Salzgitter Group confirms turnaround in the first half of 2015
The Salzgitter Group closed the first half of 2015 with its first positive half-year earnings before taxes since 2011, substantially up on the result from the previous year. All business units contributed to this pleasing development with improved results compared to the previous year. In total, € 33.1 million in expenses for structure-enhancing measures was incurred. The financial basis remains very solid with a 35% equity ratio, as well as a net credit balance of € 178 million.
CEO Prof Dr Ing Heinz Jörg Fuhrmann commented on the results: “This development proves the far reaching effects of the groupwide restructuring program ‘Salzgitter AG 2015’, regardless of the still challenging economic environment in Europe. This is the result of our own efforts. Nevertheless, we still have a long way to go and a wide range of tasks to complete. Our aim is to consistently continue along this successful path.”
At € 4,529.6 million, the external sales of the Salzgitter Group in the first half of 2015 were roughly on a par with the previous year level (first half of 2014: € 4,549.3 million). The company generated a gratifying pre-tax profit of € 80.2 million (first half of 2014: € –4.2 million). This profit contains a € 16.4 million positive contribution from the Aurubis investment (first half of 2014: € 39.2 million), as well as a total of € 33.1 million in expenses for streamlining measures. The after-tax result stood at € 41.3 million (first half of 2014: € –15.9 million), resulting in earnings per share of € 0.72 (first half of 2014: € –0.33). The return on capital employed (ROCE) was recorded at 5.4 % (first half of 2014: 1.1%).
Development of the business units
The Strip Steel Business Unit posted shipments on a par with the previous year during the first six months of the financial year 2015. Due to the highly intense competition in the European steel market, selling prices for most products have weakened over the course of the year, resulting in external sales falling just short of the previous year’s figure (€ 1,030.1 million; first half of 2014: € 1,095.6 million). The business unit generated a pre-tax profit of € 20.7 million based on the gratifying rise in contribution from Salzgitter Flachstahl GmbH and therefore significantly exceeded the first half of 2014 (€ –6.9 million). In addition to a decline in raw materials costs, this development was also driven by the first cost reduction effects of the pulverized coal injection plant at the blast furnaces in Salzgitter launched in April.
Europe’s heavy section and plate markets presented a disparate picture during the period under review. While the section business proved comparably stable, the heavy plate business was impacted by modest demand and increasing import volumes. However, the shipments of the Plate / Section Steel Business Unit still exceed the previous year figure. As a result of selling price developments, external sales of € 500.2 million remained tangibly below the figure recorded in the first half of 2014 (€ 556.5 million). Thanks to the sustained success of the rapidly implemented restructuring and operating optimization measures, Peiner Träger GmbH achieved a pleasing pre-tax profit. The plate producers also significantly improved their result compared to the previous year. However, a negative pre-tax result was posted (€ –19.5 million; first half of 2014: € –42.6 million) due to the clear loss recorded at HSP Hoesch Spundwand und Profil GmbH, which contained a € 23.1 million precautionary measure in connection with the decision to shut down the sheet piling product segment.
In the Energy Business Unit, production for the pipeline project in the Black Sea (former South Stream), which recommenced in June, as well as the high capacity utilization of the North American sites were only able to partially offset the still challenging market situation in the European pipe market. As a result, shipments declined slightly and external sales fell short of the comparable figure (€ 574.9 million; first half of 2014: € 651.0 million). However, the business unit was still able to return to the black with a profit of € 3.3 million (first half of 2014: € –19.8 million). In this context, the EUROPIPE Group substantially reduced its pre-tax loss thanks to the upbeat business of the US companies and despite the formation of € 10.0 million provisions for restructuring measures at EUROPIPE France S.A. The line pipe companies almost halved the negative result recorded in the comparable period of the previous year.
Demand on the international steel trading markets remained restrained in the first half of 2015 in almost all regions and product segments. Nevertheless, shipments at the Trading Business Unit increased sharply in the first six months of 2015 compared to the previous year’s period. External sales rose to € 1,690.3 million accordingly (first half of 2014: € 1,560.0 million). Owing largely to the gratifying pre-tax result from international trading, the business unit more than doubled pre-tax profit to € 17.3 million (first half of 2014: € 7.0 million).
In the first six months of 2015, the Technology Business Unit matched the good level of order intake from the previous year. External sales improved to € 636.3 million (first half of 2014: € 592.8 million). At € 14.6 million, a presentable pre-tax profit was generated, which rose compared to the previous year period (first half of 2014: € 11.5 million), with the KDE Group contributing to this development along with the KHS Group with its increased service business and aperiodic dividend income.
The external sales of Industrial Participations / Consolidation grew (€ 97.7 million) compared to the previous year’s figure (first half of 2014: € 93.2 million). However, the pre-tax profit of €43.7million was slightly lower than the previous year’s figure (first half of 2014: € 46.6 million). This figure includes income of € 16.4 million from the Aurubis investment (first half of 2014: € 39.2 million). In addition, Group companies not directly allocated to a business unit made an overall positive contribution to profit that clearly exceeded the previous year’s figure. Positive valuation effects from foreign exchange transactions further bolstered the result.
Source : Strategic Research Institute