Salzgitter : First nine months of 2017

Salzgitter Group achieves best result for a nine-month period since 2008

• Earnings after tax at € 174 million following very satisfactory summer quarter
• Strip Steel and Trading business units and effects from programs of measures main drivers of positive development
• Forecast for the financial year 2017:
  • increase in sales to around € 9 billion
  • pre-tax profit of between € 175 million and € 225 million

The Salzgitter Group is reporting a very satisfactory third quarter in 2017. The sustained healthy order situation in conjunction with imports into the EU that, while remaining at a high level, did not increase further have resulted in notably higher average selling prices for strip steel products. The business development of the European stockholding as well as of the international trading was also very pleasing. Flanked by the success of the internal programs of measures, the usual seasonal effects from declining demand of customers as well as scheduled repair and maintenance standstills in the summer quarter have therefore been more than compensated for.

'The ongoing implementation of the 'Salzgitter AG 2021' strategy remains a key component of the Salzgitter Group's uptrend that was affirmed by the most recent upward revision of its fore-cast. The best nine-month result since 2008 is a source of personal gratification to me as it affirms the validity of the course set in 2012. Deriving motivation from this, we have therefore not only continued with but further sharpened the focus of our groupwide optimization measures during the upswing. Accordingly, we are looking ahead to the new financial year as well with confidence', as CEO Prof. Dr.-Ing. Heinz Jörg Fuhrmann explains.

Consolidated external sales climbed to € 6,813.2 million (9M 2016: € 5,860.5 million). Earnings before taxes increased by more than € 150 million to € 174.5 million (9M 2016: € 21.1 million). The result includes € -8.7 million (9M 2016: € 16.8 million) in contribution from the Aurubis in-vestment that was impacted for the last time by € -80.0 million in valuation effects (9M 2016: € -16.7 million) from the Aurubis bond exchangeable into shares that was redeemed in the fourth quarter of 2017. The after-tax result came in at € 112.6 million (9M 2016: € 14.6 million), which brings basic earnings per share to € 2.01 (9M 2016: € 0.21) and return on capital employed to 7.9 % (ROCE 9M 2016: 2.1 %). With an equity ratio of 33 % and a net financial position of € 132 million (09/30/2016: € 115 million), the Salzgitter Group continues to enjoy a comfortable financial basis and sound balance sheet.

Outlook

We affirm our earnings forecast for the financial year 2017 that we raised on October 24, 2017 and anticipate:

• an increase in sales to around € 9 billion,
• a pre-tax profit of between € 175 million and € 225 million and
• a return on capital employed that is discernibly higher year on year.

This outlook takes account of the income from the derivative liability to be released as well as countervailing effects emanating from the proportionate derecognition of the book value of the Aurubis shares relinquished and the probable impact - with an initially adverse effect on the results - of measures envisaged under the groupwide 'FitStructure SZAG' optimization program.

The complete report released on the results of the nine months of 2017 can be viewed at: https://www.salzgitter-ag.com/en/investor-relations/news-and-publications.html

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 exchange rates, may still significantly affect performance in the course of the financial year 2017. The resulting fluctuation in the consolidated pre-tax result may 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, Mannesmann 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. Moreo-ver, 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.

Disclaimer: Some of the statements made in this report possess the character of forecasts or may be interpreted as such. These are made to the best of the Company's knowledge and judgment, and by their nature are subject to the proviso that no unforeseeable deterioration occurs in the economy or in the specific market situation pertaining to the business units' companies, but rather that the underlying bases of plans and outlooks prove to be accurate as ex-pected with regards to their scope and timing. Notwithstanding prevailing statutory provisions and capital market law in particular, the Company accepts no obligation to continuously update any forward-looking statements that are made solely in connection with circumstances prevailing on the day of their publication.

More Information:

Keydata 9 Months 2017

Interim Report 9 Months 2017