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Salzgitter : first half of 2017

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08/10/2017 | 07:40am CEST

Salzgitter Group: strong first half in 2017

  • Earnings before taxes of € 100 million mark best result since 2011
  • Major contributions from Strip Steel and Trading business units and effects from programs of measures
  • Guidance for the financial year 2017:
    • increase in sales to around € 9 billion
    • pre-tax profit of between € 150 million and € 200 Million

In an economic environment characterized by great political uncertainty and ongoing volatility in the raw materials markets, the Salzgitter Group delivered the best half-year result since 2011. The excellent performance of the Strip Steel and Trading business units, along with the continued successful implementation of the Group's internal programs, made major contributions to this result. Profit has once more increased significantly compared with the year-earlier figure despite considerable burdens from the negative valuation effects of the Aurubis bond exchangeable into shares and currency hedging.
While the strip steel segment in particular saw business firming up, not least thanks to the European Union's trade defense measures, the market environment and competitive framework conditions in other product segments did not develop as well. The continuation - and in some parts the expansion - of the Group's internal optimization programs are therefore all the more important as a factor decisive for the sustained uptrend in earnings performance. 'The measurable success of our strategy is ultimately reflected by the second increase in our profit forecast for the current financial year. Our pride in what we have achieved is both an incentive and a motivation to tackle the tasks that lie ahead with the same energy,' says CEO Prof. Dr.-Ing. Heinz Jörg Fuhrmann.
The Salzgitter Group's external sales rose by almost one fifth (€ 4,616.2 million; H1 2016: € 3,967.5 million), above all on the back of the higher average selling prices of many rolled steel products and driven mainly by the Strip Steel, Plate / Section Steel and Trading business units. Earnings before taxes climbed to € 100.2 million (H1 2016: € 16.1 million) and include € -24.7 million in contribution from the Aurubis investment (H1 2016: € +26.1 million) that was impacted by € -78.3 million in valuation effects from the Aurubis bond exchangeable into shares. The after-tax result stood at € 64.7 million (H1 2016: € 9.3 million), which brings basic earnings per share to € 1.14 (H1 2016: € 0.13). The return on capital employed (ROCE) stood at 7.3 % (H1 2016: 2.1 %). The net financial position declined to € 24 million (H1 2016: € 183 million) above all due to the greater level of business activities and the associated price-induced increase in working capital as well as higher non-current assets. However, we expect the net financial position to rise again over the course of the year. Together with an equity ratio of 33%, the Salzgitter Group continues to enjoy a sound balance sheet and a comfortable financial basis.
Owing to the good half-year results, accompanied by the firming up of the Strip Steel and Trading business units' gratifying profit situation, we revised our profit guidance for the full year 2017 upward on July 27, 2017.
We now anticipate:

  • an increase in sales to around € 9 billion,
  • a pre-tax profit of between € 150 million and € 200 million, as well as
  • a return on capital employed that is discernibly higher year on year.

The complete report released on the results of the first half of 2017 can be viewed at: https://www.salzgitter-ag.com/en/investor-relations/news-and-publications.html.
We make reference to the possibility of considerable variability in the consolidated result due to the fact that the Aurubis bond exchangeable into shares will mature in November 2017 - depending on the use of the option to settle the bond obligation through the delivery of shares or cash payment. Similarly, 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 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. 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.
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 division companies, but rather that the underlying bases of plans and outlooks prove to be accurate as expected 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.

Salzgitter AG published this content on 10 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 10 August 2017 05:39:02 UTC.

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Financials (€)
Sales 2018 9 157 M
EBIT 2018 386 M
Net income 2018 226 M
Finance 2018 486 M
Yield 2018 1,37%
P/E ratio 2018 8,98
P/E ratio 2019 9,05
EV / Sales 2018 0,20x
EV / Sales 2019 0,20x
Capitalization 2 288 M
Duration : Period :
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Technical analysis trends SALZGITTER AG
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Income Statement Evolution
Mean consensus HOLD
Number of Analysts 19
Average target price 45,7 €
Spread / Average Target 20%
EPS Revisions
Heinz Jörg Fuhrmann Chairman-Executive Board & Chief Executive Officer
Heinz-Gerhard Wente Chairman-Supervisory Board
Burkhard Becker Chief Financial Officer
Heike Niederau-Buck Chief Information Officer
Ulrich Dickert Member-Supervisory Board
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