Salzgitter Ag Akt Shs

Ladies and gentlemen, welcome to our analyst conference for the first half of 2025. Before we start, two remarks from my side. First one, this analyst conference will be recorded and afterwards published on our website. The second one, this is an analyst conference. The press is very welcome to listen, but we will only allow questions from participants of the capital market And without further ado, I'd like to hand over to you, Gunnar.

Well, thank you very much, Markus. Good morning, everybody in this call. I'm very happy to have you all here and to report to you the first half of this year for the SAIS-GIPTA group. And as usually, we'd like to start with the occupational safety. You know that this is a very important topic for all of us. and I'm very pleased to report that we have started well into this year compared to previous years, hence we are well underway to further reduce the LTIF quota. The target remains to have zero accidents and also all activities ongoing that we also reported on the annual general meeting remain in place and remain under full focus to further reduce the LTAF also going forward. Now, looking at the market environment, We, of course, see that the U.S. tariff policy has further developed now with the overall quota of 50%, however, still remains at 15%. There is an open question still to be answered between the negotiating parties whether there is a quota, a tax-free quota to be implemented but to be seen. So certainly nothing that we are as industry very happy about. We at Salzgitter are not that much Hurt by this tariff, given that our export into the U.S. is limited. Also from the pipe business, there's limited risk, downside risk that we see in that area. But, however, of course, it adds to the overall uncertainty that we see in the market. China is of course still a topic for us. We see that the export industry is under massive pressure. We see also further inflows of Chinese steel into Europe. Actually, 2025 has been so far the record year in terms of export into Europe. Back since 1990 we haven't seen figures that high compared to that. Staying with Germany, of course, the trade disputes that I just talked about are hitting us in times where also the demand is very low. So we are sort of hit from both ends. Of course, we see with some positive notion the fiscal policy that should improve growth in the steel sector as of 2026. And certainly the budget discussion, the national budget discussion on September should also give some more clarity on potential cost reduction on the electricity side. Let's see where the German government will land that discussion. Looking at EU. Skill demand is low, same picture as in Germany, and the import remains high. We see more than 30% of the total volume being imported, not only China, but also other countries, but also here record high numbers. However, the Political and regulatory discussion we're seeing, and we get back to that in a later chart, is of course to some extent positive and should help us to reduce in-courts going forward. Stimulus through construction and defense is a bit the same like in Germany. We see there is a potential demand increase as of 26. We don't see this hitting the ground in 25. So we're waiting for this in 26 and from there Intensive discussions when it comes to the carbon board adjustment mechanism, the CBAM, given that it has to be implemented in 26, so a lot of work has to be done in Brussels in the second half, especially in Q4, 25. and also high debate right now on the trade instruments, the safeguards, which also needs to be replaced in 2026. So also here a lot of political debates we're having, both in Brussels but also in Berlin. Raw material energy prices. We have seen a recent increase on the iron ore side, which has fallen below $100 per ton, now being above. 100 and a bit north of that. Let's see where that stabilizes. Coca-Cola is still below 200, relatively stable there, with daily fluctuation, but that's more sort of At least from our read, this is not the physical trade but rather the financial trade that gives this kind of fluctuation structurally below 200. Energy price is relatively stable at 90 euros per megawatt hour in Germany. And so its natural gas has come down quite substantially after the winter increase and now relatively stable there as well. Also, of course, driven by the low industrial demands overall. Looking at steel, we have seen steel prices coming down. I'm looking at the left side, Northern Europe steel prices. Went up in 25 until late April, beginning of May, and then went down again. We've seen for 540, 535 euros per ton of hot water coil. Recently a pickup. Our read is this is already expectation in the market when it comes to safeguards and C-bomb, given that this will kick in as of beginning of 26. also reflecting the pickup that we have seen in China lately. If you look at the right side, the orange curve, China has had a steel price increase since July 25. Our read here is the impropriation of the two sessions of the NVC and the CBPCC. In March next year, there has been some guidance that China will look to overcapacity that they have themselves. and try to balance the overcapacity question with sustainability. So certainly at least a hint that overcapacity is addressed also then in March next year from the NTC. So that's certainly a positive trend, but further to be looked at whether that is stabilizing or not. So, zooming in on Salzgitter, first half 25, these are the first half of 24. Going through the numbers quickly, David will go through them in more detail. Kürzel production, of course, the low production due to low demand, but also maintenance work on our blast furnace C that has been carried out in the first half of 25, hence the difference of foreign demand. 1,000 tons, first half 25 vis-à-vis 24. External sales have come down quite considerably. This is predominantly due to prices. And then basically that debt trickles down also on the following numbers. We should be aware of that the results include our rubles at a level of 71 million euros. Slightly above last year's numbers, there were 70.5, if I recall correctly. So, slightly above. That is included here, of course. And also a big number, and Birgit will also elaborate further on that, is the reporting dates related valuation of derivatives, which is included here at roughly minus €80 million, vis-à-vis a plus €10 million in the first half of 2024, so also that is part of the numbers. What we should, it's not on that slide, but we should also mention is that our equity ratio remains very healthy at a level of 42.2%. So that is perhaps worth mentioning on that slide as well. Looking at the different business units in the first half, of course steel production has seen the low level of demand. Prices or revenues for flats, I should say, have stabilized in the second quarter slightly, but sales and earnings down due to the low prices, as I just mentioned. Steel processing is hit by weak demand on heavy plate. Very weak demand also in terms of shifting qualities down to the lower grades. And we have seen market price decline also now towards the middle of this year, so hard hits on heavy plates. Line pipe demand is stable. It has not dropped. Also, exports into the US have not been cancelled. So, of course at risk, but not cancelled yet. On the precision tube side, low demand from core segments, especially automotive. And we should not forget that here in the steel processing we have the deconsolidation of the stainless steel tubes. from first half of 24 to this first half 25. This is in terms of sales roughly 170 million euros reduction due to the deconsolidation. Trading. has recovered compared to last year, so the turnaround is well underway. We're achieving good results on the improvement measures that we have implemented, so on that end However, of course, we see an overall European weak demand on stock keeping trade, hence also there a decline. International trade has also recently come down with the uncertainty on the US tax discussion. however, stabilized otherwise. Technology, positive news from KHS. We foresee a record year for KHS again, so with an EBT well above 100 million euros for this year. Order intake is also significantly above last year. Our plus-max technology is really kicking off, especially in India, and now we're trying sort of to move that forward into Africa and the Americas. So good development here. Technology still includes KDS, our shoe machinery. You follow that we recently signed a deal to sell Desma shoe machines, but still included here. So taking all that together, we have sort of narrowed down our management guidance for the quarter remainder of this year, sales being between 9 and 9.5 billion euros, EBITDA between 300 and 400. The pre-tax results narrowed down from minus 100 million to zero. and a ROC that is slightly higher year on year, so compared to last year. So that is how we look upon, overall look upon the year for the Salzgitter Group. Going further down a bit more into details, again starting with the political framework we're looking at. Trade defense. There has been a lot of discussions on trade defense, especially in Brussels lately. The safeguard review is completed. I think that is good, however not sufficient yet. Same goes for the safeguard succession instruments. There is a proposal upcoming now in Q3. The consultation of the industry, the wider industry, is ongoing and the steel industry as such is invited, or not only the steel industry, but we are also invited to contribute to the sort of data collection that the EU is doing right now. So we expect then a proposal by Q3 of this year. And then we have Melvin Poole, which is part of the consultation. So should Melvin Poole be integrated into the safeguards? From our perspective, absolutely yes, in order to reduce circumvention options in the safeguards that we today see. And then also the last two points, which are more of a strict enforcement of existing TBI rules, both the threat of injury procedures as well as the lesser-duty rule. Those are existing TBI rules that should be enforced in a stricter way. However, as we've seen from the past, difficult to implement, so let's see how that then plays out in practice. Carbon motor adjustment mechanism is something we're going to see as of 26. Details regarding the export solution will be expected in Q4, as well as the expanding of the scope and the measurements against circumventions, so all in Q4-25, so heavy on that quarter. and hence a lot of focus from our end and Salzgitter, but the entire industry to get things right here and to also lobby the Commission early on to get also actionable, an actual set of rules for the SEBA. Last but not least, the energy bureaucracy key markets. It's good to see that the Sina Metals Action Plan includes those elements as well. Some of them are very known to us. If you take the label for CO2 intensity of a product, this is covered through our LESS label, and we're now in discussions with the Commission to integrate that into their view on the labeling. The lower grid fees is something that is discussed in Germany and should be included in the upcoming budget and hence we will see how that plays out for us in terms of cost reduction as of 26. Then scrap export is a reciprocity element that the EU is discussing there with other and then the reform of the research fund is just making available 1.5 billion euros that are still part in that research fund and have not been sort of called off and make them usable for the transformation. So you see this steel and metals action plan has a lot of elements that will and can support the steel industry going forward and can also address some of the challenges that we have here as an industry and also, of course, as Stahlskette. So how do we then approach the entire situation? As you recall, we have this holistic approach where we look at both growth, but also performance initiatives and performance measures. Looking at the growth to start with, I will not go through all of them. I think the ones in bold are the ones that have changed since we talked you through that last time. We have further increased partnerships around the green steel products Zalkos, especially on the commercial vehicle side. We have closed loop agreements with OEMs, but also with the construction industry first, and then we have construction industry on that end. And we are also increasing our activities on the commercial recycling of slag, hence making slag really a product, or the different types of slag a product and a revenue stream out of that going forward. On the seed processing side, we have been very vocal about the approval on the German Bundeswehr for Secure 500. Further approvals are expected in the second half of this year. They should come in slightly quicker than the first one, given that we are basically basing them on the existing approval. So we should be able to further perform here. Trading, interesting to see that Middle East is interested in green steel and international trading. Our trading house is expanding the trades for green steel in the Middle East, both on material but also third-party material. Same goes for scrap. Scrap becomes more and more relevant also on the trading side. Africa, Southeast Asia is here the key market. Heavy plate, there's high interest in heavy plate, high quality heavy plates. in and to Asia, interesting enough. Also, Asia is interested to import high-quality heavy plates from Germany, so supporting there. And on technology, I'll talk you through PLUSMAX and the successes we have there. I'll not go further into that unless you have a question in the Q&A. Now, looking at the initiatives and performance measures, let me start then with the portfolio. I talked about the shoe machinery. The sale is signed, has been signed last week with NMP. So the transfer is supposed to happen this year, so the closing is supposed to happen now in Q3. So next step in our portfolio management, so continuous work there. On the structure, We talked about the restructuring of the trading units and you have seen the numbers, so restructuring is progressing well. A social plan has been signed and is executed as we speak. We are reducing a triple-digit number of employees in the trading unit, and this is all going through quite smoothly, which I think is a success in the way we do restructuring in Salzgitter and here in particular. Same goes for the steel processing unit, restructuring ongoing on the NPT, the precision tubes group, which is one. the closure of our Helmond sites in the Netherlands, and we will sort of reshuffle the volume that has been processed on Helmond to other sites. And we're also talking here roughly 70 FTEs that will be reduced, as well as further focus on the Mexican site, where we also are progressing well in order to get performance up here. So initial success on those restructuring measures. Now talking performance in the economics measures, I hand over to you, Birgit, to guide us through here.

Sure. Thank you, Gunnar. Thanks. A warm welcome also from me to you out there. Pleasure to be here with you again today. So looking at performance, that is really a topic that is going quite well. As you know, as you are aware, we have expanded our performance program from the original performance 2026 program to a new program, a large program, performance 2028. And by this, we doubled our ambition coming from 250 million euros of savings to 500 million euros of total cost savings until 2028. And this year we have already realized 48 million euros out of the target 97. I will show you this in the next slide. That is our target for this year. So that is running precisely on track, which is really good. And as you have seen, we really need also these contributions. And next to the performance program, we are, of course, also focusing on cash measures, really tightly looking at investments, tightly looking at budgets and spendings, of course, and also tightly looking at our working capital management. And we will have a look at this also in the upcoming slides. So here some more details on our performance program 28. You find here again on the right side the 48 million euros I have mentioned already, which we have realized in the first six months. You see right of that the target of 97, so we are here perfectly online to realize this target. and we are very confident that we will be able to make it and we are targeting for 2026 an even higher amount and we are right now busy also caring already about the measures for next year. Also good to see the 48 million Euro in the first half of the year are already three quarter of what we have achieved last year for the total year. So really you can see that we are really expanding here and that we are also able to deliver here. So coming to the KPIs, as Gunnar has said already, we did not expect a pickup of the economy in the first half of the year. And in addition, we are also facing quite some price pressure in the steel segments, and we also have the deconsolidation of the MST group. And all this is summing up in our sales of 4.665 million euro, which is 11% below previous year. And if you take out the deconsolidation of the MST, it is 11%. It is 8% below previous year, and the main decrease is coming from the trade area here. And as a result, of course, EBITDA comes down. We realized €116.8 million in the first six months. Our earnings include, as shown, the positive contributions from our cost-saving program from our restructuring activities, especially trade, and from a sustainably strong performing technology segment, and from our Aruba shares. Mona has mentioned the more than 70 million euros here as well. However, we had to digest 80 million euros from the reporting date valuation of derivative positions. And in addition, we deferred 10 million euros impairment risk from planned portfolio streamlining. This means the earnings from our business activities plus our lobes were balanced. Our cash flow from operating activities was significantly stronger than last year. As you can see here, we reached 81 million euros. And this was strongly supported by the reduction in working capital. The figure you can also find here, almost 2.5 billion Euro compared to 3 billion Euro one year before. And also quite good to see is our net financial debt, not as an absolute figure, but concerning the development, because it was a lot better than originally anticipated, and despite ZIPO's investments, it was only slightly higher than one year ago. So what do we expect for the second half of the year? We expect that our financial debt will be around minus 1.2 billion Euro, which is significantly below our last prognosis we shared with you in our last meeting here, which was around minus 1.5 billion Euro. We expect only a very cautious economic recovery. And we expect also having a positive impact, reduced costs for raw materials, especially for those purchased in U.S. dollar. And we, of course, expect the other half of our Performance 28 cost-saving program, technology with a very strong fourth quarter, and, of course, ongoing Arubus contributions. All what we have discussed right now, we of course can also see here in our profit and loss statement, the sales decreased of minus 578 million euros, and due to changes in finished goods and work in progress, a decrease in total in the operating performance of minus 833.8 million euros. And we see here also, NICE, almost 85% of the operating performance can be compensated by the material cost reduction of minus 740 million Euro. And the changes in other operating income and expenses are almost balanced. They are mainly influenced here by exchange rate impacts and by reduced administration costs as well. Looking at our balance sheets, our non-current assets increased mainly in the area of the intangible assets, property, plant, and equipment by €51 million, and also investments accounted for using the equity methods, this is mainly our rubles, by €53.6 million. Looking at our current assets, the inventories decreased nicely by more than €220 million whilst we see the upswing in the trade receivables compared to the year-end closing. Assets held for sale here are, as Gunnar has mentioned, our DESNA show machine entity. So we are putting this now into this line here with 47.7 million Euro. And you see that our cash was reduced by 237 million Euro for investing activities. Looking at the other side of the balance sheet, we see here a decrease in the equity. This is in line with the reduced earnings. So the equity reduced here by 97 million euros. Looking at the non-current liabilities, we see here an overall increase by 90.8 million euros, and whilst provisions for pensions decreased due to a higher interest rate by 100 million euros, we see that the financial liabilities increased by 168.7 million euros. Looking at current liabilities, we see an overall decrease by 149.7 million euros, mainly driven by reduced financial liabilities of minus 201.9 million euros, and also trade payables, which were reduced by 122.8 million euros. And these two positions were partially compensated and other liabilities, which increased €112.8 million. Looking at our cash flow statement, we started at the beginning of the year with around €1 billion, and I have already presented to you the €81 million cash from operating activities that we can add up here. And then we spent for investing activities 243.5 million euro. And cash from financing cost us 47.3 million euro. So we have a cash and cash equivalence at the end of the first half of the year of 765 million euros, which is better than one year before. And that amount is 184.4 million euros. Working capital, you see here the quarterly development and the comparison compared to one year ago with a nice decrease of more than half a billion Euro down to around 2.5 billion Euro. And of course, here are reflected lower prices for raw materials and for steel products as well as our really strong focus on managing our working capital. Investments you see that we have spent in the first half of this year 241 million Euro. Our budget is also quite high for this year, however a little lower than last year. And it looks like, it may look like we will not be able to reach almost the level of last year. However, when we analyze last year, we see that the ratio between the first and the second half of the year were almost equally. So there is for us no need due to the figure of the first half to cut down on the total years figure. And with this, I hand over to you, Golan.