million in burdens on earnings
english
64Financials
Income statement
Income Statement (€ million) 9M 2019 9M 2018 Δ
Sales 6,637.3 6,931.2 -293.9
Increase/decrease in finished goods and work in
2.3 24.7 -22.4
process/other own work capitalized
6,639.7 6,955.9 -316.3
Other operating income 196.4 196.7 -0.3
Cost of materials 4,329.6 4,503.6 -174.1
Personnel expenses 1,335.7 1,292.0 43.8
Amortization and depreciation of intangible assets and
262.2 252.9 9.3
property. plant and equipment
Other operating expenses 897.8 811.1 86.6
Income from shareholdings 1.8 4.8 -3.0
Result from investments accounted for using the equity
73.9 35.7 38.2
method
Finance income 13.9 9.4 4.4
Finance expenses 59.5 58.3 1.2
Earnings before taxes (EBT) 40.7 284.6 -243.9
SZAG Investor Relations
Income tax 70.5 90.6 -20.1
Consolidated result -29.8 194.0 -223.8
english
65Financials
Consolidated balance sheet
Assets (€ million) 30.09.2019 31.12.2018 Δ
Non-current assets 4,159.7 3,835.9 323,8
Intangible assets, property, plant and equipment 2,499.5 2,339.9 159.6
Investment property 82.4 83.5 -1.1
Financial assets 69.6 75.6 -6.0
Investments accounted for using the equity method 1,030.4 888.3 142.1
Trade receivables 19.9 25.5 -5.5
Other receivables and other assets 16.7 24.0 -7.3
Income tax assets 5.4 0.1 5.2
Deferred income tax assets 435.8 399.1 36.8
Current assets 4,929.6 4,921.0 8.6
Inventories 2,347.8 2,327.5 20.4
Trade receivables 1,402.3 1,367.2 35.1
Contract assets 207.6 175.2 32.5
Other receivables and other assets 442.1 403.7 38.4
Income tax assets 22.2 24.5 -2.2
Securities 50.3 67.4 -17.1
SZAG Investor Relations
Cash and cash equivalents 455.3 555.6 -100.3
Assets available for sale 1.9 0.0 1.9
english
Balance sheet total 9,089.3 8,756.9 332.4 66Financials
Consolidated balance sheet
Equity and liabilities (€ million) 30.09.2019 31.12.2018 Δ
Equity 2,981.5 3,332.1 -350.6
Subscribed capital 161.6 161.6 0.0
Capital reserve 257.0 257.0 0.0
Retained earnings 2,885.3 3,181.0 -295.7
Other reserves 33.8 60.0 -26.2
Unappropriated retained earnings 3.3 33.1 -29.8
Treasury shares -369.7 -369.7 0.0
Minority Interest 10.2 9.1 1.1
Non-current liabilities 3,823.4 3,035.7 787.8
Provisions for pensions and similar obligations 2.598.1 2.275.5 322.6
Deferred tax liabilities 67.6 67.6 0.0
Income tax liabilities 36.1 36.9 -0.9
Other provisions 308.5 358.4 -50.0
Financial liabilities 801.0 291.1 509.9
Other liabilities 12.2 6.1 6.1
Current liabilities 2,284.5 2,389.2 -104.7
Other provisions 413.9 281.4 132.5
Financial liabilities 320.1 426.9 -106.8
Trade payables 1,022.6 1,130.2 -107.7
SZAG Investor Relations
Liability contracts 200.8 250.2 -49.4
Income tax liabilities 6.9 37.0 -30.1
Other liabilities 320.3 263.4 56.9
english
Balance sheet total 9,089.3 8,756.9 332.5
67Financials
Cash flow statement
(€ million) 9M 2019 9M 2018 Δ
Cash and cash equivalents at the start of the period 555.6 679.4 -123.9
Cash flow from operating activities 77.7 280.4 -202.7
Cash flow from investment activities -378.1 -409.0 31.0
Cash flow from financial activities 193.3 -43.0 236.3
Changes in cash -100.3 -167.9 67.6
Cash and cash equivalents at the end of the period 455.3 511.6 -56.3
SZAG Investor Relations
Positive operating cash flow despite the increase of working capital
english
68Financials
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: 2,150.2463 Shares per Bond1
Conversion price: € 46.50631
Underlying shares: 3,610,2631
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 2019/05/28
english
69Financials
Strip Steel Business Unit
9M 2019 9M 2018 Δ Q3 2019 Q2 2019 Q1 2019
External sales € million 1,730.1 1,812.1 -82.0 554.6 576.7 598.8
Order bookings kt 3,347.2 3,487.0 -139.8 1,064.8 1,143.6 1,138.8
Order backlog1 kt 910.2 928.6 -18.5 910.2 932.4 911.5
EBITDA € million 243.2 334.6 -91.4 75.0 68.1 100.1
EBT € million 84.6 171.2 -86.5 24.3 14.0 46.3
Core workforce1 6,138 6,174 -36 6,138 6,192 6,207
SZAG Investor Relations
Pre-tax result includes the release of a provision for typical operating risks amounting to € 41.3 million,
counteracting factors were higher prices for iron ore and lower selling prices
english
1 per reporting date 70Financials
Plate / Section Steel Business Unit
9M 2019 9M 2018 Δ Q3 2019 Q2 2019 Q1 2019
External sales € million 630.6 773.9 -143.3 188.3 212.6 229.6
Order bookings kt 1,429.2 1,688.9 -259.7 394.0 510.8 524.5
Order backlog1 kt 243.8 395.6 -151.7 243.8 314.6 337.8
EBITDA € million 22.7 49.4 -26.8 -2.1 10.7 14.0
EBT € million -13.0 14.5 -27.4 -13.5 -1.2 1.7
Core workforce1 2,414 2,460 -46 2,414 2,425 2,444
SZAG Investor Relations
Declining earnings due to decreasing volumes and margins, especially for heavy plate,
sections record pre-tax profit, result includes release of a provision amounting to € 7.5 million at ILG
english
1 per reporting date 71Financials
Mannesmann Business Unit
9M 2019 9M 2018 Δ Q3 2019 Q2 2019 Q1 2019
External sales € million 842.1 841.6 0.5 259.8 292.0 290.3
Order bookings kt 1,065.9 1,118.2 -52.3 379.9 343.9 342.1
Order backlog1 kt 481.4 553.6 -72.2 481.4 461.1 477.3
EBITDA € million 50.7 74.0 -23.2 6.6 18.5 25.6
EBT € million -2.9 20.7 -23.5 -11.9 0.7 8.4
Core workforce1 4,670 4,602 68 4,670 4,696 4,700
SZAG Investor Relations
Breakeven achieved even though all product areas except the stainless steel tubes business record weaker results
english
1)per reporting date 72Financials
Trading Business Unit
9M 2019 9M 2018 Δ Q3 2019 Q2 2019 Q1 2019
External sales € million 2,294.5 2,405.7 -111.1 716.3 780.4 797.9
Shipments kt 3,027.7 3,381.5 -353.9 936.9 1,047.4 1,043.4
EBITDA € million 25.1 48.9 -23.8 6.7 8.7 9.8
EBT € million 3.3 35.2 -31.9 -0.9 1.2 3.0
Core workforce1 2,106 2,003 103 2,106 2,121 2,126
SZAG Investor Relations
Decrease of shipments due to lower volumes in international trading, declining margins in the stockholding
business, nonetheless slightly positive pre-tax result
english
1 per reporting date 73Financials
Technology Business Unit
9M 2019 9M 2018 Δ Q3 2019 Q2 2019 Q1 2019
External sales € million 1,000.9 956.9 44.1 344.0 323.1 333.8
Order bookings kt 1,010.0 946.2 63.8 328.1 352.0 330.0
Order backlog1 kt 716.4 697.2 19.3 716.4 724.0 704.5
EBITDA € million 41.1 46.3 -5.3 12.6 10.6 17.8
EBT € million 22.5 30.5 -8.0 6.4 4.3 11.8
Core workforce1 5,576 5,493 83 5,576 5,556 5,559
SZAG Investor Relations
Significant increase in the results of KHS-Group
compensates in part the diminishing development of the DESMA companies
english
1 per reporting date 74Financials
Industrial Participations / Consolidation
9M 2019 9M 2018 Δ Q3 2019 Q2 2019 Q1 2019
External sales € million 139.1 141.2 -2.0 48.2 47.7 43.3
EBITDA € million -30.9 31.3 -62.1 -100.6 8.7 61.0
EBT € million -53.9 12.6 -66.5 -109.0 0.4 54.7
Core workforce1 2,658 2,616 42 2,658 2,649 2,647
SZAG Investor Relations
Pre-tax result impacted by an increase of risk provisioning, counteracting effects from contributions of Aurubis AG,
included at equity, as well as services companies
english
1 per reporting date 75BACKUP
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
english
77Pensions
Funding of pension commitments
(2018/12/31) € bn (2018/12/31)
5
Projected Benefit Obligation (PBO): Balance sheet: pension provisions
€ 2,351 m1 € 2,275 m
4
According to IAS 19: Assets held by external funds:
− Discount rate of 0.75%2 € 75.2 m
3
– in line with market average Non-current assets: € 3,836 m
− Trend in salaries: 2.75% p.a. 2 Net position due to banks:
− Trend in pensions: € 192 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
SZAG Investor Relations
Pension obligations completely covered by internal funds!
english
1 thereof € 75.2 million covered by assets held by external funds 2 per 2019/06/30, previously: 1.00% per 2019/06/30, 1.25% per 2019/03/31, before that 1.75% 78BACKUP
1 Financials
2 Pensions
3 Investor Relations
SZAG Investor Relations
englishInvestor Relations
Dividend
€ Financial year 2018 € million
0.80 Dividend per share: 0.55 € 400
347
0.60 300
238 0.55
0.40 200
0.45
0.30
0.20 0.25 100
0.20 53
4
0.00 0
2014 20151 2016 2017 2018
-15
-0.20 -100
SZAG Investor Relations
Dividend increased by another 20%
english
1 restated 80Investor Relations
Shareholder structure and share turnover
Shareholder structure Daily turnover in thousand shares
600
Salzgitter AG
Other shareholders 10.0%
23.9%
Inst. shareholders 400
– other Regions State of
0.9% 26.5% Lower Saxony
Inst. share-
holders – 4.8%
other Europe 2.8%
200
Inst. shareholders Inst. Shareholders
– UK + Ireland 8.5% – Germany
22.7%
Inst. shareholders – North America 0
1Q 13 4Q 13 3Q 14 2Q 15 1Q 16 4Q 16 3Q 17 2Q 18 1Q 19 4Q 19
Free float: 63.5%
Treasury shares: as of July 8, 2010; other information is based on the external
shareholder identification as of January 2020
SZAG Investor Relations
Balanced shareholder structure High liquidity
english
81Disclaimer
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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