Key figures for the business year 2017 for the Saarstahl Group

Key figures

• Very successful business year 2017
• Group turnover increased from 2.028 to 2.440 billion euros
• Very good utilization of the facilities and record sales for wire rod and bar steel

The Saarstahl Group looks back on an overall successful business year 2017. During this period, the facilities for bar steel and wire rod had very good capacity utilization throughout and record quantities could be achieved at all locations. Shipping volumes increased yet again to a higher level than the previous year. “We were able to record favourable, high sales figures for wire rod and bar steel in 2017 and were therefore able to obtain a significant increase in turnover. We  also succeeded in increasing sales prices in all product segments. Overall, this led to a considerable leap in the financial result compared with the previous year”, commented Fred Metzken, Member of the Board of Directors with responsibility for Finance and Spokesman for the Board, with regard to the figures for the year. “We have ended the constant uncertainty at Saarschmiede GmbH Freiformschmiede through the restructuring measures which were introduced in the autumn and which have meanwhile been concluded. This provides the company and its employees a perspective which allows them to plan as well as the possibility to reposition themselves on the market”.

The market for long products in the EU in 2017 was characterized once again by over-capacities and continuing imports although the quantities from China fell slightly. By positioning itself in the higher quality range, Saarstahl AG was able to benefit once again in 2017 from the extremely positive development among the German premium-range manufacturers in the automotive industry who are strongly export-orientated.

At Saarschmiede, redimensioning was implemented at the beginning of September 2017 due to poor expectations of the market – in particular with regard to power generation machinery, the company’s most important business field. The workforce was reduced by half using socially compatible measures. Most employees were transferred internally within the corporate group by the end of the year or received offers of compensation and partial retirement. It was therefore not necessary to resort to using a transfer company.

Figures for the Saarstahl Group for the year 2017:

• The group production of crude steel increased by 13.6 % to 2.785 million tonnes (previous year: 2.451 million tonnes). The sales quantities of Saarstahl AG (wire rod and bar steel) also went up by 9.5 % to 2.532 million tonnes (previous year: 2.312 million tonnes).
• The group turnover could be increased by 20.3 % and amounted to 2.440 billion euros (pervious year: 2.028 billion euros). Germany continues to be Saarstahl's most important sales market ahead of the EU and third-party countries which, however, have greatly increased in significance (NAFTA, Asia, rest of the world).
• The group earnings before interest and tax (EBIT) amounted to 110 million euros
• (previous year: -155 million euros) and the EBITDA (EBIT before amortization and depreciation) to 230 million euros (previous year: - 26 million euros).
• With a total workforce of 6,366 employees (previous year: 6,554), the Saarstahl Group remains one of the most important employers in the region. In addition, there are 289 trainees (previous year: 261). At Saarstahl AG, the number of employees remained constant at 4,039 (previous year: 4,009).
• Investments in the group amounted to 56 million euros (2016: 101 million euros).
• The ROCE increased to 3.9 % (2016: - 5.3 %).
• With 73.3%, the Saarstahl Group continues to have a very good equity and financial structure in comparison with the rest of industry.

Positive outlook for the business year 2018

Saarstahl AG has recorded a good start to the business year 2018. Capacity utilization and the volume of incoming orders remain on a high level. Sales prices could be increased at the outset of the year and the cost structure further optimized. Through consistent investment aimed at the requirements of industry 4.0 in the new continuous casting plant S1 amounting to 100 million euros, Saarstahl will once again set the benchmark for product quality and customer service in the long product range. Completion is planned for 2019.

In the important customer segments for Saarstahl – automotive industry and mechanical engineering – continued high demand is emerging for 2018. The automotive industry even anticipates a further increase in the global production of passenger vehicles and heavy duty vehicles. On the global premium-range market, German car manufacturers, traditionally the main users of Saarstahl products, have a market share of over 70 percent. The mechanical engeneering sector  also anticipate that there will be a further increase in the volume of incoming orders, both from inland and from abroad, in 2018. Against this backdrop it can be assumed that there will be a constant rise in demand for steel in the product segments of wire rod and bar steel which are relevant for Saarstahl.

From a global point of view, however, the structural crisis has not been solved for 2018 and there are still considerable risks for the steel economy. This is due to global over-capacities which have led numerous countries to offer steel at dumped prices. Due to increasing economic protectionism worldwide, furthermore, considerable deflective flows onto the liberal EU market are to be expected and this could destabilize the sensitive price structure. The result of the trilogue negotiations on emission trading rights will have a severely adverse effect on the financial power of European steel manufacturers as of 2021.

The redimensioned Saarschmiede will still need to battle against worldwide over-capacities and constant pressure on the forge's prices in 2018. The declared objective here is to reduce the dependence on power generation machinery and to have increased diversification by taking on further business fields. For 2018, Saarschmiede anticipates stabilization of the situation regarding the turnover and with a slightly positive result.

Subject to possible effects of the import restrictions of the USA, the group anticipates that sales volumes will remain on an unchanged high level and that there will be an increase in the turnover figures and a clearly positive result.