Baader Investment Conference

Transcription

1 Baader Investment Conference Bernhard Kleinermann, Director Corporate Communication and IR Munich, September 23, 20

2 1 Market Situation 2 Financial Accounts First Half of 20 3 Salzgitter AG 20 / Prospects 4 Guidance

3 Market Situation Economic growth in the European Union 110 Industrial production in selected EU countries (Jan = 100) 105 % Germany UK France Italy Spain 60 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 90 % 88 % 78 % 73 % German industrial production consistently at pre-crisis level since 2011 Southern Europe with little impetus at a low level Source: Eurostat, own representation, last data point May 20 3

4 Market Situation Steel market supply EU vs. Germany mt EU (ex. GE) Avg = 144 mt/year GE Avg = 38.5 mt/year * 20* 2016* Market supply EU ex. Germany Market supply Germany Source: WV Stahl, as of: June 20 * Forecast First signs of recovery, but it may still take time... 4

5 Market Situation Raw materials Iron Ore (Platts IODEX 62% Fe CFR China, US$/dmt) Coking Coal (Monthly prices CRU, FOB Australia, US$/t) Raw material prices has the trough been reached? 5

6 ( /t) Market Situation Spot Prices Northern Europe / Jan 13 Jul 13 Jan 14 Jul 14 Jan Jul Hot-rolled coil EXW Ruhr Hot dip galvanized coil EXW Heavy plate EXW Ruhr Medium sections delivered North European steel prices recently with a slight downward trend Source: Platt s Steel Business Briefing, hot dip galvanized coil per July 20 6

7 Key Data / Market Situation Anti-dumping proceedings cold-rolled sheet vs. Russia / China Imports of cold-rolled sheet from China and Russia (in 1,000 t / month) Opening of anti-dumping proceedings against imports of cold-rolled sheet from China and Russia in mid-may 20. Opening of further proceedings under constant review! EU steel producers fight unfair imports! 7

8 Key Data / Market Situation May 20: Suspension of South Stream lifted South Stream (63 billion m³ p. a.) 4 line strands of 930 km offshore thereof 1,860 km tendered (Lines 1 & 2) New route Turk Stream (63 billion m³ p. a.) planned: 4 line strands of 910 km offshore = 3,640 km Europipe is currently processing the remaining 110 kt of Line 1 8

9 Key Data / Market Situation Nord Stream Nord Stream 1/2 (55 billion m³ p. a.) 2 line strands of 1,200 km offshore Built between 2007 and 2012 Nord Stream 3/4 (55 billion m³ p. a.) planned: 2 line strands of 1,200 km offshore MOU signed, tender expected soon Good news for the European plate and pipe industries 9

10 1 Market Situation 2 Financial Accounts First Half of 20 3 Salzgitter AG 20 / Prospects 4 Guidance

11 Financial Accounts First Half 20 Turnaround confirmed first positive half-year result since 2011 Earnings before taxes substantially up on the result from the previous year Salzgitter AG 20 restructuring program driving force behind the earnings increase All business units with improved results compared to the previous year In total, 33.1 million in expenses for streamlining measures was incurred Very solid financial basis with a 35 % equity ratio, as well as a net credit balance of 178 million Forecast for the financial year 20 confirmed 11

12 Financial Accounts First Half of 20 Key data per 06/30/20 H1 20 H D Q2 20 Q1 20 Crude steel production Kt 3, , , ,780.7 Consolidated sales million 4, , , ,287.9 Earnings before tax million Earnings after tax million Earnings per share (undiluted) ROCE % Core workforce 1) 23,542 23, ,542 23,651 Turnaround achieved thanks to restructuring program! 1) per reporting date 12

13 actuarial interest rate % Financial Accounts First Half 20 Balance Sheet Figures Equity Ratio Pension provisions ( million) 35% 31% 34% 39% 3,000 2,500 2,000 1,500 1, ,893 2,182 2, , , , % 45% 500-1) Variations in equity ratio due to changes in pension provisions netted with equity with no effect on net income resulting from an adaption of the actuarial interest rate Intra-year calculation of the actuarial interest rate through extrapolation on the basis of the Bloomberg Interest Rate Intra-year adaption of actuarial interest rate as a result of the volatile development of interest rates 1) restated 13 13

14 1 Market Situation 2 Financial Accounts First Half of 20 3 Salzgitter AG 20 / Prospects 4 Guidance

15 "Salzgitter AG 20 / Prospects 360 Concept MISSION STATEMENT Motivation & Qualification CORPORATE POLICY Independence at the core Positively received! -- INNOVATIONS Opening up new opportunities Culture of innovation is changing! SZAG 20 Stabilize competitiveness Group organization Process efficiency works! -- largely implemented! DEVELOPMENT OF BUSINESS UNITS Fostering potential in the making! On track turnaround achieved!

16 360 Concept Salzgitter AG 20 Earnings improvement potential Estimated split up of restructuring charges > 90 m Staff reduction in excess of 1,500 Full Time Equivalents (FTE) m 40 m Optimization of technical production processes Other optimization (e.g. procurement, steel logistics and IT) Total: ~ 70 m 2013 ~ 80 % More than 200 million in earnings potential a year; majority of restructuring charges was already booked in

17 "Salzgitter AG 20 / Prospects Salzgitter AG 20 Development Entwicklung of des fulfillment Erfüllungsgrades grade in % in % 102% 84% 90% 76% 56% 40% 6% YE 2012 YE 2013 Jan 14 YE 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YE 2016 More than 80% of targeted personnel reduction realized by 06/30/20 As of , in relation to commitment up to YE

18 "Salzgitter AG 20 / Prospects Structural topics beyond Salzgitter AG 20: HSP Ad-hoc release June 16, 20: Discontinuation of the sheet piling product segment ( ) Since efforts to sell the company to a purchaser with a more cost-effective supply of input material were also unsuccessful, the closure in order to avoid further negative consequences for the Group became unavoidable. Approximately 350 employees are affected by the measure. The Group is committed to finding a socially sustainable solution. In the financial year 20, we anticipate the costs of winding down operations in the middouble-digit million euro range. Demonstration by HSP employees and members of employee representation bodies in front of the headquarters of Salzgitter AG on 20/06/ HSP: EBT in million (excl. non-recurring effects) 18

19 "Salzgitter AG 20 / Prospects Example: Optimization of technical processes Coal drying, grinding and injection plant - Salzgitter Flachstahl Concept: Process: Economy: Substitution of liquid reduction agents and external coke with pulverized coal that is noticeably more price efficient Thermal coal is ground, dried and injected into the Blast Furnaces A and B Coal is very attractive due to the great price differential to oil o Capex: 78 million Status: Hot commissioning on March 23, 20 Trial run commenced on April 2, 20 Production since mid-20 An attractive investment even after the oil price slump first cost reduction effects in Q

20 1 Market Situation 2 Financial Accounts First Half of 20 3 Salzgitter AG 20 / Prospects 4 Guidance

21 Guidance Salzgitter Group Guidance from August 13, 20 Based on planning by the individual business units, and taking account of further positive effects from the "Salzgitter AG 20" program, we continue to assume the following for the Salzgitter Group in the year 20 stable sales, a pre-tax profit in the lower to mid-double-digit million euro range and a return on capital employed that is higher than the previous year's figure. As in recent years, we make reference to the fact that opportunities and risks from currently unforeseeable trends in selling prices, input material prices and capacity level developments, as well as changes in the currency parity, may considerably affect performance in the course of the financial year 20. The resulting fluctuation in the consolidated pre-tax result may, as current events show, be within a considerable range, either to the positive or to the negative. The dimensions of this range become clear if one considers that, with around 12 million tons p.a. of steel products sold by the Strip Steel, Plate / Section Steel, Energy and Trading business units, an average 25 change in the margin per ton is sufficient to cause a variation in the annual result of more than 300 million. Moreover, the accuracy of the company's planning is restricted by the volatile cost of raw materials and shorter contractual durations, on the procurement as well as on the sales side. 21

22 Baader Investment Conference Bernhard Kleinermann, Director Corporate Communication and IR Munich, September 23, 20