28.02.2017
Salzgitter AG DE0006202005
DGAP-News: Salzgitter AG: Key data for the financial year 2016
DGAP-News: Salzgitter AG / Key word(s): Final Results
Salzgitter AG: Key data for the financial year 2016
28.02.2017 / 07:30
The issuer is solely responsible for the content of this announcement.
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SALZGITTER AG - key data for the financial year 2016
Salzgitter Group continues on its successful course with a further increase
in the result
- Profit before taxes well above prior year
- Rigorous implementation of internal programs of measures:
- Completion of "Salzgitter AG 2015" exceeds original target by
one third
- "Salzgitter AG 2021" growth strategy defines cornerstones for
the company's further development
- Guidance for the financial year 2017: pre-tax profit of between EUR
100 million and EUR 150 million
Despite the disastrous conditions on the European steel market caused by
imports at the start of the year, the Salzgitter Group closed the financial
year 2016 with a significant year-on-year increase in earnings before
taxes. The company has therefore affirmed its uptrend. The significant
impact of internal programs of measures as well as the positive effect of
the European Union's urgently required trade defense measures as from
February 2016 onward were major factors contributing to this development.
In the second half of the year, the Strip Steel and Trading business units
in particular benefited from steel prices firming up.
The Salzgitter Group's external sales (EUR 7,905.7 million; 2015: EUR
8,618.4 million) declined above all due to the downtrend in the average
selling prices of steel products. Pre-tax profit increased to EUR 53.2
million (2015: EUR 4.1 million) and includes EUR 19.1 million in
contribution from the Aurubis investment (2015: EUR 21.8 million) as well
as a net figure of EUR -2.3 million in burdens on earnings from special
items. Earnings after tax stood at EUR 56.8 million (2015: EUR - 56.0
million), exceeding the pre-tax result mainly due to the anticipated
greater use of tax loss carryforwards. Earnings per share therefore came in
at EUR 1.00 (2015: EUR - 1.08) and return on capital employed at 2.7 %
(ROCE, 2015: 1.9 %). With a net financial position of EUR 302 million and
an equity ratio of 34 %, the company continues to have a sound balance
sheet and a comfortable financial basis.
Chief Executive Officer Prof. Dr.-Ing. Heinz Jörg Fuhrmann commented as
follows: "The positive pre-tax result of the financial year 2016 ultimately
also reflects our own endeavors in the context of rigorously implemented
programs of measures. We have given the Group robust prospects for the
future that will be completed through the recently approved "Salzgitter AG
2021" strategy. After the unavoidable focus on restructuring and cost
cutting initiatives in recent years, we now place special emphasis on
innovation and growth. Although the prospects are more favorable at present
than they have been since 2012, we will not be relying on tailwind from the
market environment, but will follow our clearly defined course of internal
business optimization. I am therefore confident that we will see an
increase in the Group's results in 2017 for the fourth time in a row."
Development of the business units
The Strip Steel Business Unit's external sales (EUR 1,814.6 million; 2015:
EUR 1,922.5 million) reported a slight price-induced decline. At EUR - 2.3
million, the business unit lifted its pre-tax result compared with the year
2015 (EUR - 26.0 million) that was burdened by EUR -41.9 million from the
relining of a blast furnace at Salzgitter Flachstahl GmbH. Thanks to the
European Union's first anti-dumping measures, spot prices began to rise
from the spring onward, which was gradually reflected in an improved
selling price quality. The losses accumulated in the first half of 2016 due
to the unsatisfactory margins caused by the import situation were therefore
largely compensated.
At EUR 741.8 million, the external sales of the Plate / Section Steel
Business Unit dropped below the year-earlier level as a result of weak
selling prices and shipments (EUR 908.8 million). Although the segment
improved its result significantly it nonetheless delivered another pre-tax
loss ( EUR - 32.1 million; 2015: EUR - 74.1 million). This figure includes
order-related provisions and EUR 6.3 million in expenses for measures aimed
at structural improvements in the plate companies. Peiner Träger GmbH
achieved a pre-tax profit for the third year in a row, delivering proof of
the company's sound operations and entailing a write-up of EUR 25.0 million
due to its sustainability. Owing above all to the ruinous price and
earnings situation in the first half of 2016, as well as to the processing
of low-margin orders from 2015, the plate producers reported another
notably negative result.
Even though the shipment volumes of the Mannesmann Business Unit exceeded
the previous year's figure, external sales (EUR 999.4 million; 2015: EUR
1,062.6 million) declined due to selling price and structural effects.
Despite the increase in the result of Salzgitter Mannesmann Großrohr GmbH
and the higher positive contribution to earnings of the EUROPIPE Group that
is included at equity, the business unit reported a pre-tax loss of EUR -
22.4 million
(2015: EUR 2.2 million). This figure includes EUR 6.0 million in expenses
for structural measures, mainly at Salzgitter Mannesmann Line Pipe GmbH
(MLP), to respond to the challenge of fierce price-led competition through
a restructuring program to adjust capacity and reduce costs further. In
addition, impairment of EUR -15.0 million was carried out on MLP's assets.
Owing to markedly lower prices and the downturn in shipment volumes,
external sales (EUR 2,855.0 million; 2015: EUR 3,210.7 million) of the
Trading Business Unit declined significantly. Although the earnings
position of the stock holding steel trade remained weak in the first three
months, the following months up until and including autumn brought a
temporary widening of margins that was based on the steel price trend.
Combined with the result of international trading, this led to a very
presentable pre-tax profit of EUR 45.2 million (2015: EUR 32.2 million).
The external sales (EUR 1,300.3 million; 2015: EUR 1,309.4 million) of the
Technology Business Unit settled around the year-earlier level thanks to
the growth achieved by the KHS Group and DESMA Schuhmaschinen GmbH (KDS).
The segment generated another increase in earnings before taxes of EUR 28.4
million (2015: EUR 24.6 million). The result of the KHS Group rose by a
third, which was also based on the success of the measures introduced under
the improvement programs. Similarly, KDS also notably outperformed the
year-earlier result, as opposed to the pre-tax profit of the KDE Group that
was lower year on year.
Industrial Participations / Consolidation reported somewhat lower external
sales (EUR 194.6 million; 2015: EUR 204.5 million). Earnings before taxes
stood at EUR 36.3 million, which is therefore lower than in the year-
earlier period (2015: EUR 45.2 million). This figure includes the
contribution of the Aurubis investment amounting to EUR 19.1 million (2015:
EUR 21.8 million). Interest income resulting from Group cash management as
well as positive reporting-date-related valuation effects from foreign
exchange and derivatives positions lifted the result. The pre-tax result of
the Group companies not directly assigned to a business unit fell short of
the figure achieved in 2015.
The annual financial statements for the financial year 2016 will be
submitted to the Supervisory Board for ratification at its next meeting and
a full version published on March 24, 2017.
Outlook
Compared with the previous year, the business units anticipate that
business in the financial year 2017 will develop as follows:
Thanks mainly to selling prices rising in the EU steel market in response
to the anti-dumping measures initiated in Europe, the Strip Steel Business
Unit anticipates a more positive development of business. Assuming that
robust demand holds steady, a notable increase in sales can be expected.
Supported by ongoing cost reduction measures, a significant increase in the
pre-tax result due to its return to the profit zone is envisaged despite
the partly sharp rise in raw materials prices, particularly for iron ore
and coking coal.
The Plate / Section Steel Business Unit will continue to be exposed to a
difficult market environment in the current financial year. Satisfactory
capacity utilization is nevertheless expected for the two heavy plate
producers. Hence, the production of input materials for the Nord Stream II
contract will contribute to a notable basic capacity utilization at the
Mülheim mill. Moreover, the two companies will benefit from the extensive
cost cutting and efficiency enhancement measures initiated in 2016. Passing
on the full scope of hikes in raw material costs in a timely manner is,
however, particularly challenging. Capacity utilization in the section
steel business is expected to run at a satisfactory level. However, the
volatile scrap price is likely to prompt speculative buying patterns on the
part of customers. Drastic increases in grid usage fees for procuring
electricity will pose an additional burden. All in all, the business unit
anticipates a substantial volume- and selling price-induced increase in
sales as well as a significant improvement in the result before taxes in
the direction of breakeven.
The companies belonging to the Mannesmann Business Unit will again reflect
very heterogeneous developments in 2017: While the German large-diameter
pipe mills report good capacity utilization, also due to bookings in the
previous year, the order situation in the North American market has
deteriorated. The segments of medium-diameter line pipe, precision and
stainless steel tubes are likely to stage a hesitant recovery at minimum.
Rising shipment volumes supported by a higher selling price level should
result in moderate sales growth in the segment. In conjunction with the
profit improvement programs, both initiated and planned, a notably
increased pre-tax result around breakeven is predicted.
In 2017, the Trading Business Unit anticipates marked sales growth on the
back of the recovery in the international project business, as well as an
increase in the sale of prefabricated products. Support should also emanate
from expanding the customer base in the context of stepping up the
digitalization of sales. As it cannot be assumed that the temporary
widening of margins attributable to the steel price trend in 2016 will
repeat in the financial year 2017, a very satisfactory pre-tax profit,
albeit at a discernably lower level than in the previous year, is
anticipated.
Based on a high order backlog, the Technology Business Unit anticipates
that sales will remain stable. In view of the fierce price-led competition
for the project business, the KHS Group will rely on growth in the
profitable product segments as well as on expanding its service business.
Moreover, above all the efficiency enhancing measures introduced under the
new "Fit4Future 3.0" program are likely to develop their positive impact.
In conjunction with the promising outlook for the other specialist
mechanical engineering companies, a tangible increase in pre-tax profit is
expected.
Against the backdrop of additional positive effects from measures and
growth programs, we anticipate the following for the Salzgitter Group in
2017:
- an increase in sales to around EUR 9 billion,
- a pre-tax profit of between EUR 100 million and EUR 150 million, as
well as
- a return on capital employed (ROCE) that marginally exceeds the
previous year's figure.
The forward-looking statements on the individual business units assume the
absence of renewed recessionary developments. Instead, we anticipate an
ongoing economic recovery in our fiercely contested main markets in the
current financial year. As in recent years, please note that opportunities
and risks from currently unforeseeable trends in selling prices, input
material prices and capacity level developments, as well as exchange rate
fluctuations, 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 of steel products sold by the Strip Steel,
Plate / Section Steel, Mannesmann and Trading business units, an average
EUR 25 change in the margin per ton is sufficient to cause a variation in
the annual result of more than EUR 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.
2016 20151)
External sales EUR m 7,905.7 8,618.4
Strip Steel Business Unit EUR m 1,814.6 1,922.5
Plate / Section Steel Business EUR m 741.8 908.8
Unit
Mannesmann Business Unit EUR m 999.4 1,062.6
Trading Business Unit EUR m 2,855.0 3,210.7
Technology Business Unit EUR m 1,300.3 1,309.4
Industrial Participations / EUR m 194.6 204.5
Consolidation
Earnings before taxes (EBT) EUR m 53.2 4.1
Strip Steel Business Unit EUR m - 2.3 - 26.0
Plate / Section Steel Business EUR m - 32.1 - 74.1
Unit
Mannesmann Business Unit EUR m - 22.4 2.2
Trading Business Unit EUR m 45.2 32.2
Technology Business Unit EUR m 28.4 24.6
Industrial Participations / EUR m 36.3 45.2
Consolidation
Net income/loss for the financial EUR m 56.8 - 56.0
year
Earnings per share - basic EUR 1.00 - 1.08
Return on capital employed % 2.7 1.9
(ROCE)2)
Disclosure of financial data in compliance with IFRS
1) Restatement because of a correction of the stock value
2) ROCE = EBIT (= EBT + interest expenses excl. interest portion in
transfers to pension provisions) divided by the sum of shareholders' equity
(excl. calculation of deferred tax), tax provisions, interest-bearing
liabilities (excl. pension provision) and liabilities from finance leasing,
forfaiting
Contact:
Markus Heidler
Head of Investor Relations
Salzgitter AG
Eisenhüttenstraße 99
38239 Salzgitter
Phone +49 5341 21-6105
Fax +49 5341 21-2570
E-Mail [email protected]
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28.02.2017 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Salzgitter AG
Eisenhüttenstraße 99
38239 Salzgitter
Germany
Phone: +49 5341 21-01
Fax: +49 5341 21-2727
E-mail: [email protected]
Internet: www.salzgitter-ag.de
ISIN: DE0006202005
WKN: 620200
Listed: Regulated Market in Frankfurt (Prime Standard), Hanover;
Regulated Unofficial Market in Berlin, Dusseldorf,
Hamburg, Munich, Stuttgart, Tradegate Exchange
End of News DGAP News Service
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