Presentation of the Group
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1 Salzgitter Group 2 Market Situation 3 Business Units 4 Strategy SZAG Investor Relations 5 Guidance english
Salzgitter Group Global Presence Strip Steel Plate / Section Steel Mannesmann Trading Technology SZAG Investor Relations Crude steel production 2020: 6.0 million tons; trading volume: 3.2 million tons; Among the top 3 producers of beverage filling and packaging machinery english 3
Salzgitter Group Diversified product portfolio Steel and Technology Strip products Line pipes Steel Service Center Precision tubes Heavy plates Stainless tubes Sections Stockholding trading Engineering services International trading Injection molding machinery Beverage filling plants SZAG Investor Relations english 4
Salzgitter Group Group structure and key data FY 2020 Salzgitter AG Group External Sales cons.: € 7.1 billion Employees: 22,604 EBT: € -196 million Plate / Strip Steel Mannesmann Trading Technology Section Steel External Sales: External Sales: External Sales: External Sales: External Sales: € 1.9 billion € 0.7 billion € 0.9 billion € 2.2 billion € 1.2 billion EBT: EBT: EBT: EBT: EBT: € -86.8 million € -94.4 million € -62.0 million € 25.1million € 0.9 million Employees: Employees: Employees: Employees: Employees: 5,999 2,272 4,366 1,946 5,433 SZAG Investor Relations english All data about employees as per 12/31 5
Salzgitter Group Group structure Salzgitter AG Salzgitter Mannesmann / Salzgitter Klöckner-Werke Strip Steel Plate / Section Steel Mannesmann Trading Technology Industrial Participations / BU BU BU BU BU Consolidation Salzgitter Ilsenburger Salzgitter Mannesmann Verkehrsbetriebe Peine- Mannesmannröhren-Werke KHS Flachstahl Grobblech Handel Salzgitter Salzgitter Salzgitter Mannesmann Salzgitter Mannesmann Europipe KHS Corpoplast Hansaport Europlatinen Grobblech 50% Stahlhandel 51% Peiner Salzgitter Mannesmann Klöckner DESMA Gesis Gesellschaft für Salzgitter Bauelemente Mannesmann Line Pipe Träger International Elastomertechnik Informationssysteme Salzgitter Mannesmann DEUMU Deutsche Universal Eisen Mannesmann Grossrohr DESMA Schuhmaschinen Telcat Stahlservice Erz- und Metall-Union und Stahl Salzgitter Mannesmann Mannesmann Precision Tubes Forschung Salzgitter Automotive Mannesmann Stainless Tubes Engineering Hüttenwerke Krupp Salzgitter Hydroforming Mannesmann 30% SZAG Investor Relations Borusan Aurubis Mannesmann Boru 23% 29.99% BU = Business Unit english As of December 2019 6
Salzgitter Group External sales 2020 by customer industries 14% 14% Other Vehicle construction 16% 13% Food and beverage industry Construction industry 5% 4% Mechanical engineering White goods, electrical equipment 5% 3% Re-rollers Energy sector and utilities 3% 23% Tubes producers Traders, Steel-Service-Centers SZAG Investor Relations Broad customer base english Only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE Group 7
Salzgitter Group External sales 2020 by regions 6% Other 7% Asia 11% Americas 46% Germany 5% Other Europe 25% Other EU SZAG Investor Relations Share of ex-Germany sales by consignee 54% english Sales by consignee (only from entities within the group of consolidated companies of Salzgitter Group, excluding EUROPIPE-Group) 8
Salzgitter Group Key data per 2020/12/31 FY 2020 FY 2019 Δ Crude steel production kt 6,033.0 6,613.4 -580.4 External sales1 € million 7,090.8 8,547.3 -1,456.5 Earnings before tax € million -196.4 -253.3 56.9 Earnings after tax € million -273.9 -237.3 -36.6 Earnings per share (undiluted) € -5.13 -4.46 -0.67 ROCE % -3.9 -5.8 1.9 Core workforce2 22,604 23,354 -750 1 only from entities within the Group of Consolidated Companies of Salzgitter Group 2 per reporting date SZAG Investor Relations Financial year 2020 characterized by the distortions of the Corona pandemic english 9
Salzgitter Group Balance sheet € million 8,618 8,618 8,237 8,237 Property, plant and Equity equipment and other 2,939 2,679 non-current assets 4,099 4,245 Pension 2,299 2,356 provisions Inventories 2,248 1,934 Other non-current 1,178 1,098 liabilities Cash and securities 751 621 Other current 2,225 Current liabilities 2,082 assets 1,519 1,438 FY 2019 FY 2020 FY 2020 FY 2019 SZAG Investor Relations Continuing sound financial basis english 10
Salzgitter Group Salzgitter Group Investments and Depreciation / Amortization 193 15 49 44 593 411 352 342 342 338 340 348 287 295 2016 2017 2018 2019 2020 Investments1 Scheduled depreciation Unscheduled depreciation SZAG Investor Relations Focus on expansion investments english 1 Property, plant and equipment and intangible assets, excluding financial assets 11
Salzgitter Group History Strip Steel BU 1998 Salzgitter AG Mannesmann BU Technology 1937 Construction 1989 Name change to Hüttenwerk Salzgitter 2017 Relaunch of 2007 Integration into SZAG (Part of Reichswerke) Preussag Stahl AG the brand presence First broad-flanged 1964 2000 Liquidation of 1992 - 1995 1970 Merger beam mill in Peine, 1914 Salzgitter Hüttenwerk AG to form Stahlwerke Mannesmann Group, Insolvency, restructuring Cross-rolling process sketch of (since 1961 part of state-owned Salzgitter AG old) Peine-Salzgitter AG Integration Tubes into SZ and end of steel production Max Mannesmann, pre 1885 Plate / Section Steel BU 1912 first attempts with stainless steel tubes 1977 1880 Acquisition of Peiner 1897 Start of production First acquisition of part. in llsenburg: est. 1595, Walzwerk, est.1872 welded steel tubes filling technology (H & K) plate since 1948 Mülheim an der Ruhr: plate since 1882 1886 First process 1923 1858 Foundation for the rolling of Foundation of steel group Demonstrations to save Ilseder Hütte AG Peine: Sections since 1876 seamless steel tubes Klöckner-Werke AG the smelting works in Bottle filling line Phönix Salzgitter, c. 1950 c. 1936 SZAG Investor Relations Privatization and acquisition of the Ilsenburg rolling mill, 1992 english 1989 privatization with the First blast furnace in Ilsede, 1861 Stock listing 1998 sale to Preussag AG 12
1 Salzgitter Group 2 Market Situation 3 Business Units 4 Strategy SZAG Investor Relations 5 Guidance english
Market Situation Raw materials prices Iron ore Coking coal (62% Fe CFR China, US$/dmt) (FOB Australia, US$/t) 250 250 225 200 200 175 150 150 125 100 100 75 50 50 SZAG Investor Relations Diverging raw material price development – coking coal prices recently surged, iron ore prices decreased english 14
Market Situation Steel prices Spot prices Northern Europe Hot-rolled coil prices international 1,900 1,900 (€/t) (€/t) 1,700 1,700 1,500 1,500 1,300 1,300 1,100 1,100 900 900 700 700 500 500 300 300 Jan' 19 Jul' 19 Jan' 20 Jul' 20 Jan' 21 Jul' 21 Jan' 19 Jul' 19 Jan' 20 Jul' 20 Jan' 21 Jul' 21 HRC EXW Ruhr Plate EXW Ruhr Medium sections Northern Europe EXW Ruhr USA EXW Indiana China Schanghai SZAG Investor Relations European steel prices stagnate at record levels following dynamic development english 15
Market Situation EU steel imports Rolled steel imports into the EU-27 (in Tt/month) 2,500 24% 20% 2,000 16% 1,500 12% 1,000 8% 500 4% 0 0% 2014 2016 2017 2018 2019 2020 2021* China Turkey Russia Ukraine India South Korea Other Market share imports *) Intra-year SZAG Investor Relations High level of imports also in 2020 despite slump of demand english Source: Eurofer, May 2021, own presentation 16
1 Salzgitter Group 2 Market Situation 3 Business Units: Strip Steel 4 Strategy SZAG Investor Relations 5 Guidance english
Strip Steel Business Unit Overview Capabilities External sales by customer industry 2020 Integrated steel works with three blast 1% 6% furnaces Mechanical engineering Other Approx. 4.7 mt/year crude steel capacity 14% 37% Modern production plants Re-rollers Vehicle construction 1% High processing competence (SSC) Tube producers Core competences and products 4% High-quality steel grades for sophisticated 37% Construction industry applications Traders 7% Custom made solutions, e.g., hot-rolled only from entities within the group of White goods, and cold-rolled coil, galvanized and consolidated companies of Salzgitter Group electrical equipment coated sheet, laser-welded tailored Key data FY 2020 blanks, corrugated sheets, coffers, sandwich and acoustic elements Consolidated Sales €m 1,880 Customer focus through local presence Earnings before taxes €m -87 Core workforce (12/31) 5,999 SZAG Investor Relations Established supplier of the demanding German automotive industry english 18
Strip Steel Business Unit Strip Products Salzgitter Flachstahl GmbH Germany; shareholder: SZAG 100% Hot-rolled coil, cold-rolled coil, electrogalvanized, hot dip galvanized and organic coated sheet Supplier of premium OEMs Integrated steel works with 3 blast furnaces Around 4.7 mt yearly crude steel capacity Top modern production plants High-tech downstream facilities 5% market share in the EU28 2019 2020 Shipments kt 4,239 3,971 SZAG Investor Relations Sales €m 2,758 2,371 Employees 12/31 5,587 5,501 english 19
Strip Steel Business Unit Processing Salzgitter Europlatinen GmbH Germany; shareholder: SZAG 100% Custom-made solutions: Laser welded Tailored Blanks for lighter car bodies 2019 2020 Sales €m 62 39 Employees 12/31 116 113 Salzgitter Bauelemente GmbH Germany; shareholder: SZAG 100% Corrugated sheets, coffers, sandwich a. acoustic elements for wall and roof constructions of commercial buildings 2019 2020 SZAG Investor Relations Sales €m 51 41 Employees 12/31 70 70 english 20
Strip Steel Business Unit Steel Service Center Salzgitter Mannesmann Stahlservice GmbH Germany; shareholder: SZAG 100% Two locations Excellent position in the heart of Modern plants and processes Europe 600,000 t/year processing capacity 2019 2020 Shipments kt 532 487 SZAG Investor Relations Sales €m 369 313 Employees 12/31 317 315 english 21
1 Salzgitter Group 2 Market Situation 3 Business Units: Plate / Section Steel 4 Strategy SZAG Investor Relations 5 Guidance english
Plate / Section Steel Business Unit Overview Capabilities External sales by customer industry 2020 Section steel: 4% 17% − Top-modern mini mill with two electric Vehicle construction arc furnaces Other 7% − Annual crude steel capacity 1 mt 5% Construction industry Mechanical engineering 9% − Two rolling mills for medium and heavy sections White goods, electrical equipment Plate: 12% 46% − Two rolling mills for plate with Tube producers Traders 1.1 mt annual capacity only from entities within the group of − Plate width up to 4,800 mm consolidated companies of Salzgitter Group Core competences and products Key data FY 2020 High-strength, wear resistant and specialized steel grades Consolidated sales €m 684 Medium and heavy sections, heavy plate incl. offshore and tube grades Earnings before taxes €m -94 Core workforce (12/31) 2,272 SZAG Investor Relations Plate: Broad range of high-quality plate products Section Steel: Efficient production english 23
Plate / Section Steel Business Unit Heavy Plate Ilsenburger Grobblech GmbH Germany; shareholder: SZAG 100% Broad diversified heavy plate steel grades Construction plate, fine grained construction plate, alloyed and unalloyed boiler plate, offshore and tube grades High-strength and wear resistant grades 7% market share in the EU28 State of the art facilities, one of the most modern water quenching plants 2019 2020 Shipments kt 625 610 SZAG Investor Relations Sales €m 494 443 Employees 12/31 655 623 english 24
Plate / Section Steel Business Unit Heavy Plate Salzgitter Mannesmann Grobblech GmbH Germany; shareholder: SZAG 100% Heavy plate mill specialized in plate for longitudinally welded line pipe and similar applications, especially for EUROPIPE GmbH Pipe bending plant for seamless and welded steel tubes in carbon, alloyed, and high-alloy steels Test Center with a wide range of mechanical and technological tests 2019 2020 Shipments kt 371 309 SZAG Investor Relations Sales €m 256 204 Employees 12/31 536 470 english 25
Plate / Section Steel Business Unit Sections Peiner Träger GmbH Germany; shareholder: SZAG 100% Medium and heavy steel beams, Peine sections Progressive and flexible mini mill Two top-modern electric arc furnaces Adjusted crude steel capacity 1.0 mt/year 12% market share in the EU28 Two of the most efficient section mills worldwide with comprehensive range of products 2019 2020 Shipments kt 953 983 SZAG Investor Relations Sales €m 553 507 Employees 12/31 773 787 english 26
Plate / Section Steel Business Unit Other Companies Deutsche Erz- und Metall-Union-Gruppe Germany; shareholder: SZAG 100% Specialist trader for ferrous scrap, non-ferrous scrap, new metals and ferro alloys, as well as rolled steel products 2019 2020 Sales €m 571 498 Employees 12/31 380 392 SZAG Investor Relations english 27
1 Salzgitter Group 2 Market Situation 3 Business Units: Mannesmann 4 Strategy SZAG Investor Relations 5 Guidance english
Mannesmann Business Unit Overview Capabilities External sales by customer industry 2020 Own crude steel supply via 30% 21% participation in Hüttenwerke Krupp 43% Vehicle construction Mannesmann GmbH Other Plant for the production of semis for the 3% seamless tubes business Construction industry Core competences and products 7% 15% Line Pipe: participation (50%) in the world Mechanical engineering Energy sector market leader EUROPIPE; international 4% and utilities presence Tube producers 7% Precision Tubes: European market leader only from entities within the group of Traders Seamless Stainless Tubes: top player in consolidated companies of Salzgitter Group, excluding EUROPIPE Group the world market Key Data FY 2020 Longitudinal and spiral welded large- diameter pipes, medium line pipes, Consolidated Sales €m 948 seamless and welded precision tubes, stainless tubes Earnings before taxes €m -62 Core workforce (12/31) 4.366 SZAG Investor Relations Global player in the high-quality segment of the global tubes market english 29
Mannesmann Business Unit Line Pipes EUROPIPE Group Germany; shareholder: SZAG 50%, Dillinger Hüttenwerke 50% Longitudinal and spiral welded large-diameter pipes for transcontinental and underwater pipelines In-house coating activities World market leader (7% market share) 3 locations in D, USA Since January 1, 2014 reported at equity 2019 2020 Shipments kt 581 471 SZAG Investor Relations Sales €m 777 629 Employees 12/31 1.083 976 english 30
Mannesmann Business Unit Line Pipes Mannesmann Line Pipe GmbH Germany; shareholder: SZAG 100% HFI-welded medium line pipes incl. plastic- and cement coatings 2019 2020 Sales €m 254 160 Employees 12/31 357 325 Mannesmann Großrohr GmbH Germany; shareholder: SZAG 100% Spiral-welded large-diameter pipes made of hot-rolled coil 2019 2020 SZAG Investor Relations Sales €m 58 51 Employees 12/31 124 117 english 31
Mannesmann Business Unit Precision Tubes Mannesmann Precision Tubes Group Germany; shareholder: SZAG 100% Seamless and welded cold drawn precision tubes for the automotive and engineering industries as well as the energy Structural Pump case Airbags sector tube Stabilizers State of the art push bench plant for the production of hollows Suspension components Market leader in the EU28 (24% market share) Engine- components 10 locations in D, F, NL and Mexico Seat belt- IHU/IHV fixings Camshafts Drivetrain and steering components Drive shafts 2019 2020 Shipments kt 247 180 SZAG Investor Relations Sales €m 458 324 Employees 12/31 2.256 2.063 english 32
Mannesmann Business Unit Seamless Stainless Tubes Salzgitter Mannesmann Stainless Tubes Group Germany; shareholder: SZAG 100% Seamless hot- and cold finished stainless tubes for the chemical- and engineering industries, as well as for the energy sector 6% market share in the world 5 locations in D, F, I, USA 2019 2020 Shipments kt 23 22 SZAG Investor Relations Sales €m 290 260 Employees 12/31 1.021 996 english 33
Mannesmann Business Unit Significant shareholdings Hüttenwerke Krupp Mannesmann GmbH Germany; shareholder: ThyssenKrupp 50%, SZAG 30% + Vallourec 20% (Pool) Steel works with two blast furnaces Production of slabs and round steel bars Up to 1,000 different steel grades Yearly crude steel production of > 4 million tons 2019 2020 SZAG Investor Relations Sales €m 2,496 1,984 Employees 12/31 2,947 2,880 english 34
1 Salzgitter Group 2 Market Situation 3 Business Units: Trading 4 Strategy SZAG Investor Relations 5 Guidance english
Trading Business Unit Overview Capabilities External sales by customer industry 2020 69 sites in 27 countries 8% 13% Mechanical engineering Other Own distribution network for steel products with warehousing sites in Europe 3% 5% Re-rollers Vehicle construction Processing group specialized on heavy 2% 35% plate products Tube producers Construction industry International trading 31% 3% Core competences and products Traders White goods, electrical equipment Global presence in all relevant regions with 4% own representation only from entities within the group of Energy sector and utilities consolidated companies of Salzgitter Group Distribution channel for Salzgitter Group products Key Data FY 2020 Procurement channel for Salzgitter Group works Consolidated Sales €m 2,225 Value add services for customers Earnings before taxes €m 25 Core workforce (12/31) 1,946 SZAG Investor Relations High customer and market orientation through a global sales organization english 36
Trading Business Unit Salzgitter Mannesmann Handel Group Salzgitter Mannesmann Handel Shipments 2020: 3.0 mt Sales 2020: € 2.1 billion Trading Stockholding Agencies International Salzgitter Mannesmann Stahlhandel Europe Europa 9 Companies GmbH, Düsseldorf (SMSD) 7 Companies 4 Agencies 2 Rep. offices 16 Branches with warehouses and Salzgitter Mannesmann International further processing (incl. 4 flame GmbH, Düsseldorf (SMID) cutting plants) Salzgitter Mannesmann International Stahl-Center Baunatal GmbH, (USA) Inc., Houston (SMIH) Baunatal (SCB) Salzgitter Mannesmann International (Canada) Inc., Vancouver (SMIV) SZAG Investor Relations 59 locations in 27 countries with 1,603 employees english 37
Trading Business Unit Universal Eisen und Stahl Group Universal Shipments 2020: 0.2 mt Sales 2020: € 0.2 billion North America Europe Universal UNIVERSAL STEEL AMERICA, Inc., Houston, USA Universal Aciers Sarl, Couzon au Mont d'Or, France Eisen und Stahl GmbH, Neuss (UES) UNIVERSAL STEEL HOLLAND B.V., SK 2 Branches 4 Branches Papendrecht, Netherlands UNIVERSAL-Stal Sp. z o.o, Gliwice, Poland UNIVERSAL OCEL spol. s.r.o., Prague, Czech Republic SZAG Investor Relations 10 locations in 6 countries with 365 employees english 38
1 Salzgitter Group 2 Market Situation 3 Business Units: Technology 4 Strategy SZAG Investor Relations 5 Guidance english
Technology Business Unit Overview Capabilities External sales by customer industry 2020 17 Production plants worldwide 2% 1% 60 Service sites Vehicle White goods, > 90% of sales outside of Germany construction electrical equipment Core competences and products KHS: among the top 3 global suppliers for 3% filling and packaging machines; technology 94% Mechanical engineering and innovation leadership Food and beverage DESMA Elastomertechnik: Global leader industry for rubber and silicon injection molding machines only from entities within the group of consolidated companies of Salzgitter Group DESMA Schuhmaschinen: World market leader for the production of machines for Key data FY 2020 the production of shoes and shoe soles Turn-key lines, single machines and Consolidated Sales €m 1,207 service Earnings before taxes €m 1 Core workforce (12/31) 5,433 SZAG Investor Relations Top 3 producer for filling and packing industry, world market leader for rubber and silicon injection molding as well as direct soling machines english 40
Technology Business Unit Filling and packaging KHS Group Germany; shareholder: SZAG 100% A global leader and solution provider of first choice in the packaging industry Among the Top 3 producers Focus on beverage applications Supplier of single machines and turnkey solutions (one-stop-shop supplier) Leadership in technology and innovation 11 production sites: 5 in Germany, 2 in the US, and 1 each in Mexico, Brazil, China and India 2019 2020 SZAG Investor Relations Sales €m 1,260 1,131 Employees 12/31 4,793 4,729 english 41
Technology Business Unit Special machinery Klöckner DESMA Elastomertechnik Group World market leader for rubber and silicone injection molding machinery 2019 2020 Sales €m 79 53 Employees 12/31 540 486 DESMA Schuhmaschinen GmbH World’s largest producer of machines for the fabrication of shoes and shoe soles 2019 2020 SZAG Investor Relations Sales €m 52 24 Employees 12/31 224 218 english 42
1 Salzgitter Group 2 Market Situation 3 Industrial Participations 4 Strategy SZAG Investor Relations 5 Guidance english
Industrial Participations Overview Comprises activities that are not directly Key data FY 2020 allocated to a business unit Consolidated sales €m 148 Core competences and participations Earnings before taxes €m 21 Services: − Research and development for the Core workforce (12/31) 2.588 Group and external customers − Information technology − Engineering services − Real estate- and facility development as well as management − Freight traffic Shareholdings: − Aurubis − Hansaport SZAG Investor Relations Gratifying contribution from the service companies and the Aurubis investment english 44
Industrial Participations Engineering Salzgitter Mannesmann Forschung GmbH Germany; shareholder: SZAG 100% Research and development for the Group and external customers with a focus on: Processes for the manufacture, processing and application of metallic materials and products made of them Development of new materials Development of application areas Material and component characterization including testing techniques Application and engineering technology from component design through forming and assembly to corrosion protection Automation and testing techniques, as well as the construction of non-destructive testing facilities SZAG Investor Relations english 45
Industrial Participations Raw Materials and Logistics Glückauf Immobilien, RSE Companies specialized in real estate- and facility development as well as management Hansaport1 Germany's largest seaport terminal for handling dry bulk goods (coal and ores), annual capacity of approximately 15 million tons Verkehrsbetriebe Peine-Salzgitter Commercial transportation provider with an annual freight volume of approximately 43 million tons SZAG Investor Relations 1 SZAG share: 51% english 46
Industrial Participations Data Processing and Communications Telcat Multicom/Telcat Kommunikationstechnik Systems for decentralized communication, Broad array of information solutions ranging from office communication and video technology to network services GESIS Gesellschaft für Informationssysteme Integration of business processes into one uniform IT-solution that reflects the entire workflow, Electronic data processing center capacities and the internet-based eService platform as a unified hub for order processing are offered for group companies and external clients SZAG Investor Relations english 47
Industrial Participations Aurubis-Participation Aurubis Dividend (€/Share) 1.80 1.60 1.55 1.45 1.40 1.35 1.35 1.30 1.25 1.25 1.20 1.20 1.10 SZAG shareholding: 29.99% 1.00 1.00 1.00 (per May 23, 2019) 0.80 Net dividend received since 0.65 2009: € 131.8 million 0.60 (per FY19/20) 0.40 0.20 0.00 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 SZAG Investor Relations Since 2008 successful shareholding in the leading European copper producer english 48
1 Salzgitter Group 2 Market Situation 3 Business Units 4 Strategy SZAG Investor Relations 5 Guidance english
Strategy Our decarbonization strategy We are in control… …and pioneer at the same time Acquired CO2- emission allowances Shortfall in CO2 allowances has Significant, gradual reduction of been compensated for the most the CO2 emissions of Salzgitter part until 2030 AG Current market value of the CO2 Target: Reduction of more than allowances acquired exceeds the 95% of the CO2 emissions of figure accounted for in the Salzgitter Flachstahl until 2050 balance sheet by more than € 800 million* SZAG Investor Relations The Salzgitter Group acts decisively! Purchase of CO2 emission allowances for the Fourth Trading Period carries us to 2030 SALCOS® – our technological concept for the medium and long-term CO2-reduced steel production english * per May 2021 50
Strategy Value of the acquired CO2 emission allowances Market value CO2 emission allowances 1,000 750 € million 500 250 0 3Q 16 1Q 17 3Q 17 1Q 18 3Q 18 1Q 19 3Q 19 1Q 20 3Q 20 1Q 21 SZAG Investor Relations Acquired CO2 emission allowances have reached a market value of almost € 1 billion! english 51
Strategy SALCOS® – Flexible hydrogen-based direct reduction Carbon dioxide → classic coal-based blast furnace route Blast furnace → innovative SALCOS®-route (direct reduction) Carbon (C): Coke, coal Pig iron Crude steel Iron ore (Fe2O3) Basic oxygen converter (BOF) Water Iron ore (Fe2O3) H2O Carbon dioxide Scrap Hydrogen (H2) Natural gas Crude steel Renewable Electrolyzer (CH4) electric energy SZAG Investor Relations Direct Direct reduced Electric arc furnace (variable use of natural gas and H2) reduction iron (DRI) (EAF) plant english 52
Strategy SALCOS® – Gradual conversion to a H2-based steel production Today Indicative: 2025+ Indicative: 2030+ Indicative: until 2050 Status Quo Pilot phase Completion CO2-Emissions (8 m t/a) - 30% CO2 DRP - 50% CO2 - 83% bis > - 95% CO2 (Stage I) (Stage II) Blast Furnaces EAF Electrolyzer Basic Oxygen Furnaces (Stage III) SZAG Investor Relations Status Quo Stage I Stage II Stage III english EAF= Electric Arc Furnace DRP= Direct Reduction Plant 53
Strategy Our path towards a low-CO2, hydrogen-based steel production Feasibility study µDRAL – Mikro-Direkt- Iron ore direct reduction plant in Wilhelmshaven ReduktionsAnLage First steam electrolysis on Construction of a MW scale at Salzgitter demonstration plant Flachstahl as from 2020 for direct reduction in Wind-H2: First industrial sector Salzgitter World’s largest high- coupling of “renewable power – temperature hydrogen production – industrial electrolyzer consumption” at one location in commences trial Germany! operation in Salzgitter 2017 2018 2019 2020 2021 MACOR: SALCOS-feasibility Bundling of study regional Analysis of framework conditions H2 expertise SZAG Investor Relations Numerical modelling of melt shop and direct reduction plant First slab successfully produced for green strip steel english 54
Strategy Green steel – current environment Marketable Fundable Economically viable Already today certified production Funding for a major part of the Higher prices for green steel in the and delivery of green steel capex requirements applied for via short-term as a result of added In addition, strong interest from the EU and Federal/State programs, green value and supply shortage customers underpinned with binding response by In the medium- to long-term higher memoranda of understanding for the end of 2021 competitiveness of green vs. gray green steel via the hydrogen route Acquired CO2 emission steel due to CO2 regulations and Natural gas as bridge technology allowances serve as additional rising prices allows for significant CO2 reduction security until green H2 is available to the necessary extent We resolutely strive to realize our ambition to produce green steel at the Salzgitter site by the end of 2025 in order to bolster our strong competitive ability and clear commitment to the green transformation SZAG Investor Relations We have very good preconditions for a successful transformation towards green steel english 55
Strategy EU crude steel: Green vs. Gray Expected main drivers Green Steel Gray Steel Short-term: Price premium in the EU due to Medium- to long-term: significant additional burden as a supply shortage and added green value result of decreasing EU allocation of CO2-emission allowances and rising CO2 prices Medium- to long-term: Price premium will diminish following an increase of the supply and a decrease of production costs Long-term: Lower to no demand as a result of substitution as a result of the scale effect and level of maturity effects from gray to green steel, high cost pressure as demand decreases SZAG Investor Relations Higher competitiveness for steel via direct reduction versus blast furnace route expected; in the long run Gray Steel made in Europe will be obsolete! english 56
Strategy Green strip steel – these days already… Since the end of 2020, Salzgitter Flachstahl GmbH is offering green strip steel products in a defined range of various dimensions and grades The carbon footprint of these products is markedly below that of conventional products TÜV SÜD has confirmed this in February of 2021: “A reduction in the CO2 footprint of more than 75 % of a steel slab and more than 66 % of a hot-dip galvanized coil can be achieved by changing the steel production method from the conventional blast furnace route to the electric route.” SZAG Investor Relations …renowned steel processors demonstrate keen interest for this low CO2 product! english 57
Strategy Update investment projects Ilsenburger Grobblech: New heat treatment line Optimization of the product portfolio Expansion of the market position and volume expansion for higher value grade segments such as high strength and wear resistant, water tempered steel Commissioning: 2021 Current status: Trial operation, first deliveries to customers Salzgitter Flachstahl: Hot-Dip Galvanizing Line 3 Qualitative growth in the strip steel business Reinforcement of the market position in the automotive segment Strengthening of the premium segment for auto customers Commissioning: 2022 Current status: Installation of equipment SZAG Investor Relations Realization of major investment projects to grow in terms of quality progresses well! english 58
Strategy Strategy review initiated FitStructure 2.0 (2019-) FitStructure 2.0: Of a total of around Salzgitter AG 2021 (2016-2021) € 300 m in earnings improvement potential € 160 m realized per June 30, 2021 A further € 100 m in additional Development of new Group strategy (H2 2021) earnings contribution to be expected from Salzgitter AG 2021 New Group strategy (2022-) 2021 2022 SZAG Investor Relations Presentation of the new Group strategy expected for early 2022 english 59
Strategy Strategy review: key points Strategy Portfolio Efficiency Who and what do we What is the right How do we generate want to be in business portfolio for additional efficiency 2025/2030? our strategy? gains across the entire value chain? Enabler Management structures and instruments, organization of the Group, corporate culture SZAG Investor Relations Review of the four main areas has started english 60
1 Salzgitter Group 2 Market Situation 3 Business Units 4 Strategy SZAG Investor Relations 5 Guidance english
Economic Development and Financials Business Units – Forecast Strip Steel Plate / Section Steel Mannesmann Trading Technology demand that will fully utilize plate: stable, healthy demand large-diameter pipes: exceptionally good earnings KHS Group: sustained good capacity accompanied by rising demand remains insufficient situation of the first half year order situation considerably improved, very imports medium line pipes: uptrend in cannot be expected to repeat specialist mechanical high price levels in a multi- section steel: volatile market volumes to resume in these dimensions in the engineering companies: full year year comparison environment that will precision tubes: demand notable rebound of the significantly higher operating fundamentally continue to selling price growth rates will market rebounding especially in the costs for iron ore and coking focus on the short-term slow automotive industry coal stainless tubes: growing prices will remain at a high level demand Business Unit significant increase in sales notable increase in sales higher sales level considerably higher sales higher sales compared with very gratifying pre-tax profit the previous-year period return to the profit zone pre-tax result will tangibly earnings before taxes of more than € 300 million improve while nevertheless notably higher than in the significant increase in pre-tax remain in negative territory previous year profit, positively influenced from non-recurrent effects SZAG Investor Relations english 62
Economic Development and Financials Salzgitter Group – Guidance Provided that the market continues its stable development in the second half of the year despite the latent COVID-19 crisis, we affirm our forecast for the financial year 2021 that was revised upward in June and anticipate the following for the Salzgitter Group: an increase in sales to more than € 9 billion, a pre-tax profit of between € 400 million and € 600 million, as well as a return on capital employed (ROCE) that is tangibly above the previous year's figure. Legal Note and other remarks We make explicit reference to the fact that imponderables, including changes in the cost of raw materials, precious metal prices and exchange rates, along with global trade policy measures and their possible impact may still exert a considerable influence over the course of the financial year. To the extent that this presentation contains statements oriented towards or related to the future, such statements are based on our current state of knowledge and the estimates based on such knowledge made by the management of Salzgitter AG. However, as is the case with any forecasts or prognosis, such statements are also subject to uncertainties and risks. Notwithstanding prevailing statutory provisions and capital market law in particular, we are not obligated to update this data. In particular, we SZAG Investor Relations shall not assume liability of any kind for knowledge and statements, as well as any acts resulting on the basis of such knowledge or statements that emanate directly or indirectly from the analysis of the data, content and correlations of this document. The information and data made available do not represent an encouragement or invitation to buy, sell or conduct any other type of trade in securities. Salzgitter AG shall neither assume liability for direct nor indirect damages, including lost profits, arising as a result of the utilization of the information or data contained in this document. For computational reasons, rounding-off differences of +/– one unit (€, % etc.) may occur in the tables. This document is also available in German language. In the event of any discrepancy, the German version shall prevail. english
BACKUP 1 Financials 2 Pensions 3 Investor Relations SZAG Investor Relations english
Financials Key data H1 2021 H1 2020 Δ Q2 2021 Q1 2021 Crude steel production kt 3,377.6 2,952.7 424.9 1,733.1 1,644.5 External sales1 € million 4,435.5 3,631.0 804.5 2,341.4 2,094.1 Earnings before tax € million 305.7 -127.8 433.5 188.4 117.3 Earnings after tax € million 230.6 -144.7 375.3 154.1 76.6 Earnings per share (undiluted) € 4.20 -2.70 6.90 2.82 1.38 ROCE % 16.4 -6.3 22.7 20.1 13.2 Core workforce2 22,414 23,009 -595 22,414 22,475 SZAG Investor Relations Salzgitter Group continues its upward trajectory, delivering a strong result in the second quarter english 1 only from entities within the Group of Consolidated Companies of Salzgitter Group 2 per reporting date 65
Financials Income statement Income Statement (€ million) H1 2021 H1 2020 Δ Sales 4,435.5 3,631.0 804.5 Increase/decrease in finished goods and work in process/other own 88.2 -57.2 145.4 work capitalized 4,523.7 3,573.8 949.9 Other operating income 174.9 132.9 42.0 Cost of materials 2,925.8 2,373.3 552.5 Personnel expenses 871.2 846.0 25.2 Amortization and depreciation of intangible assets and property, plant 149.9 148.7 1.2 and equipment Other operating expenses 509.3 462.1 47.3 Result from impairment losses and reversal of impairment losses of 3.5 -8.9 12.4 financial assets Income from shareholdings 0.6 2.1 -1.5 Result from investments accounted for using the equity method 82.5 33.3 49.2 Finance income 3.5 3.9 -0.4 Finance expenses 26.6 34.8 -8.1 SZAG Investor Relations Earnings before taxes (EBT) 305.7 -127.8 433.5 Income tax 75.1 16.9 58.2 Consolidated result 230.6 -144.7 375.3 english 66
Financials Consolidated balance sheet Assets (€ million) 2021/06/30 2020/12/31 Δ Non-current assets 4,229.0 4,244.5 -15.5 Intangible assets, property, plant and equipment 2,424.0 2,423.6 0.4 Investment property 80.8 81.5 -0.7 Financial assets 53.1 54.6 -1.5 Investments accounted for using the equity method 1,236.5 1,169.1 67.4 Trade receivables 9.4 11.0 -1.6 Other receivables and other assets 18.3 22.3 -4.0 Income tax assets 2.2 0.5 1.7 Deferred income tax assets 404.7 481.9 -77.2 Current assets 4,771.7 3,992.9 778.8 Inventories 2,181.1 1,933.7 247.4 Trade receivables 1,416.0 923.9 492.1 Contract assets 313.3 300.2 13.1 Other receivables and other assets 244.2 188.3 55.9 Income tax assets 21.2 23.7 -2.5 Securities 49.9 0.0 49.9 SZAG Investor Relations Cash and cash equivalents 544.6 621.4 -76.8 Assets available for sale 1.4 1.7 -0.3 Balance sheet total 9,000.7 8,237.4 763.3 english 67
Financials Consolidated balance sheet Equity and liabilities (€ million) 2021/06/30 2020/12/31 Δ Equity 2,998.5 2,678.9 319.6 Subscribed capital 161.6 161.6 0.0 Capital reserve 257.0 257.0 0.0 Retained earnings 2,902.9 2,594.5 308.4 Other reserves 37.7 26.4 11.3 Unappropriated retained earnings 0.0 0.0 0.0 Treasury shares -369.7 -369.7 0.0 Minority Interest 9.0 9.1 -0.1 Non-current liabilities 3,340.2 3,476.4 -136.2 Provisions for pensions and similar obligations 2,170.1 2,298.6 -128.5 Deferred tax liabilities 73.6 73.9 -0.3 Income tax liabilities 30.4 30.4 0.0 Other provisions 274.5 267.1 7.4 Financial liabilities 737.3 749.4 -12.1 Other liabilities 54.3 57.1 -2.8 Current liabilities 2,662.0 2,082.1 579.9 Other provisions 227.0 210.4 16.6 Financial liabilities 454.1 488.3 -34.2 Trade payables 1,231.4 802.4 429.0 SZAG Investor Relations Liability contracts 381.0 272.8 108.2 Income tax liabilities 10.9 5.5 5.4 Other liabilities 357.6 302.8 54.8 Balance sheet total 9,000.7 8,237.4 763.3 english 68
Financials Cash flow statement (€ million) H1 2021 H1 2020 Δ Cash and cash equivalents at the start of the period 621.4 700.5 -79.1 Cash flow from operating activities 222.1 -121.5 343.6 Cash flow from investment activities -197.7 -161.1 -36.6 Cash flow from financial activities -105.5 -12.5 -93.1 Changes in cash -76.8 -299.0 222.2 Cash and cash equivalents at the end of the period 544.6 401.5 143.0 SZAG Investor Relations More than € 200 million cash flow from operating activities english 69
Financials Strip Steel Business Unit H1 2021 H1 2020 Δ Q2 2021 Q1 2021 External sales € million 1,198.1 902.8 295.3 591.7 606.4 Order bookings kt 2,235.3 1,834.0 401.3 1,047.7 1,187.6 Order backlog1 kt 1,061.5 779.4 282.1 1,061.5 1,078.4 EBITDA € million 174.6 12.4 162.2 96.6 78.0 EBT € million 104.5 -69.2 173.7 61.4 43.1 Core workforce1 5,980 6,040 -60 5,980 6,010 SZAG Investor Relations Outstanding profit contribution boosted by higher shipments and selling prices at record levels towards the end of the first half of 2021 english 1 per reporting date 70
Financials Plate / Section Steel Business Unit H1 2021 H1 2020 Δ Q2 2021 Q1 2021 External sales € million 445.5 363.2 82.3 231.1 214.4 Order bookings kt 1,101.2 965.5 135.7 576.1 525.1 Order backlog1 kt 485.1 274.2 210.9 485.1 408.1 EBITDA € million -8.5 -12.7 4.3 3.9 -12.4 EBT € million -26.9 -27.0 0.0 -5.9 -21.0 Core workforce1 2,245 2,347 -102 2,245 2,260 SZAG Investor Relations Gradual improvement of order activity and pricing over the course of the first half; sections with solid profit contribution; recovery of the plate companies lags due to late-cyclical nature of the business english 1 per reporting date 71
Financials Mannesmann Business Unit H1 2021 H1 2020 Δ Q2 2021 Q1 2021 External sales € million 530.4 494.5 35.9 273.8 256.6 Order bookings € million 880.9 497.8 383.0 468.2 412.7 Order backlog1 € million 555.3 347.8 207.4 555.3 448.3 EBITDA € million 16.1 8.1 8.0 8.0 8.1 EBT € million -15.5 -22.7 7.2 -8.0 -7.5 Core workforce1 4,325 4,511 -186 4,325 4,317 SZAG Investor Relations Improved business situation at the precision tubes group, medium-diameter line pipes and the stainless steel tubes group also registered an increase in bookings english 1) Tubes, per reporting date 72
Financials Trading Business Unit H1 2021 H1 2020 Δ Q2 2021 Q1 2021 External sales € million 1,538.1 1,229.2 308.9 864.8 673.3 Shipments kt 1,809.6 1,724.4 85.3 921.7 888.0 EBITDA € million 155.6 -5.1 160.7 107.5 48.1 EBT € million 149.3 -15.8 165.1 104.6 44.7 Core workforce1 1,936 1,990 -54 1,936 1,931 SZAG Investor Relations Very gratifying pre-tax profit as a result of the dynamic price development, along with favorable purchase prices in the stockholding business and at the UES Group english 1 per reporting date 73
Financials Technology Business Unit H1 2021 H1 2020 Δ Q2 2021 Q1 2021 External sales € million 639.3 574.6 64.7 338.4 300.9 Order bookings kt 748.7 558.4 190.3 390.7 358.0 Order backlog1 kt 819.6 618.2 201.4 819.6 734.3 EBITDA € million 45.6 4.5 41.2 13.8 31.8 EBT € million 32.5 -10.6 43.0 7.4 25.0 Core workforce1 5,328 5,504 -176 5,328 5,353 SZAG Investor Relations KHS Group’s pre-tax result significantly outperformed the year-earlier figure also due to accounting profit achieved by selling the pouch business; KDE Group also with profit contribution, slightly negative result of KDS english 1 per reporting date 74
Financials Industrial Participations / Consolidation H1 2021 H1 2020 Δ Q2 2021 Q1 2021 External sales € million 84.1 66.7 17.5 41.6 42.5 EBITDA € million 95.1 42.5 52.6 45.9 49.2 EBT € million 61.8 17.4 44.4 28.8 33.0 Core workforce1 2,600 2,617 -17 2,600 2,604 SZAG Investor Relations Pre-tax profit includes € 91.0 million contribution of Aurubis AG, an investment included at equity english 1 per reporting date 75
BACKUP 1 Financials 2 Pensions 3 Investor Relations SZAG Investor Relations english
Pensions Mechanics of internal pension commitment funding Internal funding over lifetime of employee ... ... Joins 5 years Retirement company Pension provision (non-cash) Contribution by SZAG (non-cash) Pension payment (cash) SZAG Investor Relations Provision is determined by development of individual salary, time in employment at SZAG, actuarial life expectancy and inflation Contribution as personnel expense and interest element (both non-cash) Monthly payout from operating cash flow english 77
Pensions Funding of pension commitments (2020/12/31) € bn (2020/12/31) 5 Projected Benefit Obligation (PBO): Balance sheet: pension provisions € 2,367 m1 € 2,299 m 4 According to IAS 19: Assets held by external funds: − Discount rate of 1.40%1 € 68.1 m 3 – in line with market average Non-current assets: € 4,245 m − Trend in salaries: 2.50% p.a. 2 Net position due to banks: − Trend in pensions: € -432 m 1 1.50% p.a. − Staff turnover: 1% p.a. 0 − Valuation based on the actuarial provisions assets + cash PBO Non-current Pension principles SZAG Investor Relations Pension obligations completely covered by internal funds! english 1 thereof € 68.1 million covered by assets held by external funds 1 per March 31, 2021, before that 1.10% 78
BACKUP 1 Financials 2 Pensions 3 Investor Relations SZAG Investor Relations english
Investor Relations Shareholder structure and share turnover Shareholder structure Daily turnover in thousand shares 600 Salzgitter AG Other shareholders 10.0% 15.9% 400 State of 26.5% Lower Saxony 15.1% Retail investors 200 32.5% Institutional investors 0 1Q 15 4Q 15 3Q 16 2Q 17 1Q 18 4Q 18 3Q 19 2Q 20 1Q 21 Free float: 63.5% Treasury shares: as of July 8, 2010; other information is based on the external shareholder identification as of January 2021 SZAG Investor Relations Balanced shareholder structure High liquidity english 80
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