DGAP-News: Salzgitter AG: Financial year 2019 dominated by special items
DGAP-News: Salzgitter AG
/ Key word(s): Annual Results
Salzgitter AG: Financial year 2019 dominated by special items
16.03.2020 / 07:30
The issuer is solely responsible for the content of this announcement.
- Pre-tax result of €-253 million comprises a total of €-396 million in special items
- EBT of € 143 million excluding special items within the original forecast
- Dividend proposal of € 0.20 per share
- Outlook for the financial year 2020 affirmed:
- increase in sales to € 9 billion
- earnings before taxes (EBT) around breakeven
Great political uncertainty, compounded by multiple trade conflicts and economic headwind, presented Salzgitter AG with special challenges in the past financial year. The gradual decline in rolled steel selling prices over the course of the year, accompanied by a temporary sharp increase in the cost of iron ore, a downturn in demand and a sustained high level of steel imports burdened the steel producing and processing companies in particular. In addition,
€-396.0 million in burdens on the result from special items (2018: €-62.8 million) reduced the pre-tax result (EBT: €-253.3 million; 2018: €+347.3 million). EBT excluding special items comes in at € 142.7 million and was therefore in line with the original forecast of February 2019 (between € 125 million and € 175 million).
The Group's external sales declined to € 8,547.3 million due above all to the drop in rolled steel selling prices and lower shipment volumes (2018: € 9,278.2 million). The pre-tax result includes €-62.3 million in restructuring expenses for implementing the "FitStructure 2.0" streamlining program and €-140.8 million in expenses for the mutually agreed end to the investigation conducted on the grounds of suspected cartel arrangements. Furthermore, the result includes impairment of €-192.9 million in the Strip Steel, Plate / Section Steel and Mannesmann business units, as well as at Salzgitter Automotive Engineering GmbH & Co. KG, which will positively affect the consolidated result from the financial year 2020 onward in dimensions of around € 30 million p.a. A countereffect emanated a contribution of € 99.5 million (2018: € 44.0 million) from the participating investment in Aurubis AG accounted for at equity, as well as the gratifying profit of the Technology Business Unit (€ 32.7 million; 2018: € 43.1 million). An after-tax loss that stands at €-237.3 million (2018: €+277.7 million) brings earnings per share to €-4.46 (2018: € 5.06) and return on capital employed to -5.8 % (ROCE; 2018: 10.3 %). With an equity ratio of 34.1 % (2018/12/31: 38.1 %), Salzgitter AG enjoys a sound balance sheet, also after a reduction in the actuarial rate applicable to pension provisions to only 1.4 % (2018/12/31: 1.75 %). The Executive Board and the Supervisory Board of Salzgitter AG will submit a proposal to the Annual General Meeting of Shareholders on May 28, 2020 to distribute a dividend of € 0.20 per share.
Chief Executive Officer Prof. Dr.-Ing. Heinz Jörg Fuhrmann on the financial year 2019:
"The bottom line of the financial year 2019 was most certainly not a gratifying one. Adjusted for negative non-recurrent effects, we nevertheless achieved a presentable operating result. In this context, the strategic decision to work toward achieving a balance between our steel-related activities and areas not so closely related to steel has once again proven to be correct. Thanks to our company's sustainable, conservative business policy and broad diversification in terms of its customer sectors, our Group remains internationally competitive, with a comfortable financial basis and sound balance sheet, and well positioned with its cutting-edge technology. To preserve this status, we will rigorously forge ahead with the imperative and ongoing improvement of our structures and processes. A determining topic and factor for us in the years ahead will also be the process of transforming into a climate-neutral steel industry. In SALCOS(R) - our climate strategy for sustainable steel production - we have developed a technical solution that can be rapidly implemented. It is now down to policymakers to create the requisite political framework conditions. I am convinced that we must act now if our economy and society are to achieve the 2050 climate targets."
A multitude of economic and political uncertainties are likely to accompany us in the new year as well. The advent of coronavirus is yet another factor whose impact cannot be reliably estimated today. Starting from a currently low level, we have nevertheless been seeing stabilizing tendencies since the start of the year on the European steel market that should be reflected in rising results over the course of the year.
Against this backdrop, we anticipate the following for the Salzgitter-Group in the current financial year 2020:
- an increase in sales to € 9 billion,
- earnings before taxes around breakeven, as well as
- a return on capital employed (ROCE) that is tangibly above the previous year's figure.
"Salzgitter AG 2021" strategy
The "Salzgitter AG 2021" Group strategy launched in the autumn of 2016 is being advanced. The program is laying the cornerstones for our Group's future development. The aim is to develop the Group's de facto sales and value added portfolio with profitable growth of currently around 60% from steel and 40% from non-steel in a manner that both parts converge in the direction of balanced, equal proportions. Having implemented affordable investments and R&D expenditure, an additional profit contribution from organic growth of more than € 200 million a year is to be generated over the period from 2017 to 2023. By the end of the financial year 2019, the profit contribution from "Salzgitter AG 2021" totaled € 85 million.
With fresh impetus, we are moving ahead with the exacting and consistent improvement of our structures and processes under our "FitStructure 2.0" optimization program. Upon full completion, we intend to have generated more than € 240 million a year in profit improvement potential - and up until that point approximately € 60 million will be added each year.
SALCOS(R) - our climate strategy for sustainable steel production
An essential cornerstone of our innovation activities consists of reducing the CO2 emissions of the integrated steel production at the Salzgitter site. Together with the Fraunhofer Society and other partners, we are expediting the SALCOS(R) (Salzgitter Low CO2 Steelmaking) project. The project's engineering approach targets the direct avoidance of CO2 emissions ("'Carbon Direct Avoidance", CDA) in the production process itself by using hydrogen to gradually replace the carbon necessary for steel production based on iron ore. We are convinced that avoidance of CO2 emissions in steelmaking is a more sustainable - and also energy-wise more sensible - way compared to carbon capture and usage or carbon capture and storage. Moreover, according to the latest scientific findings, SALCOS(R) offers the best combination of energy efficiency and CO2 reduction potential compared to other industrial concepts. A unique selling proposition consists of the innovative combination of the technologies available today and established in the industry that can therefore be implemented quickly from a technical standpoint as soon as the requisite framework conditions for sustainable operation have been set in place by policymakers and society. In the first stage of development implementable through to 2025, SALCOS(R) could reduce the CO2 emissions from steel production at the Salzgitter location by around one quarter and, in the final stage of implementation through to 2050, by up to 95%.
The following links provide further information:
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.
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 2020. 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 volatility are illustrated by the following example: 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 already 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.
Head of Investor Relations
Phone +49 5341 21-6105
Fax +49 5341 21-2570
E-Mail [email protected]
16.03.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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Quelle: boersengefluester.de und Firmenangaben
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Geschäftsbericht 2020 - Kostenfrei herunterladen.
1 in Mio. Euro; 2 EBITDA = Ergebnis vor Zinsen, Steuern und Abschreibungen; 3 EBITDA in Relation zum Umsatz; 4 EBIT = Ergebnis vor Zinsen und Steuern; 5 EBIT in Relation zum Umsatz; 6 Jahresüberschuss (-fehlbetrag) in Relation zum Umsatz; 7 Cashflow aus der gewöhnlichen Geschäftstätigkeit; 8 in Euro; Quelle: boersengefluester.de
Wirtschaftsprüfer: Ernst & Young
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