Annual General Meeting of the Shareholders of Salzgitter AG · Rolled steel prices in northern Europe 2014-2015 (short-term business) 9 Second half of 2015: spot prices tumble due

Annual General Meeting of the Shareholders of Salzgitter AG

Prof. Dr.-Ing. Heinz Jörg Fuhrmann

Chairman of the Executive Board of Salzgitter AG

Braunschweig, June 1, 2016

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Press releases on the last three financial years

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2013: We have set a great deal in motion “... the "Salzgitter AG 2015" program, initiated back in the autumn of 2012 and implemented as from the second half of 2013, will be assigned the highest priority in the future as well.

2014: Results say more than many words “... the pre-tax loss in 2014 was less than a thirtieth of the 2013 result. We have halted cash outflow from the Group. This undisputed success should not detract from the fact that we still have our work cut out for us ..."

2015: We have delivered “The first pre-tax result delivered since 2011, generated in an extremely adverse market environment, marks a milestone. The Salzgitter Group has delivered impressive proof of the effectiveness of its self-help measures launched in 2012 and ongoing since then.”

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Annual General Meeting of Shareholders on June 1, 2016

"Salzgitter AG 2015" program achieves decisive impact

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Storyline in the 2015 Annual Report: “Our success ...”

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... are many and presentable!


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1 Conditions in the Environment 2 Results of 2015 and Q1 2016 3 360° Concept – We have delivered 4 Explanations on the Agenda

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ILVA… remains unresolved

Micro mind map

Economic and structural crisis in

Europe

High social standards in EU-

and German steel industry

CURRENTLY: massive dumping imports are

destroying market recovery in Europe

Burdens specific to the EU plus specific to

Germany

Structural crisis EU steel industry

Margin pressure

Critical stance toward industry by the population and

media in the EU

Threat of new burdens

Ongoing financial erosion

We are helping

ourselves!

360°

No exogenous

reversal

Counter-activeness

5

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Hesitant recovery through to autumn 2015


Imbalance of supply and–

demand for steel

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60

70

80

90

100

110

Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15

Economy in the European Union

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Industrial production in selected countries of the EU (Jan. 2007 = 100)

Rising imports coincide with largely stagnating EU industrial production -– southern Europe still at crisis level

Source: Eurostat, own research, last figure from December 2015

France Italy Spain

Germany UK

75 % 77 %

87 %

102 %

88 %

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Overcapacities in China

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China has a huge excess capacity problem ...

(Mill

ions

of t

ons)

Effective capacities Production Market supply

... nonetheless

■ Commissioning of further large-scale projects with annual capacities of 30 million tons in 2016

■ Since the start of 2016, a total of 41 blast furnaces with an annual capacity of ca 50 million tons of crude steel have been taken into operation again!

300

500

700

900

1.100

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Source: German Steel Federation, May 2016

Annual steel production

EU

Annual steel production

Germany

> 300 million tons p.a. in overcapacity!

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Imports into the European steel market

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... and exports its problems to us!

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Plate

Imports into the EU 28 from countries outside the EU (1,000 t/month) and market share of imports (in percent)

Source: Eurofer

15 15

20

25 25 27

23

26 25

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Rest China Ukraine Marktanteil Importe (%)

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70%

75%

80%

85%

90%

95%

100%

105%

Jan14

Feb14

Mar14

Apr14

May14

Jun14

Jul14

Aug14

Sep14

Oct14

Nov14

Dec14

Jan15

Feb15

Mar15

Apr15

May15

Jun15

Jul15

Aug15

Sep15

Oct15

Nov15

Dec15

Rolled steel prices in northern Europe 2014-2015 (short-term business)

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Second half of 2015: spot prices tumble due to massive volume of imports

Hot-rolled strip Heavy plate

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-27%

12/15

-20%

Source: Steel Business Briefing

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Urgent missive: Seven EU ministers for economic affairs have requested the EU Commission to significantly curtail the length of anti-dumping procedures and to take more effective trade defense measures!

Struggle for fair competitive conditions

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Solidarity between steel companies and trade unions Sensitivity heightened at political level for the burdens on the steel industry

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(FAZ, February 7, 2016) Demonstration against dumped imports (Brussels, February 2016)

Lower Saxony’s Steel Summit Conference (Hanover, February 2016)

Committing together, taking up the fight together: European and German steel manufacturers join forces at association level with employee representatives

… in a direct exchange with European and national

politicians

Steel Action Day (April 7/11, 2016)

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Current anti-dumping proceedings

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Annual General Meeting of Shareholders on June 1, 2016 En

glis

h

First positive signs

Since February 2016 – step in the right direction:

Introduction of provisional anti-dumping duties on cold-rolled strip products from Russia and China, as well as the opening of anti-dumping proceedings against China in respect of hot-rolled strip and plate

Initiation of an anti-subsidy case against China in respect of hot-rolled strip in May 2016.

Market economy status in China (MES) Brussels is working on obtaining an effective range of trade defense tools

New methods and criteria are currently being developed in order to bring successful anti-dumping actions against China as well after the date of December 12, 2016.

The EU Parliament recently clearly declared itself against recognition of China as market economy without proof of fixed criteria!

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200

250

300

350

400

450

500

550

600

Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16

Hot-rolled strip prices in China, USA, Northern Europe

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Different trading policies result in a huge price variations between Europe and the US

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Source: Steel Business Briefing, *) incl. 17% VAT

(€/t)

05/16

Hot-rolled coil US domestic ex. Indiana

Hot-rolled coil domestic DDP NW Europe

Hot-rolled coil China domestic Shanghai*

+30%

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"Salzgitter AG 2015" program achieves decisive impact on earnings

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Overview of the key aspects

Result: for the first time since 2011, pre-tax profit for the full year

Liquidity: net credit balance raised to € 415 million

Balance sheet: equity ratio still sound at 35 %

Outlook: operating pre-tax result close to breakeven, as well as marginally positive return on capital employed (ROCE)

Dividend: € 0.25 per share; increase of 25% compared with FY 2014

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Key data as of 2015/12/31

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FY 2015 FY 2014 ∆ 2015-2014

Crude steel production kt 6,651.5 7,287.0 -635.5

Consolidated Sales € m 8,618.4 9,040.2 -421.9

Earnings before taxes € m 12.6 -15.2 +27.8

Earnings after taxes1) € m -45.5 -31.9 -13.6

Earnings per share (basic) € -0.89 -0.64 -0.25

ROCE % 2.1 1.8 +0.3

Core workforce (12/31) 23,524 23,555 -31

Salzgitter Group delivers pre-tax profit for the full year for the first time since 2011, despite considerable deterioration in the framework conditions in the second half of 2015

1) EAT includes € 26.5 million in tax expenses for eventual burdens arising from the verdict of the German Federal Fiscal Court on the “convertible bond”

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Performance of the business units

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Steel companies suffered from external environment conditions; Energy stages

turnaround; Trading and Technology deliver gratifying contributions to profit

FY 2015 FY 2014 ∆

Earnings before taxes: € m 13 -15 +28

Strip Steel € m -26 -9 -17

Plate / Section Steel: € m -68 -130 +62

Of which PTG € m 21 1 +20

Of which plate € m -41 -42 +1

Energy € m 2 -41 +43

Trading € m 32 60 -28

Technology 25 25 0 Industrial Participations / Consolidation € m 48 79 -31

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Sound balance sheet: equity ratio of 35% and a net credit balance of € 415 million

2.039 1.931 2.502 2.126

888 892673 938

1.992 1.8112.442 2.327

3.575 3.6502.876 2.893

Consolidated balance sheet as at 2015/12/31

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Property, plant and equipment and other non-current assets

Inventories

Cash & securities

Other current assets

Equity

Pension provisions

Other non-current liabilities

Current liabilities

€ m

8,284 8,284 8,493 8,493

FY 2014 FY 2015 FY 2014 FY 2015

Assets Equity & liabilities

Equity ratio: 34.9 %

(2014: 33.9 %).

Net position due to banks

€ 415 million

(2014: € 403 million)

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Salzgitter Group in Q1 2016

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Salzgitter Group delivers pre-tax result at breakeven

thanks to diversified product portfolio

Q1 2016 Q1 2015 ∆

Group sales (consolidated) € m 1,869 2,288 -419

Earnings before taxes € m 3 52 -49

Strip Steel € m -20 17 -37

Plate / Section Steel € m 1 -1 +2

Of which plate € m -24 -2 -22

Energy € m 6 -5 +11

Trading € m -2 12 -14

Technology 7 10 -3 Industrial Participations / Consolidation € m 12 19 -7

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Salzgitter Group – guidance as of May 13, 2016

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:

a marginally positive return on capital employed (ROCE).

sales virtually stable at around € 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

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 changes in the currency parity, may considerably affect performance in the course of the financial year 2016. The resulting fluctuation in the consolidated pre-tax result may, as current events show, 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, Energy and Trading business units, an average €10 change in the margin per ton is sufficient to cause a variation in the annual result of more than € 120 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.

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360° Concept

… we are helping ourselves!

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CORPORATE POLICY – independence at the core

MISSION STATEMENT Motivation & Qualification

DEVELOPMENT OF BUSINESS UNITS Developing potential

Living the values!

--------- Market- and future-oriented!

--------

----

----

SZAG 2015 & other individual measures Stabilize competitiveness

Process efficiency

Group organization

INNOVATIONS Open up new opportunities

Focused and effective

-----

----

-

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1) Heinz Jörg Fuhrmann in an interview with Reuters news agency, February 16, 2016

“Game plan” for a steel merger

22

Independence therefore remains the core of our corporate policy!

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“Salzgitter gives thoughts of a merger a brush off”

Consolidations or mergers are not suitable instruments for counteracting subsidized Chinese dumping imports or one-sided burdens resulting from European and German policies on energy and the environment! Concerning the idea of merging with other European producers, there is evidently still no concept today that would further us as a group… Whether such concepts will materialize in the future remains to be seen.“1)

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360° Concept


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Living the values!


--------

----

-


Process efficiency

Group organization



-----

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Salzgitter AG 2015 – What we said we would do

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Profit potential of more than € 200 million a year

Profit improvement potential

> € 90 million Personnel reduction in excess of 1,500 FTE

> € 70 million Optimization of technical processes in production

> € 40 million Other measures (e.g. procurement, steel, logistics and IT)

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~ 30

~ 60

> 80

> 40

0

50

100

150

200

2012 2013 2014 2015

Salzgitter AG 2015 – What we have achieved so far

We have delivered

(€ m

)

25 *Net savings

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Profit improvement p.a. from implemented measures*

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Main contribution to turnaround: Just under € 200 million in self-initiated profit improvement from “Salzgitter AG 2015” and other measures

Salzgitter AG 2015 – reconciliation of results 2013 – 2015

26


Group 2013

Salzgitter AG 2015 (net)

Aurubis Market influences

etc.

Group operational

2015

Group overall

2015

Special - items

(out of period / non-operational)

other measures/ Programs

(net)

-220

-263

[m€]

Special factors

+141

86

+39

+79

+47 -74

+13

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Overall effects/measures programs in the Salzgitter Group

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SZAG 2015* Other

programs Total

2012 to 2015 € m 210 90 300

2016 et seq. € m 70 190 260

Total € m 280 280 560

Sustain dynamic momentum initiated throughout the entire Group

Measures in numerous fields of activity supplement “Salzgitter AG 2015”:

Plant closures largely concluded!

Restructuring with the aim of securing locations initiated

Profit improvement program at individual companies ongoing process

Other measures (e.g. strengthening/expanding business lines) optimize and grow

* Net savings

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360° Concept


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Living the values!


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Process efficiency

Group organization



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Reports of success from the Energy Business Unit

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Orders bear testimony to the leading position of the Energy Business Unit’s large-diameter pipe companies as manufacturers of high-grade line pipes


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10/2015: “EUROPIPE supplies 270 kilometers of large-diameter pipes for the Trans-Adriatic Pipeline“ – 170,000 t onshore

04/2016: “EUROPIPE also delivers the offshore leg of the Trans-Adria Pipeline“ – more than 71,000 t

03/2016: Main supplier! - “EUROPIPE delivers pipes for Nord Stream 2“ ! Total of 890,000 t !

04/2016: “EUROPIPE makes deliveries for Zohr project in Egypt 132,000 t of large-diameter pipes”

02/2016: Salzgitter Group awarded three contracts by Open Grid Europe for around 70,000 t of spirally welded large-diameter pipes

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In dialog with the automotive industry

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In dialog with the automotive industry- Joint presentation of all relevant Group companies

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Chassis Car body Drive unit

TechDay MAN

July 2015

TechDays Volkswagen, 8/2013

BMW 11/2013 Ford 05/2014

2015 2016 2014 2013

http://szfg.sz.salzgitter-ag.de/

http://szmf.sz.salzgitter-ag.de/

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Salzgitter Mannesmann Renewables – Offshore Wind

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Development and marketing of new product concepts

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Offshore contract booked for a German offshore wind park!

Realization of the Salzgitter Supply Chain concept – first-time manufacturing of 20 industrial scale jackets for leading wind farm operators

Salzgitter Mannesmann Handel, EUROPIPE and Ilsenburger Grobblech supply 8,800 t of large-diameter pipes and 2,500 t of plate

Delivery from July 2016 onwards

Strip steel Plate / sections Tubes/pipes

Bilfinger Mars Offshore (BMO)

Salzgitter Offshore - Wind Cooperation Bilfinger

+

Suction Bucket Jacket

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We invest in the future

Product/grade optimization

Salzgitter Plant Commissioning scheduled for 2017

Plate: expanding the product range to include heavy and wide plate

“31 Ton Concept” Mülheim mill Planning under way

Securing of the supply of crude steel

+ further investment in preparation

Relining of blast furnace B 7 Sep.-10 Dec.2016

Construction of new RH plant to expand the range of highest grade strip steel and plate

in the Energy Business Unit

Strip Steel Plate / Section Steel

HKM

Expansion in Mexico‘

SZ Mannesmann Präzisrohr Planning under way

Energy

Investment: aligned to the market and to the future

http://www.smp-tubes.com/img/Company/_x_y_800_550/Mexico.jpg

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360° Concept


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Living the values!


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Process efficiency

Group organization



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Industry 4.0 Annual General Meeting of Shareholders on June 1, 2016

Industry 4.0 – fully interconnected networking of value chains, products and business models

Definition: Industry 4.0 stands for the fourth industrial revolution and is determined by the increasing digitalization and networking of products, value chains and business models.1)

34 1) PWC study “Industry 4.0 – Opportunities and Challenges of the Fourth Industrial Revolution”, October 2014

Point of departure: Increasingly individual nature of customer wishes: “Batch size 1”

Sphere of action: From the idea or specific contract across development and production, the delivery of a product to the end customer from service right through to recycling, including the associated services

Precondition: Connecting up all links in the value chain, availability of the relevant information in real time

Concept: Linking up of people, objects and systems through dynamic, real-time optimized and self-organizing cross-company value adding networks

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e-World – digital selling platform launched in April 2016

“Trading 4.0” – e-World…

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… customize online configuration today, delivery tomorrow!

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e-CONNECT…networking of merchandise management systems

e-SHOP… for customers without their own ERP systems

e-… further solutions at the planning stage

e-WORLD SYSTEMS. SERVICE. STEEL. DIGITAL.

https://shop.salzgitter-mannesmann-stahlhandel.com

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KHS innovation: Nature MultiPackTM

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From innovation right through to market maturity – KHS launches Nature MultiPack™ onto the market

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World premiere for Evian: ‘Prestige’ PET bottle set

Sale launched in Monoprix supermarkets in France in March 2016

Cooperation with Danone Waters, with the Evian brand

Nature MultiPack®: The new patented procedure makes it possible to dispense repackaging in the

future

holds PET bottles together through specially developed adhesive

with practical handle and individual bottle design

conveys marketing messages effectively

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KHS innovation: Plasmax

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1. J

uni

2016

As light as PET but with the density of glass

+ 100 % recyclable

+ Lower weight

+ High breakage resistance

+ Convenience + Optimum product protection

+ Long shelf life

+ Freshness

+ Hallmark of quality

Plasmax • Ultra-thin glass coating seals the

inside wall of PET bottles • Delivers perfect barrier results • Typical application:

• “sensitive beverages” e.g. fruit juice and beverages with fruit juice content

• highly carbonated beverages 6,0

6,5

7,0

7,5

8,0

8,5

0 4 8 12 16 20 24

Limit (quality standard as defined by customer) Uncoated Plasmax

CO

2 con

tent

in g

CO

2/l

Time in weeks

Bottle: 500 ml, 24g filled with carbonated water Storage temperature 22°C

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360° Concept


38

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Living the values!


--------

----

-


Process efficiency

Group organization



-----

----

-

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Our mission statement –

39

High acceptance, resonance and impact – mission statement process to be continued

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Sustainability – Value of the year 2015/16

Mission statement process – ongoing coordinated work on the values

Innovation – Value of the year 2014/15

Status: May 31, 2016

Value of the Year 2016/17 Fairness & Spirit of Partnership

Savings potential >€ 25 million p.a.*

* Rough estimates of the respective managers

http://szag.sz.salzgitter-ag.de/Pressebereich/Informationen/2014/14.12.04_Ideenwettbewerb_Marke_von_1000_Ideen_ueberschritten.asp

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The motivation of the employees and their identification with the Group has grown again despite the hard times!

Third groupwide IMPULS 2015 employee survey

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… result of the groupwide survey on 73 companies with more than 22,000

employees:

The motivation of the employees, their commitment and their willingness to embrace entrepreneurial thinking – for instance, in the

direction of customer orientation – have

definitely increased!

(%)

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Conclusion

41

We are on the right track

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We do our homework well:

More than € 200 million in profit potential released by the end of 2015 Implementation of further individual measures under way

We have a robust business model:

Results at breakeven can be achieved also in extremely adverse environment Diversified and strong

We are financially healthy:

Equity ratio of over 30% Net credit balance of more than € 200 million

The Salzgitter Group has prospects

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30%

50%

70%

90%

110%

130%

150%

170%

12 '14 03 '15 06 '15 09 '15 12 '15 03 '16

Salzgitter AG vs peer competitors in steel

43

Share price performance

The share price performance as from January 1, 2015

Perf

orm

ance

in %

3

1

-7% 2

4

-6%

Competitor C -37%

Salzgitter AG

Company

Competitor A

Ranking Performance As of 2016/05/31

23%

Competitor B

The capital market rewards our achievements

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Ongoing dividend payment since IPO

0,38 0,40 0,15 0,42 0,32 0,25 0,40 0,50 1,00

2,00 1,40

0,25 0,32 0,45 0,25 0,20 0,20 0,25

0,50

1,00

1,00

31 97 34 160 72

42

323

941 948

1.314

1.003

-496

49 202

-29

-483

-15

13

-750

-500

-250

0

250

500

750

1.000

1.250

1.500

-2,00

-1,00

0,00

1,00

2,00

3,00

4,00

1998/ 99

1999/ 2000

SFY 2000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Dividend proposal

44 ) Pending the decision of the Annual General Meeting of Shareholders on July 1, 2016 2) Excluding proceeds from the sale of the Vallourec investment (€ 907 million) 3) Restated

€ € m

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2) 3)

“Normality” Boom Structural crisis

Dividend proposal1)

Dividend per share € 0.25 Total payout amount: € 15.1 million

1)

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4 Explanations on the Agenda

* Pending the resolution of the Annual General Meeting of Shareholders on July 1, 2016

Agenda items

2. Resolution on the appropriation of retained earnings

Dividend for the financial year 2015 Shareholders to receive € 0.25 per share* • Dividend payment €13,521,825.00 • Profit carried forward to new account €1,578,175.00 • Unappropriated retained earnings €15,100,000.00

3. Resolution on the discharge of the members of the Executive Board

4. Resolution on the discharge of the members of the Supervisory Board

5. By-election to elect a new member of the Supervisory Board

45

6. Election of the auditor for the financial year 2016

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Annual General Meeting of the Shareholders of Salzgitter AG

Prof. Dr.-Ing. Heinz Jörg Fuhrmann

Chairman of the Executive Board of Salzgitter AG

Braunschweig, June 1, 2016

Documents

Annual General Meeting of the Shareholders of Salzgitter AG · Rolled steel prices in northern Europe 2014-2015 (short-term business) 9 Second half of 2015: spot prices tumble due