Press release

Key figures for the business year 2018 for the Saarstahl Group

26 March 2019

The Saarstahl Group looks back on a successful business year 2018 which is characterized by a further increase in sales revenues and favourable figures in the financial result. Tim Hartmann, Chairman of the Management Board and Chief Financial Officer explained the figures for the year saying, “Thanks to high demand in our core segments of bar steel and wire rod, the group turnover increased to a record level compared with the previous year due to a positive development in revenue and in spite of a slight decrease in shipping volumes. In the last few months of the year, there was a decline in demand due to economic factors but sales remained on a high level throughout the year“.

Key figures

  • Successful business year 2018 with significantly positive results

  • Group achieves a record turnover for wire rod and bar steel with at 2.528 billion euros (+ 3.6 %)

  • Figures for the workforce are characterized by a favourable order situation and high level of capacity utilization

  • Cautious outlook for 2019: slight downturn in sales revenues expected with continued positive figures for the financial result

The steel market for wire rod and bar steel products which is relevant for Saarstahl AG continues to be characterized by over-capacities so that there is still a high degree of pressure on volumes and prices. As a supplier of steel grades on a demanding quality level, Saarstahl was also able to benefit from the development in the automotive industry and other steel processing industries in 2018, above all from mechanical engineering and the construction industry. The unusually high demand continued into the autumn so that there was generally a high level of capacity utilization throughout the year and the production of crude steel could be maintained on the very high level of the previous year.

At Saarschmiede, after completion of restructuring measures, the business year 2018 was characterized by orientation towards new business fields – such as mechanical engineering, special materials, tool steel – and consolidation in the field of power generation machinery. The situation on the forge market also continued to be extremely tense in 2018. The workforce was reduced by half at the end of 2017 using socially compatible measures to its current level of 430 employees.

Figures for the Saarstahl Group in the year 2018:

  • The production of crude steel remained unchanged on a very high level and reached 2.782 million tonnes compared with 2.785 million tonnes in the previous year. The sales volumes of Saarstahl AG (wire rod and bar steel) fell by 4 % to 2.431 million tonnes (previous year: 2.532 million tonnes).

  • Thanks to higher average revenues the group turnover could be further increased by 3.6 % and amounted to 2.528 billion euros – a record for wire rod and bar steel – (previous year: 2.440 billion euros). Germany continues to be the most important sales market for Saarstahl but the increase in sales took place mainly in the other EU countries (+11.5%) and in third party countries (+5.6 %) (NAFTA, Asia, rest of the world).

  • The group earnings before interest and tax (EBIT) amounted to 93 million euros
    (previous year: 110 million euros) and the EBITDA (EBIT before depreciation and amortization) to 205 million euros (previous year: 230 million euros).

  • The Saarstahl Group with its total workforce of 6,384 employees (previous year: 6,366) continues to be one of the most important employers in the region. In addition, there are 287 trainees (previous year: 289). At Saarstahl AG, workforce figures increased to 4,340 employees (previous year: 4,040). The workforce figures are characterized by the favourable order situation, the high level of capacity utilization in the wire rod and bar steel sector as well as by the taking on of numerous employees from Saarschmiede.

  • Group investments amounted to around 68 million euros (2017: 56 mil­lion euros). Within this context, work on the new continuous casting plant S1 was driven forward with a volume of investment amounting to 100 million euros. With the investment, which is consistently tailored to meet the requirements of Industry 4.0, Saarstahl is once again setting a benchmark in product quality and customer service in the long product sector. Completion is planned for autumn 2019.

  • Positive operative cash flow of 97 million euros compared to - 23 million euros in the previous year. In a comparison within the industry, at 76.2%, the Saarstahl Group continues to have a very good equity and financial structure.

Cautious outlook for the business year 2019

The forecast for the business year 2019, which has already commenced, is subject to numerous uncertainties. Based on a slight worldwide increase in economic performance, there will only be a slightly positive development in the global demand for steel in 2019 and, in the EU, too, it is expected that there will be a significant reduction in the demand for steel. The effects of the global economic slowdown and tangibly weaker economic activity in China were noticeable in the last few months of 2018 and led to a downturn in the demand from the automotive sector and from mechanical engineering.

From a global point of view, in 2019, the structural crisis on the steel market has not yet been solved and there are still significant risks for the economy of the steel industry. The reasons for this are global over-capacities which mean that numerous countries are offered steel at dumped prices. Furthermore, due to a worldwide increase in economic protectionism, considerable deflection of flows into the liberal EU market are expected to continue and this, in turn, can destabilize the sensitive price structure.

As a consequence, Saarstahl anticipates a challenging business year 2019. Against the backdrop of potential risks and the subsequent current economic situation, it is to be expected that demand for the steel products wire rod and bar steel in the relevant steel processing industries for Saarstahl – the automotive and mechanical engineering industries - will stagnate in 2019.

The Saarstahl Group expects that demand will recover over the course of the year but, at the same time, it sees itself subjected to considerably greater pressure from a cost/margin point of view in 2019 which can only be compensated to a limited degree by an increase in revenue.  Tim Hartmann commented on the development saying, “Saarstahl has had a restrained development in the first few months of the year 2019 due to weaker demand in the important consumer segments. We anticipate that the group turnover will be slightly weaker in 2019 and, on condition that consistent efforts are made on the cost side, we expect a positive result for the group on the other hand”.

 

Saarstahl Group in Figures

 

2017

2018

Hot metal purchase

Thous. t

2,408

2,377

Crude steel production

Thous. t

2,785

2,782

Shipping (Saarstahl AG only)

Thous. t

2,532

2,431

Sales revenues

Million €

2,440

2,528

Workforce (without trainees)

31.12.

6,366

6,384

Trainees

 

289

287

 

 

 

 

EBIT

(Earnings before Interest and Tax)

M EUR

 

110

93

EBITDA

(Earnings before Interest, Tax, Depreciation and Amoritization)

M EUR

230

205

ROCE

(Return on Capital Employed)

%

4,0

3,4

Impressions from the construction site of the new continuous casting system S1

Impressions from the construction site of the new continuous casting system S1