DGAP-News: Salzgitter AG / Key word(s): Quarterly / Interim Statement Salzgitter AG: Salzgitter Group delivers a pre-tax result at breakeven thanks to sound business model 13.05.2016 / 07:30 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- The Salzgitter Group again delivered proof of its sound business model and the sustainable success of its restructuring projects in an extremely challenging European steel market environment. The company closed the first quarter of the financial year 2016 with a pre-tax result at breakeven that exceeded capital market expectations. Presentable performance by the Energy and Technology business units, Peiner Träger GmbH's gratifying profit trend, and the earnings contribution of the Aurubis investment offset the mid-range double-digit million euro loss of the strip steel and plate companies that were themselves unable to counteract the negative impact of dumping prices - above all for Chinese steel imports - and their competition-distorting effect. Mainly owing to lower average selling prices for most steel products, the Salzgitter Group's external sales declined to EUR 1,868.8 million (first quarter of 2015: EUR 2,287.9 million). As a consequence of conditions in the European steel market due to massive imports, pre-tax profit dropped to EUR 3.1 million (first quarter of 2015: EUR 51.8 million). This amount includes a contribution of EUR 11.6 million from the Aurubis investment (first quarter of 2015: EUR 3.1 million). Earnings after taxes stood at EUR 1.0 million, bringing earnings per share to EUR -0.00 (first quarter of 2015: EUR 0.58) and return on capital employed to 1.3 % (ROCE: first quarter of 2015: 7.5 %). With an equity ratio of 33.3 %, Salzgitter AG enjoys a sound balance sheet, also after a reduction to only 1.75 % in the actuarial rate applicable to pension provisions. The net financial position declined to EUR 216 million on the back of brisk business activities, as well as a precautionary tax payment, but nevertheless still remains comfortably sufficient. Chief Executive Officer Prof. Dr.-Ing. Heinz Jörg Fuhrmann commented as follows: "The result of the first quarter of 2016 shows that Salzgitter AG can successfully hold its own, also in an extremely adverse environment, thanks to its diversified product portfolio, its sound balance sheet and financial structure, but above all, due to its self-help measures, successfully implemented since 2012. The most recent bookings of large- diameter pipes projects allow us to look to the future with confidence, particularly in the Energy Business Unit. It is currently not possible to predict how sustainable the recovery in the steel market that set in a few weeks back will be. For this reason alone, we will be unceasing in our rigorous implementation of the remaining tasks we need to implement in order to optimize our competitiveness. We are well equipped for this with our robust positioning." External sales by business unit (EUR million):

                                                         Q1 2016  (Q1 2015)
Strip Steel                                                470.2    (524.8)
Plate / Section Steel                                      184.8    (253.2)
Energy                                                     243.6    (293.9)
Trading                                                    606.3    (851.9)
Technology                                                 316.1    (315.1)
Industrial Participations / Consolidation                   47.7     (49.0)
Group                                                    1,868.8  (2,287.9)

Earnings before taxes (EBT) by business unit (EUR million):

                                            Q1 2016              (Q1 2015)
Strip Steel                                   -20.0                 (16.6)
Plate / Section Steel                           0.5                 (-0.7)
Energy                                          5.6                 (-4.7)
Trading                                        -2.2                 (11.8)
Technology                                      6.9                 (10.1)
Industrial Participations /                    12.3                 (18.7)
Consolidation
Group                                           3.1                 (51.8)

Outlook Guidance on the development of the macroeconomic situation is already fundamentally subject to a great deal of uncertainty, particularly in the current political and financial environment. The forward-looking statements below on the individual business units assume the absence of renewed recessionary developments. Instead, we anticipate a relatively moderate economic recovery for our persistently contested main markets in the current financial year. Against this backdrop, the business segments anticipate that business will develop as follows in the financial year 2016: The activities of the companies of the Strip Steel Business Unit are subject to extremely challenging framework conditions in the current financial year. The sharp increase in the volumes of cheap imports from China since the second half of 2015 has exerted considerable pressure on prices. Spot market prices for rolled steel products in the European market were recently observed to be picking up, albeit starting from a very low level. At the same time, the procurement prices for iron ore, other raw materials and energy sources have increased notably. Salzgitter Flachstahl GmbH, the business unit's largest company, expects selling prices to stabilize over the course of the second half of 2016, depending on when further anti-dumping measures by the European Union (EU) enter into force. EU anti-dumping measures for cold-rolled strip have meanwhile already been decided, while a ruling on the respective measures against hot-rolled strip and plate imports at dumping prices is expected in the second half of the year. Assuming that demand remains satisfactory, we anticipate a slight price-induced overall decline in revenues. Despite further cost savings, we expect a marginally lower pre-tax result in comparison with 2015. The Plate / Section Steel Business Unit is also exposed to a difficult market environment in the current financial year. Due to the flood of imports, the plate mills in particular are confronted with partly ruinous price declines that are currently stabilizing at a low level. At the same time, the awarding of the North Stream 2 project has ensured better capacity utilization. Nonetheless, given the significant deficit of the Group's two plate producers, intensive measures to reduce costs and enhance efficiency are unavoidable. With the scrap price trend returning to a normal level, Peiner Träger GmbH nevertheless anticipates another positive pre-tax result. Along with non-recurrent losses from HSP Hoesch Spundwand GmbH, whose operations were discontinued at year-end 2015, this is, however, unlikely to be sufficient to fully compensate for the plate mills' negative results. We nonetheless anticipate a significant reduction in the business unit's pre-tax loss. Owing above all to selling prices, coupled with the discontinuation of the sheet piling business, a notable downturn in sales is expected. The markets for the companies of the Energy Business Unit remain fiercely contested. The booking of several contracts in the first few months of the year, especially the major Nord Stream 2 project, has secured good capacity utilization for EUROPIPE's German large-diameter pipe mill through to mid-2018. The US American large-diameter pipe companies where capacity has been booked through to the fourth quarter of 2016 and partial volumes have been acquired in subsequent years also present a pleasing picture. Capacities in the spiral-welded pipe mill in Salzgitter have also already been taken until the start of 2017. By contrast, bookings in the segment of medium-diameter line pipes remain unsatisfactory due to low energy prices, which is why endeavors on implementing capacity adjustment and cost reduction measures have been stepped up. The precision tubes companies expect stable demand from automotive manufacturers, as opposed to the markets of the energy and industry product segments that are likely to display a weaker trend. The stainless steel tubes business anticipates a market recovery in the second half of the year at the earliest following the initially weak order intake during the first months of 2016. The Energy Business Unit's sales are likely to settle around the level posted in 2015; earnings before taxes are expected to exceed the prior-year level on the back of an improved order and capacity utilization situation in the large- diameter pipes segment. Over the course of the full-year 2016, the Trading Business Unit anticipates a stabilization of the price level and demand conditions. With an upturn in the project business, particularly in the tubes segment, an increase in shipments in international trading can be assumed in the coming months. Moreover, the stock holding steel trade anticipates a moderate increase in volumes, mainly due to the expansion of further processing capacities and from the innovative digitalization of business processes. Special items that boosted the result in 2015 will not repeat in 2016, which is likely to be reflected in a considerably lower pre-tax result. Adjusted for these effects, the segment anticipates a gratifying upturn in sales overall and an appreciable increase in the operating result. Profit improvements here are focused above all on optimization measures in the stockholding business of Salzgitter Mannesmann Stahlhandel GmbH and a strategic realignment of Universal Eisen und Stahl GmbH. The Technology Business Unit expects a stable sales and profit trend supported by a high order backlog. Given ongoing competition in the global project business, growth in profitable product segments is to be generated, supported by a further expansion of the service business. Accordingly, the KHS Group expects a result around the year-earlier level at minimum. Further efficiency enhancements from the "Fit4 Future 2.0" program will release their positive effects. The outlook for Klöckner Desma Schuhmaschinen GmbH and the KDE Group is similarly promising. Against the backdrop of the current conditions, particularly in the rolled steel and pipe market, and taking account of further positive effects from the "Salzgitter AG 2015" program, flanked by additional measures for the individual companies, we affirm our guidance and continue to assume the following for the Salzgitter Group in the year 2016: - sales virtually stable at around EUR 8.6 billion, - an operating pre-tax result around breakeven - depending on when anti- dumping measures take effect and net of non-recurrent expenses for specific measures aimed at structural improvements within the Group - as well as - a marginally positive return on capital employed (ROCE). Additional information can be found in the full press release and the financial report published today (www.salzgitter-ag.com/en). 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. 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] --------------------------------------------------------------------------- 13.05.2016 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. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- 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; Terminbörse EUREX End of News DGAP News Service --------------------------------------------------------------------------- 463301 13.05.2016