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SZAG
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Presentation of the Group
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SZAG
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1 Salzgitter Group2 Market Situation3 Business Units4 Strategy5 Guidance
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Global Presence
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Salzgitter Group
Strip SteelPlate / Section Steel
Mannesmann
Trading
Crude steel production 2018: 7.0 million tons; trading volume: 4.5 million tons;Among the top 3 producers of beverage filling and packaging machinery
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Technology
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Diversified product portfolioSalzgitter Group
Steel and Technology
Stainless tubes
Stockholding trading
International trading
Strip products
Steel Service Center
Heavy plates
Sections
Engineering services
Injection molding machinery Beverage filling plants
Line pipes
Precision tubes
4
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Group structure and key data FY 2018Salzgitter Group
Salzgitter AG Group
External Sales cons.: € 9.3 billion EBT: € 347 million
Employees: 23,523
External Sales:€ 2.3 billion EBT:
€ 205.8 million Employees:
6,182
Strip Steel
External Sales:€ 1.0 billion EBT: € 24,8 million Employees:
2,451
Plate / Section Steel
External Sales:€ 1.1 billion EBT:
€ -5,4 million Employees:
4,675
Mannesmann
External Sales:€ 1.3 billion EBT:
€ 43,1 million Employees:
5,490
Technology
External Sales:€ 3.3 billion EBT:
€ 50,5 million Employees:
2,109
Trading
5All data about employees as per 12/31
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Salzgitter AG
Salzgitter Mannesmann / Salzgitter Klöckner-Werke
Strip Steel BU
Plate / Section Steel BU
MannesmannBU
TradingBU
TechnologyBU
Salzgitter Flachstahl
Ilsenburger Grobblech Mannesmannröhren-Werke Salzgitter Mannesmann
Handel KHS
Salzgitter Mannesmann Grobblech Europipe Salzgitter Mannesmann
StahlhandelSalzgitter Europlatinen
Peiner Träger
Mannesmann Grossrohr
Salzgitter Mannesmann International
KHS Corpoplast
Salzgitter Bauelemente
DEUMU Deutsche Erz- und Metall-Union
Mannesmann Line Pipe
Universal Eisen und Stahl
Mannesmann Precision Tubes
Salzgitter Mannesmann Stahlservice
Mannesmann Stainless Tubes
Hüttenwerke Krupp Mannesmann
BorusanMannesmann Boru
50%
30%
23%
Industrial Participations / Consolidation
Verkehrsbetriebe Peine-Salzgitter
Hansaport
Gesis Gesellschaft für Informationssysteme
Salzgitter Automotive Engineering
Telcat
Aurubis
Salzgitter Hydroforming
Salzgitter Mannesmann Forschung
51%
>25%
Klöckner DESMA Elastomertechnik
DESMA Schuhmaschinen
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BU = Business UnitAs of December 2018
Group structureSalzgitter Group
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5%Tubes producers
13%Other
12%Food and beverage industry
6%Mechanical engineering
6%Re-rollers
3%Energy sector and utilities
15%Vehicle construction
24%Traders, Steel-Service-Centers
12%Construction industry
4%White goods,
electrical equipment
External sales 2018 by customer industriesSalzgitter Group
Broad customer base
7Only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE Group
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Share of ex-Germany sales by consignee 52%
External sales 2018 by regionsSalzgitter Group
5%Other
7%Asia
13%Americas
3%Other Europe
24%Other EU
48%Germany
8Sales by consignee (only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE-Group)
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Key data per 2018/12/31
9
Salzgitter Group
FY 2018 FY 2017 Δ 2018 – 2017
Crude steel production kt 7,039.4 6,955.2 84.2
Consolidated Sales € million 9,278.2 8,990.2 288.0
Earnings before tax € million 347.3 238.0 109.3
Earnings after tax € million 277.7 193.6 84.1
Earnings per share (undiluted) € 5.06 3.52 1.54
ROCE % 10.3 8.6 1.7
Core workforce (12/31) 23,523 23,139 384
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Salzgitter-Konzern mit bestem Ergebnis der vergangenen zehn Jahre
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2,025 2,389
569761
2,3272,275
3,836 3,332
Aktiva Passiva
Balance sheet per 2018/12/31Salzgitter Group
Property, plant and equipment and other
non-current assets
Inventories
Cash and securities
Other current assets
Equity
Pension provisions
Other non-currentliabilities
Current liabilities
€ million
8,757 8,757Goodwill:
€ 6 m Equity ratio:
38.0%
Assets to equity: 87%
Net position due to banks: € 192 m
€ 679 m € 269 m
€ 200 m € 418 m
10
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Sound financial basis
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Focus on expansion investments
Salzgitter Group Investments and Depreciation / Amortization
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Salzgitter Group
Investments1 Scheduled depreciation Unscheduled depreciation
1 Property, plant and equipment and intangible assets, excluding financial assets
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270330
411340 352 342
287342 338 340
52 15 49 44
2014 2015 2016 2017 2018
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History
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Salzgitter Group
Stock listing 1998First blast furnace in Ilsede, 1861
First broad-flanged beam mill in Peine, 1914
1989 privatization with the sale to Preussag AG
Demonstrations to save the smelting works in Salzgitter, c. 1950
Privatization and acquisitionof the Ilsenburg rolling mill, 1992
Cross-rolling process sketch ofMax Mannesmann, pre 1885
Bottle filling line Phönixc. 1936
llsenburg: est. 1595,plate since 1948Mülheim an der Ruhr: plate since 1882Peine: Sections since 1876
1989 Name change toPreussag Stahl AG
1970 Mergerto form StahlwerkePeine-Salzgitter AG
1937 Construction Hüttenwerk Salzgitter
(Part of Reichswerke)2007 Integration into SZAG
1880 Acquisition of PeinerWalzwerk, est.1872
1923Foundation of steel group
Klöckner-Werke AG
1886 First processfor the rolling of
seamless steel tubes1858 FoundationIlseder Hütte AG
1912 first attempts withstainless steel tubes
1897 Start of productionwelded steel tubes
2017 Relaunch ofthe brand presence
1977 First acquisition of part. infilling technology (H & K)
2000 Liquidation ofMannesmann Group,
Integration Tubes into SZ
1992 - 1995Insolvency, restructuring
and end of steel production
Strip Steel BU Mannesmann BU Technology
Plate / Section Steel BU
1964Salzgitter Hüttenwerk AG(since 1961 part of state-owned
Salzgitter AG old)
1998 Salzgitter AG
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1 Salzgitter Group2 Market Situation3 Business Units4 Strategy5 Guidance
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Economic development in the European UnionMarket Situation
Industrial production in selected countries of the EU (Jan. 2007 = 100)
France Italy SpainGermany GB
14
60
70
80
90
100
110
120
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Eurostat, own research, last figure from February 2019
The trend of the previous years continued: Slightly improving EU industrial production, Germany despite deterioration in the second half of 2018 remains relatively strong
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50
60
70
80
90
100
110
100
150
200
250
300
350
200
220
240
260
280
300
Volatile raw materials markets harbor risks, but also opportunities;2019 price levels – especially for iron ore – expected to be above the average of 2018
Raw materials pricesMarket Situation
Iron ore(62% Fe CFR China, US$/dmt)
Coking coal(FOB Australia, US$/t)
Steel scrap(grade 2/8, €/t)
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300
400
500
600
700
800
900
Jan 17 Jul 17 Jan 18 Jul 18 Jan 19300
400
500
600
700
800
900
Jan 17 Jul 17 Jan 18 Jul 18 Jan 19
Following periods of rises, steel prices are consolidating since mid 2018; different trading policies result in tremendous regional price variations
Steel pricesMarket Situation
Spot prices Northern Europe
16
Hot-rolled coil prices international
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(€/t) (€/t)
Northern Europe EXW Ruhr USA EXW Indiana China SchanghaiHRC EXW Ruhr Plate EXW Ruhr Medium sections
05/19
05/19
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326-846
-1.863
-2.911-3.287
-3.528
382798
1.433
2.3012.879 2.707
-4.500
-3.500
-2.500
-1.500
-500
500
1.500
2.500
3.500
4.500
EU: Steel imports as collateral damageMarket Situation
EU import volumes as a result of diversionary effects on record level. Softening of the Safeguard measures risk to further decrease their effectiveness.
Import situation EU (in 1,000 t/month) Diversionary effects due to US tariffs (in 1,000 t/month)Imports into the EU vs. USA in cumulative annual comparison 2018/2017
+2.4 mt
-4.0 mt
17
-
500
1.000
1.500
2.000
2.500
2014 2016 2018 Q1 2019
China Ukraine Russland Türkei Indien Südkorea Iran Brasilien SonstigeChina Ukraine Russia Turkey India South Korea Iran Brazil Others
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+60 %
Source: Eurofer, USITC
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1 Salzgitter Group2 Market Situation3 Business Units: Strip Steel4 Strategy5 Guidance
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Overview
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Strip Steel Business Unit
Capabilities Integrated steel works with three blast
furnaces Approx. 4.7 mt/year crude steel capacity Modern production plants High processing competence (SSC)Core competences and products High-quality steel grades for sophisticated
applications Custom made solutions, e.g., hot-rolled
and cold-rolled coil, galvanized and coated sheet, laser-welded tailored blanks, corrugated sheets, coffers, sandwich and acoustic elements
Customer focus through local presence
Key data FY 2018
Consolidated Sales €m 2,341
Earnings before taxes €m 206
Core workforce (12/31) 6,182
Established supplier of the demanding German automotive industry
External sales by customer industry 2018
only from entities within the group of consolidated companies of Salzgitter Group
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4%
Other
35%
Vehicle construction
4%
Construction industry
7%
White goods,electrical equipment
32%
Traders
1%
Tube producers
16%
Re-rollers
1%
Mechanical engineering
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Strip ProductsStrip Steel Business Unit
Salzgitter Flachstahl GmbH
Supplier of premium OEMs
Germany; shareholder: SZAG 100% Hot-rolled coil, cold-rolled coil, electrogalvanized, hot dip
galvanized and organic coated sheet Integrated steel works with 3 blast furnaces Around 4.7 mt yearly crude steel capacity Top modern production plants High-tech downstream facilities 4% market share in the EU28
2018 2017
Shipments kt 4,341 4,154
Sales €m 2,887 2,652
Employees 12/31 5,666 5,58720en
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ProcessingStrip Steel Business Unit
Salzgitter Europlatinen GmbH
Germany; shareholder: SZAG 100%Custom-made solutions: Laser welded Tailored Blanks for lighter car bodies
2018 2017
Sales €m 71 77
Employees 12/31 122 117
2018 2017
Sales €m 52 46
Employees 12/31 71 67
Germany; shareholder: SZAG 100%Corrugated sheets, coffers, sandwich a. acoustic elements for wall and roof constructions of commercial buildings
Salzgitter Bauelemente GmbH
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Steel Service CenterStrip Steel Business Unit
Salzgitter Mannesmann Stahlservice GmbH
Germany; shareholder: SZAG 100% Two locations Modern plants and processes 600,000 t/year processing capacity
Excellent position in the heart of Europe
2018 2017
Shipments kt 584 598
Sales €m 415 402
Employees 12/31 323 32122en
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1 Salzgitter Group2 Market Situation3 Business Units: Plate / Section Steel4 Strategy5 Guidance
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Overview
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Plate / Section Steel Business Unit
Capabilities Section steel:
− Top-modern mini mill with two electric arc furnaces
− Annual crude steel capacity 1 mt− Two rolling mills for medium and heavy
sections Plate:
− Two rolling mills for plate with 1.6 mt annual capacity
− Plate width up to 4,800 mmCore competences and products High-strength, wear resistant and
specialized steel grades Medium and heavy sections, heavy plate
incl. offshore and tube grades
Consolidated sales €m 1,026
Earnings before taxes €m 24.8
Core workforce (12/31) 2,451
Key data FY 2018
Plate: Broad range of high quality plate products Section Steel: Efficient production
External sales by customer industry 20181%
Vehicle construction8%
Construction industry
25%
5%White goods,
electrical equipment
41%TradersTube producers
Mechanical engineering
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only from entities within the group of consolidated companies of Salzgitter Group
17%Other
3%
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Heavy PlatePlate / Section Business Unit
Ilsenburger Grobblech GmbH
Germany; shareholder: SZAG 100% Broad diversified heavy plate steel grades Construction plate, fine grained construction plate, alloyed
and unalloyed boiler plate, offshore and tube grades High-strength and wear resistant grades 7% market share in the EU28 State of the art facilities, one of the most modern water
quenching plants
2018 2017
Shipments kt 697 682
Sales €m 534 501
Employees 12/31 741 73925en
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Heavy PlatePlate / Section Steel Business Unit
Salzgitter Mannesmann Grobblech GmbH
Germany; shareholder: SZAG 100% Heavy plate mill specialized in plate for longitudinally
welded line pipe and similar applications, especially for EUROPIPE GmbH Pipe bending plant for seamless and welded steel tubes
in carbon, alloyed, and high-alloy steels Test Center with a wide range of mechanical and
technological tests
2018 2017
Shipments kt 526 584
Sales €m 378 394
Employees 12/31 539 60726en
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SectionsPlate / Section Steel Business Unit
Peiner Träger GmbH
Germany; shareholder: SZAG 100% Medium and heavy steel beams, Peine sections Progressive and flexible mini mill Two top-modern electric arc furnaces Adjusted crude steel capacity 1.0 mt/year 13% market share in the EU28 (plus N, CH) Two of the most efficient section mills worldwide with
comprehensive range of products
2018 2017
Shipments kt 1,022 997
Sales €m 619 523
Employees 12/31 785 78327en
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Other CompaniesPlate / Section Steel Business Unit
Deutsche Erz- und Metall-Union-Gruppe
Germany; shareholder: SZAG 100%Specialist trader for ferrous scrap, non-ferrous scrap, new metals and ferro alloys, as well as rolled steel products
2018 2017
Sales €m 678 627
Employees 12/31 378 378
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1 Salzgitter Group2 Market Situation3 Business Units: Mannesmann4 Strategy5 Guidance
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25%Vehicle construction
Overview
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Mannesmann Business Unit
Capabilities Own crude steel supply via 30%
participation in Hüttenwerke Krupp Mannesmann GmbH
Plant for the production of semis for the seamless tubes business
Core competences and products Line Pipe: participation (50%) in the world
market leader EUROPIPE; international presence
Precision Tubes: European market leader Seamless Stainless Tubes: top player in
the world market Longitudinal and spiral welded large-
diameter pipes, medium line pipes, seamless and welded precision tubes, stainless tubes
Consolidated Sales €m 1,119
Earnings before taxes €m -5,4
Core workforce (12/31) 4,675
Key Data FY 2018
External sales by customer industry 2018
Global player in the high quality segment of the global tubes market
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only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE Group
1%Construction industry
5%
15%Energy sector
and utilities
40%Other
4%Traders
Tube producers
10%Mechanical engineering
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Line PipesMannesmann Business Unit
EUROPIPE Group
Germany; shareholder: SZAG 50%, Dillinger Hüttenwerke 50% Longitudinal and spiral welded large-diameter pipes for
transcontinental and underwater pipelines In-house coating activities World market leader (7% market share) 3 locations in D, USA Since January 1, 2014 reported at equity
2018 2017
Shipments kt 895 1.099
Sales €m 953 1.042
Employees 12/31 1.048 1.03131en
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Line PipesMannesmann Business Unit
Mannesmann Line Pipe GmbH
Germany; shareholder: SZAG 100%HFI-welded medium line pipes incl. plastic- and cement coatings
2018 2017
Sales €m 285 261
Employees 12/31 364 385
2018 2017
Sales €m 67 78
Employees 12/31 125 124
Germany; shareholder: SZAG 100%Spiral-welded large-diameter pipes made of hot-rolled coil
Mannesmann Großrohr GmbH
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Precision TubesMannesmann Business Unit
Mannesmann Precision Tubes Group
Germany; shareholder: SZAG 100% Seamless and welded cold drawn precision tubes for the
automotive and engineering industries as well as the energy sector State of the art push bench plant for the production of hollows Market leader in the EU28 (24% market share) 10 locations in D, F, NL and Mexico
2018 2017
Shipments kt 276 282
Sales €m 497 477
Employees 12/31 2,287 2,31333en
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Structural tube
AirbagsPump case
Stabilizers
Suspension components
Seat belt- IHU/IHVfixings
Engine-components
Drive shaftsDrivetrain and steering components
Camshafts
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Seamless Stainless TubesMannesmann Business Unit
Salzgitter Mannesmann Stainless Tubes Group
Germany; shareholder: SZAG 100% Seamless hot- and cold finished stainless tubes
for the chemical- and engineering industries, as well as for the energy sector 6% market share in the world 5 locations in D, F, I, USA
2018 2017
Shipments kt 23 25
Sales €m 245 237
Employees 12/31 1.000 93534en
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Significant shareholdingsMannesmann Business Unit
Hüttenwerke Krupp Mannesmann GmbH
Germany; shareholder: ThyssenKrupp 50%, SZAG 30% + Vallourec 20% (Pool) Steel works with two blast furnaces Production of slabs and round steel bars Up to 1,000 different steel grades Yearly crude steel production of > 4 million tons
2018 2017
Sales €m 2,468 2,515
Employees 12/31 2,980 2,90735en
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1 Salzgitter Group2 Market Situation3 Business Units: Trading4 Strategy5 Guidance
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5%
Vehicle construction
Overview
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Trading Business Unit
Consolidated Sales €m 3,268
Earnings before taxes €m 51
Core workforce (12/31) 2,109
Capabilities 74 sites in 30 countries Own distribution network for steel products
with warehousing sites in Europe Processing group specialized on heavy
plate products International tradingCore competences and products Global presence in all relevant regions with
own representation Distribution channel for Salzgitter Group
products Procurement channel for Salzgitter Group
works Value add services for customers
Key Data FY 2018
External sales by customer industry 2018
High customer and market orientation through a global sales organization
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14%
Other
29%
Construction industry3%
White goods,electrical equipment
32%
Traders
2%
Tube producers
5%
Re-rollers
2%
Energy sector and utilities
7%
Mechanical engineering
only from entities within the group of consolidated companies of Salzgitter Group
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International10 Companies2 Rep. offices
Europa7 Companies
Europa4 Agencies
Salzgitter Mannesmann Handel Group
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Trading Business Unit
Salzgitter Mannesmann Handel
Shipments 2018: 4.3 mt Sales 2018: € 3.3 billion
Trading AgenciesStockholding
Salzgitter Mannesmann International GmbH, Düsseldorf (SMID)
Salzgitter Mannesmann International (USA) Inc., Houston (SMIH)
Salzgitter Mannesmann International (Canada) Inc., Vancouver (SMIV)
63 locations in 30 countries with 1,739 employees
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Salzgitter Mannesmann Stahlhandel GmbH, Düsseldorf (SMSD)
Stahl-Center Baunatal GmbH, Baunatal (SCB)
20 Branches with warehouses and further processing (incl. 4 flame cutting plants), 4 Sales offices
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Universal Eisen und Stahl Group
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Trading Business Unit
Universal
Shipments 2018: 0.2 mt Sales 2018: € 0.2 billion
North America Europe
5 Branches
Universal Eisen und Stahl GmbH, Neuss (UES) Universal Aciers Sarl, Couzon au Mont d'Or, France
UNIVERSAL STEEL HOLLAND B.V., SK Papendrecht, Netherlands
UNIVERSAL-Stal Sp. z o.o, Gliwice, Poland
UNIVERSAL OCEL spol. s.r.o., Prague, Czech Republic
UNIVERSAL STEEL AMERICA, Inc., Houston, USA
1 Branch in Chicago
11 locations in 6 countries with 370 employees
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1 Salzgitter Group2 Market Situation3 Business Units: Technology4 Strategy5 Guidance
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Overview
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Technology Business Unit
Capabilities 17 Production plants worldwide 60 Service sites > 90% of sales outside of GermanyCore competences and products KHS: among the top 3 global suppliers for
filling and packaging machines; technology and innovation leadership
DESMA Elastomertechnik: Global leader for rubber and silicon injection molding machines
DESMA Schuhmaschinen: World market leader for the production of machines for the production of shoes and shoe soles
Turn-key lines, single machines and service
Consolidated Sales €m 1,338
Earnings before taxes €m 43.1
Core workforce (12/31) 5,490
Top 3 producer for filling and packing industry, world market leader for rubber and silicon injection molding as well as direct soling machines
Key data FY 2018
External sales by customer industry 2018
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1%White goods,
electrical equipement
87%
3%Vehicle construction
Food and beverageindustry
9%Mechanical engineering
only from entities within the group of consolidated companies of Salzgitter Group
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Filling and packagingTechnology Business Unit
KHS Group
Germany; shareholder: SZAG 100% A global leader and solution provider of first choice in the packaging
industry Among the Top 3 producers Focus on beverage applications Supplier of single machines and turnkey solutions (one-stop-shop
supplier) Leadership in technology and innovation 11 production sites: 5 in Germany, 2 in the US, and 1 each in Mexico,
Brazil, China and India
2018 2017
Sales €m 1,161 1,138
Employees 12/31 4,714 4,64842en
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Special machineryTechnology Business Unit
Klöckner DESMA Elastomertechnik Group
World market leader for rubber and silicone injection molding machinery
2018 2017
Sales €m 116 100
Employees 12/31 552 530
2018 2017
Sales €m 62 47
Employees 12/31 224 208
World’s largest producer of machines for the fabrication of shoes and shoe soles
DESMA Schuhmaschinen GmbH
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1 Salzgitter Group2 Market Situation3 Industrial Participations4 Strategy5 Guidance
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Overview
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Industrial Participations
Comprises activities that are not directly allocated to a business unit
Core competences and participations Services:
− Research and development for the Group and external customers
− Information technology− Engineering services− Real estate- and facility development as
well as management− Freight traffic
Shareholdings:− Aurubis− Hansaport
Consolidated sales €m 186
Earnings before taxes €m 28
Core workforce (12/31) 2,616
Key data FY 2018
Gratifying contribution from the service companies and the Aurubis investment
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Derivation of pre-tax result 2018
in € million
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EngineeringIndustrial Participations
Salzgitter Mannesmann Forschung GmbH
Germany; shareholder: SZAG 100%Research and development for the Group and external customers with a focus on: Processes for the manufacture, processing
and application of metallic materials and products made of them Development of new materials Development of application areas Material and component characterization including testing
techniques Application and engineering technology from component design
through forming and assembly to corrosion protection Automation and testing techniques, as well as the construction
of non-destructive testing facilities
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Raw Materials and Logistics
Glückauf Immobilien, RSE
Companies specialized in real estate- and facility development as well as management
Hansaport1
Germany's largest seaport terminal for handling dry bulk goods (coal and ores), annual capacity of approximately 15 million tons
Verkehrsbetriebe Peine-Salzgitter
Commercial transportation provider with an annual freight volume of approximately 43 million tons
1 SZAG share: 51%47en
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Data Processing and Communications
Telcat Multicom/Telcat Kommunikationstechnik
Systems for decentralized communication, Broad array of information solutions ranging from office communication and video technology to network services
Integration of business processes into one uniform IT-solution that reflects the entire workflow, Electronic data processing center capacities andthe internet-based eService platform as a unified hub for order processing are offered for group companies and external clients
GESIS Gesellschaft für Informationssysteme
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Industrial Participations
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Aurubis-Participation
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Industrial Participations
Aurubis Dividend (€/Share)
Since 2008 successful shareholding in the leading European copper producer
SZAG shareholding: 29.99% (per May 23, 2019)
Net dividend received since 2009: € 106.5 million (per FY17/18)
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0.65
1.00
1.20
1.35
1.101.00
1.351.25
1.451.55
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2008/2009
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
2016/2017
2017/2018
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1 Salzgitter Group2 Market Situation3 Business Units4 Strategy5 Guidance
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Review
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Strategy
“Salzgitter AG 2015” Other programs(since end of 2016 combined under FitStructure SZAG)
2012 – 2016€ 260 million p.a. € 350 million p.a.
> € 600 million € p.a. earnings improvement potential realized
Structural measures 2012-2018
Initial emphasis on restructuring and cost reduction measures
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Development of the portfolio towards high- and highest-strength grades: to this large-scale investments ILG and SZFG
DESMA Achim “Factory of the Future”, Expansion precision tubes group in Mexico
Acquisition SOTEP, Joint Venture Baolong Salzgitter Hydroforming, Increase of the Aurubis AG shareholding
“Salzgitter AG 2021” growth strategy Strategy
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Steel-related Less steel-related
60% 40%Start 2016
Rolled steel production and partsof the tubes production can only grow qualitatively, not quantitatively.
Quantitative growth is possible exclusively in activities apart from steel – especially in the Technology Business Unit.
External growth on a larger scale is not mandatorily necessary for the development of the business units – can, however, be desirable.
Target
2019
50% 50%
44%56%
Status implementationGoals Stipulations
Q1
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Investments into the development of the Group
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Strategy
We invest into the sustainability of our Group: € 2.5 billion since 2012!
Salzgitter FlachstahlConstruction of thepulverized coal injection plant
DESMA Schuhmaschinen„Factory of the Future“
Salzgitter FlachstahlConstruction of the RH vacuum degassing plant
Ilsenburger GrobblechNew heat treatment line
Mannesmann Precision Tubes
Expansion plant in Mexico
Salzgitter FlachstahlHot-Dip Galvanizing Line 3
2015 2017 2019 2020 2022
SZ Mannesmann HandelExpansion of the cutting line at the Plochingen site
Commissioning
“Digital Roadmap 2022”
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What we intend in the coming years – effects
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Strategy
All in all at least € 250 million in additional effects from programs of measures planned;the dynamism started in 2012 will be maintained – new initiative are in preparation to this end
€ million earnings improvement potential
FitStructure SZAG SZAG 2021 Growth Programs
€ million additional profit contribution
~40
~40
~100
0
20
40
60
80
100
120
140
160
180
200
2019 2020 2021 ff.
~25
~25
~25
0
10
20
30
40
50
60
70
80
2019 2020 2021 ff.
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Goal: Profitability improvement of the company Optimization of the product portfolio Strengthening of the market position and volume
expansion for higher value grade segments such as high strength and wear resistant, water tempered steel
Restructuring and future orientation go hand in hand
Measures at the Ilsenburg site
“Salzgitter AG 2021” – example Plate / Section Steel BU
55* planned volumes
Strategy SZAG 2021 – focus on qualitative growth Investment into a modern and competitive heat treatment line Commissioning: 2020
FitStructure SZAG – cost cutting and efficiency improvement Capacity reduction to 700 kt p.a. with corresponding
workforce adjustment Temporary decrease of weekly working time to
32 hours without wage compensation
Volume development of higher value grades
36%41%
52%
2016 2018 2020*
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Structural tube
AirbagsPump case
Stabilizers
Suspension components
Seat belt- IHU/IHVfixings
Engine-components
Drive shaftsDrivetrain and steering components
Camshafts
Cost reduction, efficiency increase and growth
Innovation and growth – example Mannesmann BU
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Strategy
Strategy SZAG 2021 – focus on growth Expansion of the precision tubes plant in Mexico Construction of a production line for thick-walled tubes Upgrade of the existing finishing line
FitStructure SZAG – cost cutting and efficiency improvement Realignment of Mannesmann Precision Tubes Group as a
technology provider Program comprising 180 individual measures
Goal: Sustainable pre-tax margin of 5% as of 2021 Growth with profitable products Extension of the value chain Growth through internationalization
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Wir arbeiten an der Zukunft: Forschungsprojekt GrInHy2.0 Strategie
Green Industrial Hydrogen via steam electrolysis (GrInHy2.0)
Februar 2019Januar 2019 Aktuell
Start GrInHy2.0 mit Sunfire, Paul Wurth und Tenova
Erfolgreicher Abschluss des GrInHy-Projekts mit 10.000 Betriebsstunden
Bau GrInHy2.0-System und Fortführung des GrInHy-Anlagenbetriebs
GrInHy2.0 – efficient hydrogen production for a CO2-reduced steel production:Salzgitter-Group is an important research partner for the highly efficient steam electroysis technology
57
This project has received funding from the Fuel Cells and Hydrogen 2 Joint Undertaking (JU) under grant agreement No 826350. The JU receives support from the European Union’s Horizon 2020 research and innovation programme and Germany, Luxembourg, Italy, France.
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The future of CO2-reduced and sustainable steel production – in Salzgitter!
58Source: Fraunhofer-Gesellschaft/SZAG
Strategyen
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– SAlzgitter Low CO2 Steelmaking
Standard DRP Use of already established(direct reduction with natural gas) and novel (hydrogen production and use) technologies
Integration into existing and optimized integrated iron-and-steel works
Gradual reduction of CO2emissions: between 25% and 95% CO2 savings!
Sustainable "Carbon Direct Avoidance" approach: Reducing instead of recycling!
Use of hydrogen (H2) instead of carbon (C) for iron ore reduction.
Direct reduced iron as energy storage
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1 Salzgitter Group2 Market Situation3 Business Units4 Strategy5 Guidance
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Business Units – Forecast 2019Guidance
glut on the European steel market
higher raw material costs, especially for iron ore
plate: continuing high imports from non EU-countries
impact from the low utilization of the large-diameter pipes segment
section steel: lower, but sill satisfactory margins
large-diameter pipe mills: unsatisfactory capacity utili-zation expected in Germany – but better in the US
medium line pipes: norma-lization of demand
precision tubes over all stable
stainless tubes: moderate improvement in the market
prospects in international trading will remain under pressure due to restrictive trading policies
expected margin decrease in stockholding steel trade at least partly compensable through business with additional value added
KHS Group: selective order intake, expanding service business and additional positive effects from the measures introduced to enhance efficiency
specialist mechanical engineering companies of the DESMA Group: earnings will return to normal levels
stable sales
tangible reduction in the pre-tax profit due to margins
sales at the year earlier level
result notably below the previous year’s figure
sales slight upturn
positive pre-tax result
price-induced sales growth
gratifying earnings before taxes but notably below the previous year
moderate increase in sales
decline pre-tax profit
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Strip Steel Plate / Section Steel Mannesmann Trading Technology
Business Unit
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Salzgitter Group – GuidanceGuidance
Salzgitter AG affirmes its guidance for the financial year 2019. We continue to anticipate:
a pre-tax profit of between € 125 million and € 175 million and
a return on capital employed (ROCE) that is tangibly below the previous year’s figure.
a slight increase in sales to above the € 9.5 billion mark,
Legal Note and other remarks
We make explicit reference to the fact that imponderables, including changes in the cost of raw materials, precious metal prices and exchange rates, along with global trade policy measures and their possible impact may still exert a considerable influence over the course of the financial year.
To the extent that this presentation contains statements oriented towards or related to the future, such statements are based on our current state of knowledge and the estimates based on such knowledge made by the management of Salzgitter AG. However, as is the case with any forecasts or prognosis, such statements are also subject to uncertainties and risks. Notwithstanding prevailing statutory provisions and capital market law in particular, we are not obligated to update this data. In particular, we shall not assume liability of any kind for knowledge and statements, as well as any acts resulting on the basis of such knowledge or statements that emanate directly or indirectly from the analysis of the data, content and correlations of this document. The information and data made available do not represent an encouragement or invitation to buy, sell or conduct any other type of trade in securities. Salzgitter AG shall neither assume liability for direct nor indirect damages, including lost profits, arising as a result of the utilization of the information or data contained in this document.
For computational reasons, rounding-off differences of +/– one unit (€, % etc.) may occur in the tables. This document is also available in German language. In the event of any discrepancy, the German version shall prevail.
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Following a strong first quarter, we currently expect a pre-tax result rather more in the upper end of the aforementioned range. However,with reference to the unstable economic situation, not only in the EU, and the associated reduced forecasting reliability for the remainderof the financial year, we consider revising the forecast to be premature at present.
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BACKUP1 Financials2 Pensions3 Investor Relations
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Q1 2019 Q1 2018 Δ
Crude steel production kt 1,739.8 1,773.8 -34.0
External sales1 € million 2,293.8 2,307.5 -13.7
Earnings before tax € million 125.9 95.9 30.0
Earnings after tax € million 96.7 65.2 31.5
Earnings per share (undiluted) € 1.76 1.18 -1.18
ROCE % 14.1 11.6 2.5
Core workforce2 23,683 23,333 350
Key data per 2019/03/31
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Financials
Salzgitter Group off to successful start to the year
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1 only from entities within the Group of Consolidated Companies of Salzgitter Group 2 per reporting date
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Income statement
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Income Statement (€ million) Q1 2019 Q1 2018
Sales 2,293.8 2,307.5
Increase/decrease in finished goods and work in process/other own work capitalized 26.9 18.9
2,320.7 2,326.4
Other operating income 53.7 55.8
Cost of materials 1,495.1 1,505.0
Personnel expenses 442.5 422.4
Amortization and depreciation of intangible assets and property. plant and equipment 87.4 84.6
Other operating expenses 262.6 270.7
Income from shareholdings 0.0 0.1
Result from investments accounted for using the equity method 52.9 9.5
Finance income 5.6 3.6
Finance expenses 19.4 16.9
Earnings before taxes (EBT) 125.9 95.9
Income tax 29.2 30.7
Consolidated result 96.7 65.2
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Consolidated balance sheet
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Assets (€ million) 2019/03/31 2018/12/31 ΔNon-current assets 4,082.5 3,835.9 246.6
Intangible assets, property, plant and equipment 2,452.2 2,339.9 112.3
Investment property 83.1 83.5 -0.4
Financial assets 73.7 75.6 -1.9
Investments accounted for using the equity method 987.7 888.3 99.4
Trade receivables 23.0 25.5 -2.5
Other receivables and other assets 26.6 24.0 2.6
Income tax assets 0.1 0.1 0.0
Deferred income tax assets 436.0 399.1 36.9
Current assets 4,934.1 4,921.0 13.1
Inventories 2,341.9 2,327.5 14.4
Trade receivables 1,437.6 1,367.2 70.4
Contract assets 173.8 175.2 -1.4
Other receivables and other assets 441.3 403.7 37.7
Income tax assets 26.7 24.5 2.2
Securities 68.6 67.4 1.1
Cash and cash equivalents 444.3 555.6 -111.3
Balance sheet total 9,016.6 8,756.9 259.7
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Consolidated balance sheet
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Equity and liabilities (€ million) 2019/03/31 2018/12/31 ΔEquity 3,246.9 3,332.1 -85.1Subscribed capital 161.6 161.6 0.0Capital reserve 257.0 257.0 0.0Retained earnings 3,154.3 3,181.0 -26.7Other reserves 0.0 60.0 -60.0Unappropriated retained earnings 33.1 33.1 0.0Treasury shares -369.7 -369.7 0.0Minority Interest 10.7 9.1 1.6Non-current liabilities 3,290.0 3,035.7 254.4Provisions for pensions and similar obligations 2.440.5 2.275.5 165.0Deferred tax liabilities 67.6 67.6 0.0Income tax liabilities 36.3 36.9 -0.6Other provisions 353.2 358.4 -5.2Financial liabilities 387.8 291.1 96.6Other liabilities 4.6 6.1 -1.5Current liabilities 2,388.2 2,389.2 -1.0Other provisions 287.7 281.4 6.2Financial liabilities 419.3 426.9 -7.6Trade payables 1,101.9 1,130.2 -28.3
Liability contracts 200.4 250.2 -49.8Income tax liabilities 39.1 37.0 2.2Other liabilities 339.8 263.4 76.3Balance sheet total 8,925.2 8,756.9 168.3
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Cash flow statement
67
Financials
Operating cash flow positively impacted by improved quarterly result
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(€ million) Q1 2019 Q1 2018 Δ
Cash and cash equivalents at the start of the period 555.6 679.4 -123.9
Cash flow from operating activities 53.6 100.6 -47.0
Cash flow from investment activities -143.2 -147.0 3.8
Cash flow from financial activities -24.6 -7.0 -17.6
Changes in cash -111.3 -55.5 -55.8
Cash and cash equivalents at the end of the period 444.3 624.0 -179.7
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BondsFinancials
Convertible Bond
Volume: € 167,900,000 Coupon: 0.0 % p.a. Issue date: June 5, 2015 Maturity date: June 5, 2022 Denomination: € 100,000 Conversion ratio: 2,125.4708 Shares per Bond1
Conversion price: € 47.04841
Underlying shares: 3,568,6651
Conversion right period: July 25, 2015 to May 26, 2022 Early redemption at the option of the Issuer: On or after June 5, 2018, and upon giving not less than 30 nor more than 40 calendar days notice,
only possible if the volume adjusted average XETRA-quotation on at least 20 of the 30 consecutive trading days directly prior to the notification date exceeds 130% of the then applicable conversion price
1 Most recently adjusted per 2018/05/2968en
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Strip Steel Business Unit
69
Financials
Gratifying result; decline compared with excellent year-earlier result mainly due to raw material price increases
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1 per reporting date
Q1 2019 Q1 2018 Δ
External sales € million 598.8 609.4 -10.6
Order bookings kt 1,138.8 1,238.3 -99.5
Order backlog1 kt 911.5 944.6 -33.1
EBITDA € million 100.1 117.9 -17.8
EBT € million 46.3 62.5 -16,2
Core workforce1 6,207 6,183 24
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Plate / Section Steel Business Unit
70
Financials
Lower pre-tax result due to the earnings development of the heavy plate producers
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1 per reporting date
Q1 2019 Q1 2018 Δ
External sales € million 229.6 286.6 -57.0
Order bookings kt 524.5 629.2 -104.8
Order backlog1 kt 337.8 380.8 -42.9
EBITDA € million 14.0 20.6 -6.6
EBT € million 1.7 9.3 -7.6
Core workforce1 2,444 2,467 -23
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Mannesmann Business Unit
71
Financials
Growth in result thanks to better performance in nearly all product segments
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1)per reporting date
Q1 2019 Q1 2018 Δ
External sales € million 290.3 271.0 19.3
Order bookings kt 342.1 382.8 -40.7
Order backlog1 kt 477.3 539.7 -62.4
EBITDA € million 25.6 19.0 6.6
EBT € million 8.4 1.6 6.8
Core workforce1 4,700 4,651 49
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Trading Business Unit
72
Financials
Lower pre-tax profit because of decline in volumes and the margin situation of the stockholding steel trade business
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1 per reporting date
Q1 2019 Q1 2018 Δ
External sales € million 797.9 759.8 38.0
Shipments kt 1,043.4 1,122.7 -79.4
EBITDA € million 9.8 17.9 -8.1
EBT € million 3.0 13.8 -10.8
Core workforce1 2,126 1,991 135
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Technology Business Unit
73
Financials
Doubled result of the KHS Group more than compensates earnings decrease of special machinery producers
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1 per reporting date
Q1 2019 Q1 2018 Δ
External sales € million 333.8 327.7 6.1
Order bookings kt 330.0 305.9 24.1
Order backlog1 kt 704.5 686.1 18.4
EBITDA € million 17.8 15.9 1.9
EBT € million 11.8 11.2 0.6
Core workforce1 5,559 5,425 134
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Industrial Participations / Consolidation
74
Financials
Earnings before taxes significantly improved, result impacted by the contribution of Aurubis AG
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Q1 2019 Q1 2018 Δ
External sales € million 43.3 52.9 -9.6
EBITDA € million 61.0 1.8 59.3
EBT € million 54.7 -2.4 57.1
Core workforce1 2,647 2,616 31
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BACKUP1 Financials2 Pensions3 Investor Relations
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Mechanics of internal pension commitment fundingPensions
Internal funding over lifetime of employee
Provision is determined by development of individual salary, time in employment at SZAG, actuarial life expectancy and inflation Contribution as personnel expense and interest element (both non-cash) Monthly payout from operating cash flow
Pension provision (non-cash) Contribution by SZAG (non-cash) Pension payment (cash)
Joinscompany
5 years Retirement
... ...
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Funding of pension commitmentsPensions
(2018/12/31) (2018/12/31)
Pension obligations completely covered by internal funds!
Projected Benefit Obligation (PBO): € 2,351 m1
According to IAS 19:− Discount rate of 1.25%2
– in line with market average− Trend in salaries: 2.75% p.a.− Trend in pensions:
1.75% p.a.− Staff turnover: 1% p.a.− Valuation based on the actuarial
principles
Balance sheet: pension provisions € 2,275 m Assets held by external funds:
€ 75.2 m Non-current assets: € 3,836 m Net position due to banks:
€ 192 m
1 thereof € 75.2 million covered by assets held by external funds 2 per 2019/03/31, before: 1.75%
0
1
2
3
4
5
PBO
Pens
ion
prov
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Non
-cur
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asse
ts +
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€ bn
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BACKUP1 Financials2 Pensions3 Investor Relations
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0.200.25
0.30
0.45
0.55
-15
4
53
238
347
-100
0
100
200
300
400
-0.20
0.00
0.20
0.40
0.60
0.80
2014 2015 2016 2017 2018
DividendInvestor Relations
Dividend increased by another 20%
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Financial year 2018Dividend per share: 0.55 €
1 restated
1
€ € million
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Inst. shareholders – other Regions
Shareholder structure and share turnoverInvestor Relations
Balanced shareholder structure
Shareholder structure Daily turnover in thousand shares
Salzgitter AG
State ofLower Saxony
Inst. Shareholders – Germany
Inst. shareholders – North America
Inst. shareholders– UK + Ireland
Inst. shareholders– other Europe
Other shareholders
High liquidity
80
0
200
400
600
1Q 13 4Q 13 3Q 14 2Q 15 1Q 16 4Q 16 3Q 17 2Q 18 1Q 19
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Free float: 63.5%Treasury shares: as of July 8, 2010; other information is based on the external shareholder identification as of January 2019
10.0%
26.5%
13.9%19.6%
3.3%
5.0%
1.1%
20.6%
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Disclaimer
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Legal NoteTo the extent that our Internet pages contain statements oriented towards or related to the future, such statements are based on our current state of knowledge and the estimates based on such knowledge made by the management of Salzgitter AG. However, as is the case with any forecasts or prognosis, such statements are also subject to uncertainties and risks. Notwithstanding prevailing statutory provisions and capital market law in particular, we are not obligated to update this data. In particular, we shall not assume liability of any kind for knowledge and statements, as well as any acts resulting on the basis of such knowledge or statements that emanate directly or indirectly from the analysis of the data, content and correlations of this document. The information and data made available do not represent an encouragement or invitation to buy, sell or conduct any other type of trade in securities. Salzgitter AG shall neither assume liability for direct nor indirect damages, including lost profits, arising as a result of the utilization of the information or data contained in this document.
CopyrightsThis data file and the data contained on these pages (including, among others, texts, images and graphics) are subject to copyright and other laws on the protection of intellectual property. To the extent that nothing contradicting or deviating is stated, all trademarks bear legal trademark protection. This applies in particular for Salzgitter company logos and product names. The brands and design elements used on our web pages are the intellectual property of Salzgitter AG. We therefore reserve all rights as such. The document serves to provide non-binding information regarding our company to the respective user, and may not be used within the framework of other depictions, in particular websites, without our express prior written consent.
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