Salzgitter AG with mixed first quarter of 2024

• Earnings before interest, taxes, depreciation and amortization (EBITDA) of € 126.4 million
• Steel-related activities feeling the lackluster German economy
• Diversification paying off – Technology Business Unit heading for a record result in 2024

In the first quarter of the financial year 2024 that was impacted by the ailing economy, the Salzgitter Group delivered earnings before interest, taxes, depreciation and amortization of € 126.4 million and a pre-tax profit of € 17.2 million. The result was mainly driven by the Technology Business Unit that delivered an extremely satisfactory quarterly result, as well as by a contribution from Aurubis AG, an investment included at equity (IFRS accounting). Conversely, the steel-related business units were burdened by Europe’s very downbeat economic trend, above all in Germany.

Due to prices declining compared with the year-earlier period, the Salzgitter Group's external sales dropped 10.2 % to € 2.68 billion (Q1 2023: € 2.98 billion). Also primarily attributable to selling prices, EBITDA (€ 126.4 million; Q1 2023: € 290.0 million) and earnings before taxes (€ 17.2 million; Q1 2023: € 183.7 million) also declined. The result includes a contribution of € 23.9 million from Aurubis AG (Q1 2023: € 29.3 million), an investment included at equity (IFRS accounting). The after-tax result came in at € 15.0 million (Q1 2023: € 140.5 million), which brings basic earnings per share to € 0.24 (Q1 2023: € 2.57). The return on capital employed (ROCE) stood at 2.6 % (Q1 2023: 12.6 %). The equity ratio posts a very sound 45.6 % (Q1 2023: 44.4 %).

As Gunnar Groebler, Salzgitter AG’s Chief Executive Officer, comments:

“After the two exceptional years of 2021 and 2022, we were already feeling headwind in the second half of last year. This was also reflected in the figures for the first quarter and will continue to impact the remainder of 2024. Forging ahead with measures to increase profitability and active portfolio management is therefore all the more important, as is continuing our journey toward transformation with determination. I am convinced that this journey will pave the way for a more resilient Salzgitter AG. KHS GmbH’s performance is currently a source of gratification. By far the largest company of our Technology Business Unit, it is heading for a record result this year.”

As Chief Financial Officer Birgit Potrafki states, commenting on the financials:

“Neither a continuation of the slight recovery tendencies discernible at the start of the year, nor the originally anticipated gradual brightening of the market environment have so far materialized. An economic rebound in Germany and in Europe is only likely to manifest at a later point in time and be weaker than predicted a few months ago. In Germany, our key customer markets of construction, automotive and mechanical engineering in particular experienced a partly pronounced phase of weakness throughout the first quarter. This had – and continues to have – a direct impact first and foremost on the performance of our Group’s steel-related companies whose results are not a reason for us to be satisfied. Thanks to our business with filling and packaging machinery and our 30 % participating investment in Aurubis AG, we were nevertheless able to deliver a small pre-tax profit in the first quarter of 2024 that exceeded the results produced in the third and fourth quarter of 2023. Diversification is paying off once again. However, the result serves to highlight the importance of our measures aimed at internal profit improvement and cost discipline. We will be untiring in these endeavors, especially as we are right in the middle of the capital-intensive transformation as part of SALCOS®. The Salzgitter Group’s balance sheet and sound financial position remains very robust despite all the challenges.”

External sales by business unit (EUR million):

EBITDA by business unit (EUR million):

Earnings before taxes (EBT) by business unit (EUR million):

Outlook

As far as the remainder of the year is concerned, there are also indications that the German economy will not be able to keep pace with the upswing ongoing in other industrial nations. The signs of recovery are more hesitant and weaker than originally anticipated; at the same time, uncertainty regarding the economic development in the second half of the year is on the rise. Against this backdrop, we anticipate the following for the Salzgitter Group in the financial year 2024:

• sales around € 10.5 billion,
• an EBITDA of between € 550 million and € 625 million,
• a pre-tax profit of between € 100 million and € 175 million and
• a return on capital employed that is marginally lower year on year (ROCE).

The complete report released on the results of the first quarter of 2024 can be viewed at:

https://www.salzgitter-ag.com/en/investor-relations/news-and-publications.html