EANS-News: Salzgitter AG
Difficult economic situation and accounting measures
impact the result of the first quarter
Salzgitter (euro adhoc) -
Corporate news transmitted by euro adhoc. The issuer/originator is solely responsible for the content of this announcement.
finances/Interim Report
In the first quarter of the financial year, the Salzgitter Group was exposed to the pressure exerted by recessionary trends, especially in the businesses of the Steel, Trading and Technology divisions. By contrast, the sustained positive result of the Tubes Division, coupled with income from the shareholding in Aurubis AG and financial investments, had a considerably stabilizing effect. In order to take account of selling price trends in the rolled steel markets, as well as declines in the price of raw materials, both actual and foreseeable, further valuation adjustments were carried out on inventories in the reporting period. As a result, the Group is free from hidden encumbrances accruing from inventory valuation.
Consolidated external sales fell by 24 % to EUR 2,194.7, which is indicative of the substantial decline in the business activities of all divisions, to the exception of the Tubes Division. The Salzgitter Group closed the first quarter with a pre-tax loss of EUR 98.3 million. This result includes around EUR 100 million for accounting measures relating to inventory valuation in the Steel Division. Moreover, a very gratifying first-time amount of EUR 23.7 million in after-tax earnings of Aurubis AG, the leading European copper manufacturer in which the Group holds a 23 % stake consolidated at equity, was recorded. The after-tax result stood at EUR -74.1 million, bringing earnings per share to EUR -1.38. Return on capital employed (ROCE) from industrial operations was negative (-11.3 %) and, including EUR 1.3 billion in cash and cash equivalents, result in -7.7 %.
External sales by Division (EUR million):
Q1 2009 (Q1 2008) Steel 427.7 (782.1) Trading 926.9 (1,154.3) Tubes 552.0 (543.0) Services 83.4 (128.6) Technology 192.5 (248.5) Others 12.1 (44.6) Group 2,194.7 (2,901.1)
Earnings before tax by Division (EUR million):
Q1 2009 (Q1 2008) Steel -129.7 (172.5) Trading -20.6 (48.6) Tubes 50.8 (66.0) Services -3.2 (4.9) Technology -23.3 (4.2) Others 27.7 (-4.3) Group -98.3 (291.9)
Owing to the ailing global economy, we consider our original forecast of not achieving breakeven for the Group in the first half of the year to be affirmed. We currently do not have any reliable indications that there will be a recovery in the second half year. We nonetheless believe it possible that order activity for steel products will settle at a normal level once the steel processors and traders have completed the process of reducing their inventories.
As from the third quarter, the reduction in the price of raw materials will be felt to a greater extent in terms of in the manufacturing costs. Accordingly, we still believe, even taking account of valuation adjustment measures carried out on inventories, that, given a notable recovery in the rolled steel market and in demand from the automotive industry, achieving breakeven in the pre-tax result in 2009 should still be possible. This is, however, contingent upon a strong and sustained turnaround of the situation in the steel market.
More information can be found in the full press release and interim report published today (see www.salzgitter-ag.de).
end of announcement euro adhoc
Further inquiry note:
Bernhard Kleinermann
Tel.: +49 (0) 5341-21-3783
E-Mail: kleinermann.b@salzgitter-ag.de
Branche: Iron & Steel
ISIN: DE0006202005
WKN: 620200
Index: DAX, CDAX, Classic All Share, HDAX, Prime All Share
Börsen: Frankfurt / regulated dealing/prime standard
Berlin / free trade
Hamburg / free trade
Stuttgart / free trade
Düsseldorf / free trade
München / free trade
Hannover / regulated dealing