Salzgitter Group has expressed concerns about the ongoing challenges faced by the German steel industry, citing the weakening German economy and rising uncertainty in export markets due to growing tensions between the United States and its trading partners. This outlook was detailed in the company’s report for the financial year 2024.
Steel Sector Struggles with High Energy Costs and Imports
The steel sector has been notably impacted by high energy prices and a surge in steel imports, which have contributed to reduced profitability. The company reported a decline in external sales for 2024, reaching €10 billion, down from €10.8 billion in 2023. This was attributed to lower average revenue for steel products and a weak order book in the steel processing division. EBITDA also fell significantly to €445 million, compared to €677 million the previous year. Despite a pre-tax profit increase to €296 million (up from €238 million in 2023), the results were overshadowed by €406 million in expenses related to restructuring, impairment, and other provisions.
In terms of production, Salzgitter reported an 11.9% increase in steel output compared to 2023, reaching nearly 6.4 million tons. However, these gains were not enough to offset the financial pressures stemming from the broader economic and industry challenges.
Transformation and New Opportunities in the Defense Sector
Salzgitter’s CEO, Gunnar Gröbler, emphasized that the company continues to pursue its SALCOS transformation program, focusing on reducing carbon emissions in steel production. The company is also preparing for ongoing market difficulties and expects political measures to address energy cost reductions and regulatory hurdles.
Additionally, new opportunities are emerging in the defense sector, and Salzgitter is looking to expand its portfolio to target this growing market. The company's shift toward defense is seen as a strategic move to diversify and adapt to changing market conditions.
Uncertainty Around Joint Venture and Potential Closure
Salzgitter also addressed the potential closure of the joint venture between Hüttenwerke Krupp-Mannesmann (HKM) and Thyssenkrupp following the withdrawal of a potential buyer in February 2025. Gröbler noted that while it’s still too early to definitively assess the outcome, the closure of HKM would require the company to find alternative solutions for sourcing materials previously produced by the venture.
Strategic Acquisition in Steel Pipe Business
In other developments, Hoberg & Driesch Röhrengruppe, one of Europe’s leading steel pipe distributors, reached an agreement with Salzgitter Mannesmann Stahlhandel GmbH to acquire part of its pipe business in Germany. The acquisition will focus on seamless heavy-wall pipes and precision steel pipes, highlighting Salzgitter’s efforts to refine and restructure its operations in response to market pressures.
As Salzgitter navigates these challenges, the company’s future success will depend on its ability to adapt to volatile market conditions, political shifts, and evolving industry demands.
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