The Salzgitter steel group is expecting a significant drop in profits this year due to the difficult economic environment. In addition, investments in the transformation towards “green” steel are likely to put pressure on the results. In the previous year, Salzgitter had benefited greatly from the high steel prices in the first half of the year and earned significantly more than in 2021. However, the current first quarter is better than feared.
Salzgitter expects earnings before interest, taxes, depreciation and amortization (Ebitda) of between EUR 750 million and EUR 850 million in 2023. Before taxes, 300 million to 400 million euros are likely to remain, the company announced on Monday in the run-up to its balance sheet press conference in Frankfurt. Sales are expected to reach around 13 billion euros and thus grow slightly.
In addition to the persistently difficult economic environment, investments in the planned decarbonization will also depress the result. In an interview with the financial news agency dpa-AFX, CEO Gunnar Groebler expects a net burden of around 300 million euros for the transformation program to reduce CO2 emissions in the current year. Last week, the supervisory board approved the budget for the first stage of the conversion to “green” steel of 2.2 to 2.4 billion euros, which is more than originally planned. This includes public funding of one billion euros.
Better than expected
However, the first quarter is better than expected at the end of 2022, said CFO Burkhard Becker. The winter recession was weaker than expected. According to the information, demand at the beginning of the year has picked up again. A price recovery can be seen again for flat steel.
From the second half of last year, the environment had increasingly deteriorated. Steel prices, which had risen significantly in the first six months, fell rapidly. However, thanks to the high prices in the first half of the year, Salzgitter was able to significantly increase sales and profits in 2022. The operating result increased from almost 1.3 billion to 1.6 billion euros.
At 1.25 billion euros, Salzgitter earned before taxes, thanks in part to savings, significantly more than in the previous year, when almost 706 million euros were achieved. In this context, Groebler spoke of an “exceptional year” that was divided into two halves. The first half of the year was a “record half year”. The company thus reached the upper end of its forecast, which was increased last June.
The stake in the Aurubis copper group brought Salzgitter 156 million euros, less than the previous year’s figure of around 217 million euros. The bottom line is that profits rose from around 586 million euros to just under 1.1 billion euros.
