Salzgitter : Quarterly Statement 3 Months 2022

Quarterly Statement 3 Months 2022
TABLE OF CONTENTS
Table of Contents	1
The Salzgitter Group in Figures	2
Profitability of the Group and its Business Units	3
Steel Production Business Unit	4
Steel Processing Business Unit	7
Trading Business Unit	9
Technology Business Unit	10
Industrial Participations / Consolidation	11
Profitability, Financial Position and Net Assets	12
Employees	13
Forecast, Opportunities and Risk Report	14
Interim Report	17
Notes	22

01

02

THE SALZGITTER GROUP IN FIGURES

Q1 2021	+/-
Crude steel production	kt	1,712.6	1,644.5	68.1
External sales	€m	3,349.9	2,094.1	1,255.8
Steel Production Business Unit	€m	1,204.4	743.2	461.2
Steel Processing Business Unit	€m	466.7	334.2	132.5
Trading Business Unit	€m	1,302.7	673.3	629.4
Technology Business Unit	€m	333.7	300.9	32.8
Industrial Participations / Consolidation	€m	42.3	42.5	- 0.1
EBIT before depreciation and amortization (EBITDA)	€m	548.1	202.8	345.3
Earnings before interest and taxes (EBIT)	€m	478.8	128.6	350.3
Earnings before taxes (EBT)	€m	465.3	117.3	348.0
Steel Production Business Unit	€m	290.3	43.2	247.1
Steel Processing Business Unit	€m	4.4	- 28.4	32.8
Trading Business Unit	€m	98.1	44.7	53.4
Technology Business Unit	€m	13.1	25.0	- 11.9
Industrial Participations / Consolidation1	€m	59.4	32.8	26.6
Consolidated result	€m	368.8	76.6	292.3
Earnings per share - basic	€	6.80	1.38	5.41
Return on capital employed (ROCE)2	%	35.2	13.2	22.0
Cash flow from operating activities	€m	- 15.2	108.8	- 124.0
Investments3	€m	67.2	79.1	- 11.9
Depreciation / amortization3 4	€m	- 69.3	- 74.2	5.0
Total assets	€m	10,764.8	8,599.5	2,165.3
Non-current assets	€m	4,187.9	4,205.8	- 18.0
Current assets	€m	6,576.9	4,393.7	2,183.2
of which inventories	€m	3,093.1	1,892.5	1,200.6
of which cash and cash equivalents	€m	668.2	578.4	89.8
Equity	€m	4,011.1	2,834.6	1,176.5
Liabilities	€m	6,753.7	5,764.9	988.8
Non-current liabilities	€m	2,972.1	3,342.1	- 370.1
Current liabilities	€m	3,781.6	1,892.5	1,889.1
of which due to banks5	€m	857.0	578.4	278.6
Net financial position on the reporting date6	€m	- 619.7	- 447.1	- 172.6
Employees
Personnel expenses	€m	- 447.2	- 424.3	- 22.9
Core workforce on the reporting date7	Empl.	22,492	22,475	17
Total workforce on the reporting date8	Empl.	24,272	24,136	136
Disclosure of financial data in compliance with IFRS
1 Retroactive adaptation of the previous year figure due to new Group structure
2 Annualized
3 Excluding financial assets
4 Scheduled and unscheduled write downs
5 Current and non-current bank liabilities
6 Including investments, e.g. securities and structured investments
7 Excl. trainee contracts and excl. non-active age-related part-time work
8 Incl. trainee contracts and incl. non-active age-related part-time work

Q1 2022

03

PROFITABILITY OF THE GROUP AND ITS

BUSINESS UNITS

EARNINGS SITUATION WITHIN THE GROUP

Q1 2022	Q1 2021
Crude steel production kt	1,712.6	1,644.5
External sales € m	3,349.9	2,094.1
EBIT before depreciation and amortization (EBITDA) € m	548.1	202.8
Earnings before interest and taxes (EBIT) €m	478.8	128.6
Earnings before taxes (EBT) € m	465.3	117.3
Consolidated result € m	368.8	76.6
Return on capital employed (ROCE)1 %	35.2	13.2
Investments €m	67.2	79.1
Depreciation / amortization €m	- 69.3	- 74.2
Cash flow from operating activities €m	- 15.2	108.8
Net financial position2 € m	- 619.7	- 447.1
Equity ratio %	37.3	33.0

• 1 Annualized

• 2 Including investments, e.g. securities and structured investments

  In the first quarter of 2022, the Salzgitter Group generated a pre-tax profit of € 465.3 million (Q1 2021: € 117.3 million), the highest quarterly operating result in the history of the company. The prices of rolled steel products at a record level sent profit up by leaps and bounds for the Steel Production and Trading business units that were the key drivers behind the gratifying earnings trend in the period under review. The Steel Processing and Technology business units also contributed positive results. Furthermore, the result includes a contribution of € 61.9 million from the participating investment in Aurubis AG accounted for using the equity method (Q1 2021: € 42.5 million). The Salzgitter Group's external sales saw price-induced growth of 60% to € 3,349.9 million (Q1 2021: € 2,094.1 million). An after-tax result that stood at € 368.8 million (Q1 2021: € 76.6 million) brings earnings per share to € 6.80 (Q1 2021: € 1.38) and return on capital employed to 35.2% (ROCE; Q1 2021: 13.2%). The equity ratio was raised to 37.3%, thereby underscoring the Salzgitter Group's continued sound balance sheet.

  SPECIAL ITEMS

EBT	RestructuringImpairment / Reversal of impairment	Other	EBT without special items
In € million	Q1 2022	Q1 2021	Q1 2022	Q1 2021 Q1 2022	Q1 2021	Q1 2022	Q1 2021	Q1 2022	Q1 2021
Steel Production	290.3	43.2	-	- -	-	-	-	290.3	43.2
Steel Processing	4.4	- 28.4	-	- -	-	-	-	4.4	- 28.4
Trading	98.1	44.7	-	- -	-	-	-	98.1	44.7
Technology	13.1	25.0	-	- -	-	-	-	13.1	25.0
Industrial Participations / Consolidation	59.4	32.8	-	- -	-	-	-	59.4	32.8
Group	465.3	117.3	-	- -	-	-	-	465.3	117.3

04

STEEL PRODUCTION BUSINESS UNIT

Q1 2022	Q1 2021
Order intake1	kt	1,586.7	1,471.7
Order backlog on reporting date1	kt	1,377.7	1,250.5
Crude steel production	kt	1,390.2	1,302.3
Salzgitter Flachstahl	kt	1,104.0	1,032.1
Peiner Träger	kt	286.1	270.2
Rolled steel production	kt	1,224.8	1,238.5
Salzgitter Flachstahl	kt	956.8	960.5
Peiner Träger	kt	268.0	278.0
Shipments1	kt	1,505.2	1,530.0
Segment sales2	€m	1,603.7	994.3
External sales	€m	1,204.4	743.2
EBIT before depreciation and amortization (EBITDA)	€ m	330.8	83.5
Earnings before interest and taxes (EBIT)	€m	294.4	47.0
Earnings before taxes (EBT)	€m	290.3	43.2
1 Excluding the DMU Group
2 Including sales with other business units in the Group

Along with the two steel producing companies of Salzgitter Flachstahl GmbH and Peiner Träger GmbH, the Steel Production Business Unit also comprises DEUMU Deutsche Erz- und Metall-Union GmbH (DMU) as an important internal transformation partner for our SALCOS® - SAlzgitter Low CO2 Steelmaking program. With the aim of massively reducing CO2 emissions in steel production, we are incrementally switching the production of steel to a hydrogen-based route under SALCOS®. In contrast to the former process involving blast furnaces, hydrogen and green electricity will replace the carbon formerly required for producing steel (https://salcos.salzgitter-ag.com/en/). Salzgitter AG plans to have completed the technical transformation of the steelworks to accommodate the new procedure by the year 2033. This technology enables the carbon footprint of steel production to be reduced by 95 %. Furthermore, the business unit includes the companies of Salzgitter Mannesmann Stahlservice GmbH (SMS), Salzgitter Bauelemente GmbH (SZBE) and Salzgitter Europlatinen GmbH (SZEP).

MARKET DEVELOPMENT

It is not yet possible to predict the ultimate impact of the war in Ukraine on economic recovery after the pandemic. The drastic surge in energy prices has driven inflation to its highest level for over 40 years.Moreover, part of the eastern European market can no longer be tapped for German exports. As a result, the order intake of Germany's industry dropped surprisingly sharply by 2 % in February. On the steel market, the war in Ukraine has led to a shortfall in the global supply of steel and consequently to increased demand for domestic wide strip and heavy plate. The market for tubes and pipes also gained visible momentum due to projects materializing at short notice from the energy sector. Both effects serve to largely compensate stagnating demand from the automotive sector and ensured stable prices and plant capacity utilization. The sections business was also determined by the energy price trend. In anticipation of price hikes, the stockholding steel trade moved to substantially replenish its below-average inventory levels at the start of the year. Although reticence in buying on the part of end consumers partly caused demand in February to decline, by March it had already returned to normal levels, however, in connection with significant hikes in the cost of scrap and energy.