Salzgitter AG Reports Strong EBITDA Performance for 2024 Amidst Challenges
Salzgitter AG, one of Germany’s leading steel producers, has released preliminary figures for the financial year 2024, revealing a mixed but generally resilient performance in a challenging economic environment. Despite a decrease in external sales and a pre-tax loss, the company’s earnings before interest, taxes, depreciation, and amortization surpassed expectations. Here’s a closer look at Salzgitter AG’s 2024 results and its outlook for 2025.
Financial Performance Overview:
• External Sales: Salzgitter reported external sales of €10.0 billion for 2024, a decline of about 7% compared to €10.8 billion in 2023. This decrease reflects the ongoing struggles in the global steel market and a sluggish German economy.
• EBITDA: Despite the drop in sales, Salzgitter achieved an EBITDA of €445 million, exceeding expectations. However, this was down from €677 million in 2023, which points to challenges in maintaining profitability amidst lower demand and pricing pressures in the steel sector.
• Pre-Tax Loss: The company reported a pre-tax loss of €–296 million in 2024, a significant turnaround from the pre-tax profit of €238 million recorded in 2023. This decline was largely due to higher impairment expenses and restructuring costs.
• Aurubis AG Contribution: A notable bright spot in Salzgitter's financials came from its investment in Aurubis AG. The company recorded a contribution of €184 million from this investment, a substantial increase from €40 million in 2023. This positive contribution helped to offset some of the challenges faced by the steel business.
• Restructuring and Impairment Expenses: The company incurred €278 million in impairment expenses, along with €128 million in restructuring costs. These efforts are part of Salzgitter's ongoing strategy to optimize its operations and position itself for long-term success.
Outlook for 2025:
Looking ahead to 2025, Salzgitter has set a conservative forecast for its financial performance, reflecting the uncertainty in both the German and global economies.
• Sales Projections: The company expects its sales to range between €9.5 billion and €10.0 billion, a slight decline or stabilization compared to the previous year. This forecast is influenced by the ongoing stagnation in the German economy, though economic policy changes by the new federal government could potentially improve conditions in the second half of the year.
• EBITDA Projections: For 2025, Salzgitter anticipates an EBITDA between €350 million and €550 million, which represents a potential decline from the 2024 figure but offers room for growth if the company can effectively manage cost controls and capture any market recovery.
• Pre-Tax Results: The company forecasts a pre-tax result between €–100 million and €+100 million, highlighting the uncertainty of market conditions, particularly with regard to trade policies and foreign market access.
• Return on Capital Employed (ROCE): Salzgitter is targeting an improvement in its return on capital employed year-on-year, reflecting a focus on improving operational efficiency and capital utilization in a challenging business climate.
Economic and Market Context:
The results come amid a backdrop of economic stagnation in Germany, with no clear end in sight to the slowdown. The steel industry, in particular, has faced significant challenges due to rising costs, lower demand in key sectors, and increased competition from foreign producers. Furthermore, the new American government’s stance on trade policies has contributed to uncertainty in foreign trade, particularly affecting the steel sector’s international prospects.
Despite these challenges, Salzgitter remains cautiously optimistic. The company believes that potential changes in government policy, both in Germany and the U.S., could positively impact the business environment, particularly in the latter half of 2025.
Key Strategic Priorities:
Salzgitter’s management is focused on several strategic initiatives to drive future growth, including:
• Investment in Efficiency: Continuing its emphasis on restructuring and cost-cutting measures to streamline operations.
• Sustainability: Focusing on sustainable steel production methods and adapting to the increasing global demand for eco-friendly products.
• Global Trade: Navigating the complexities of international trade by securing new markets and adjusting to global trade policy changes, especially in the wake of shifting dynamics in U.S.-Europe trade relations.
Salzgitter's 2025 outlook reflects the company's commitment to adapting to market changes while carefully managing its risks. Despite the headwinds, the steelmaker’s strategic focus on operational efficiency, sustainable practices, and international market expansion will be key to navigating the uncertainties ahead.
