Analyst Conference First Half 2018 Prof. Dr.-Ing. Heinz Jrg Fuhrmann, - PowerPoint PPT Presentation

Analyst Conference First Half 2018 Prof. Dr.-Ing. Heinz Jörg Fuhrmann, Chairman of the Executive Board Burkhard Becker, Chief Financial Officer SZAG Investor Relations Frankfurt, August 13, 2018 english

Prof. Dr.-Ing. Heinz Jörg Fuhrmann 1 Key Data / Market Situation 2 Business Units 3 Group strategy SZAG 2021 SZAG Investor Relations Burkhard Becker 4 Financial Accounts First Half 2018 5 Guidance english

Key Data / Market Situation Overview Very pleasing first half of 2018 Market  Robust strip steel market  Framework conditions of other product areas developed positively for the most part  High uncertainty from trade policy measures impair planning capability and international projects  Volatile raw material markets Salzgitter Group  Earnings doubled versus previous year’s period  € 43 million additional earnings improvement potential realized in the first half year  Additional € 24 million in earnings contributions from growth programs SZAG Investor Relations english 3

Key Data / Market Situation Key data per 2018/06/30 Crude steel production [kt] Consolidated sales [€ million] EBT [€ million] 4,616 4,617 3,528 3,415 199 +114 +1 +99 (+3%) (+0%) (+98%) 100 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 ROCE [%] Net financial position [€ million] Core workforce [per 06/30] 12.8 23,296 23,273 240 SZAG Investor Relations 7.3 +5,5% +215 -23 24 english H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 4

Key Data / Market Situation Economy Industrial production in selected countries of the EU (Jan. 2007 = 100) 120 110 100 90 80 70 60 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Germany GB France Italy Spain Source: Eurostat, own research, last figure from May 2018 SZAG Investor Relations The trend of the previous years continues: Slightly improving EU industrial production, Germany remains strong english 5

Key Data / Market Situation Raw materials Iron ore Coking coal Steel scrap (62% Fe CFR China, US$/dmt) (FOB Australia, US$/t) (grade 2/8, €/t) 350 300 100 90 300 280 80 250 70 260 60 200 240 50 150 40 220 100 30 20 50 200 SZAG Investor Relations Volatile raw material markets present risks, but also opportunities. english 6

Key Data / Market Situation Update international steel trade International measures affecting the European Union Reaction of the European Union  USA: Protective tariffs against numerous states cover  June 1, 2018: WTO complaint filed against the Section almost all product groups 232 tariffs of the United States  March 26, 2018: Introduction of protective tariffs under the  June 22, 2018: Rebalancing measures against certain guise of national security (Section 232) in the U.S., since “iconic” US products adopted June 1, 2018 these also apply to imports from the EU  July 19, 2018: Preliminary safeguard measures for a  Turkey: Safeguard investigation initiated broad steel and tubes portfolio implemented Imports of finished steel products (1,000 t/month) 2.500 2.000 + 61% 1.500 1.000 500 SZAG Investor Relations - 2014 2016 Q1 2018 China Ukraine Russia Turkey India South Korea Rest english 7

Key Data / Market Situation Steel prices Spot prices Northern Europe Hot-rolled coil prices international (€/t) (€/t) 900 900 800 800 700 700 08/18 08/18 600 600 500 500 400 400 300 300 Jan 17 Jul 17 Jan 18 Jul 18 Jan 17 Jul 17 Jan 18 Jul 18 HRC EXW Ruhr Plate EXW Ruhr Medium sections Northern Europe EXW Ruhr USA EXW Indiana China Schanghai SZAG Investor Relations Following a period of recent rises, steel prices are stabilizing at the moment; different trading policies result in enormous regional price variations english 8

Prof. Dr.-Ing. Heinz Jörg Fuhrmann 1 Key Data / Market Situation 2 Business Units 3 Group strategy SZAG 2021 SZAG Investor Relations Burkhard Becker 4 Financial Accounts First Half 2018 5 Guidance english

Business Units Strip Steel Order intake Consolidated sales Earnings before taxes 3,000 1,400 125 1,200 1,243 2,500 2,383 1,102 2,305 1,000 2,000 109.7 € million 800 € million kt 1,500 100 600 94.2 1,000 400 500 200 0 0 75 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 SZAG Investor Relations Increase of sales and profit before taxes was caused by sales price development english 10

Business Units Plate / Section Steel Order intake Consolidated sales Earnings before taxes 1,400 600 25 555 1,200 538 500 22.0 1,165 20 1,100 1,000 400 15 800 € million € million kt 300 600 10 200 400 5 5.7 100 200 0 0 0 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 SZAG Investor Relations PTG was main factor of earnings increase; pre-tax result of heavy plate companies on previous year’s level english 11

Business Units Mannesmann Order intake* Consolidated sales* Earnings before taxes 900 600 14 569 563 800 12 12.3 791 500 767 700 10 600 400 8 € million € million € million 500 6 300 400 4 300 200 2 200 0 100 100 -2 -2.7 0 0 -4 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 * excluding EUROPIPE-Group SZAG Investor Relations Marked earnings improvements of EUROPIPE, precision tubes group and Mannesmann Line Pipe result in turnaround english 12

Business Units Trading Shipments Consolidated sales Earnings before taxes 3,000 1,800 40 1,600 1,676 2,500 1,549 34.6 2,500 1,400 30 2,247 2,000 1,200 25.0 € million € million 1,000 kt 1,500 20 800 1,000 600 10 400 500 200 0 0 0 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 SZAG Investor Relations Decreasing shipments in international trading due to trade policy framework conditions; nonetheless very presentable result english 13

Business Units Technology Order intake Consolidated sales Earnings before taxes 700 700 25 633 600 600 630 614 610 20 20.5 500 500 15 € million 400 € million 400 € million 13.6 300 300 10 200 200 5 100 100 0 0 0 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 SZAG Investor Relations Stable earnings contribution of KHS, KDS and KDE with another profit increase english 14

Prof. Dr.-Ing. Heinz Jörg Fuhrmann 1 Key Data / Market Situation 2 Business Units 3 Group strategy SZAG 2021 SZAG Investor Relations Burkhard Becker 4 Financial Accounts First Half 2018 5 Guidance english

Group strategy SZAG 2021 Programs of measures I – what we have achieved so far Restructuring  Extensive optimization measures in Salzgitter AG 2015 / FitStructure numerous Group companies Growth  Product range development RH vacuum plant –  Capacity expansion of the secondary metallurgy Salzgitter Flachstahl  Substitution of liquid reduction agents and external coke Coal injection plant – with pulverized coal that is noticeably more Salzgitter Flachstahl price efficient eWorld  Change of the strategic approach: digital marketing platform – From commodity vendor to solutions provider Trading Business Unit  Expansion of the product range (engineering services) Acquisition SOTEP –  Expansion of the market position for cold-finished Mannesmann Business Unit seamless stainless tubes in the premium segment SZAG Investor Relations Around € 500 million in effects realized since 2012, thereof in sum € 68 million in the first half of 2018 english english 16

Group strategy SZAG 2021 Programs of measures II – what we have achieved over the course of the year Reconciliation of earnings H1 2018 vs. H1 2017 € million -5 68 199 36 100 Group EBT H1 2017 Market influence Measures Other Group EBT H1 2018 SZAG Investor Relations Earnings improvement to a large extend result of internal measures english 17

Group strategy SZAG 2021 Programs of measures III – What we intend in the coming years Restructuring – 2018-2021 additional € 140 million p.a. earnings improvement potential FitStructure  Focus on Mannesmann and Technology business units Growth – around € 240 million p.a. additive earnings contribution  Growth in target segments by shifting steel grade portfolio towards hot-dip Strip Steel galvanized material  Volume increase of higher quality grade Plate / Section Steel such as wear-resistant and high-strength plate Mannesmann  Internationalization and extension of the value chain Trading  Expansion of the digitalization and pre-processing activities Technology Participation in the market growth, expansion of the after-sales business  SZAG Investor Relations Focus on innovation and growth – the dynamism started in 2012 will be maintained english 18

Group strategy SZAG 2021 May 22, 2018: Acquisition of the French stainless steel tube producer SOTEP and Key data of the acquisition Landing gear Airbus A320 ceo/neo Founding year  1980 Headquarters  Issoudun, France Sales (2017)  > € 10 million SAM 146 engine Sukhoi Superjet 100 Employees  65  Cold-finished seamless stainless tubes Products in the premium segment Customer  Aerospace, power plant, as well as oil groups and gas industry Business Class seats Commercial aircraft SZAG Investor Relations Mannesmann Stainless Tubes strengthens its market position english 19