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SZA
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Bernhard KleinermannHead of Investor Relations
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1 Salzgitter Group + Financials
2 Steel Division + Market
3 Tubes Division + Market
4 Strategy
5 Outlook
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• Crude steel production: 7.3 million tons; trading volume: 6.7 million tons• 5th largest European steel producer• Among the top 3 producers of filling und packaging machinery
Global PresenceSalzgitter Group
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Diversified product portfolioSalzgitter Group
Line pipes
Precision tubes
Stainless tubes
Stockholding trading
International trading
Strip products
Heavy plates
Sections
Engineering services
Logistics
Injection molding machinery Beverage filling plants
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Steeland
Technology
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Group structure
Salzgitter AG (Holding)
simplified structure
Salzgitter Group en
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SteelSalzgitter Stahl GmbH
Salzgitter Flachstahl
Ilsenburger Grobblech
Peiner Träger
HSP Hoesch Spundwand und Profil
Salzgitter Bauelemente
Salzgitter Europlatinen
Trading
Salzgitter Mannesmann Handel Group
Universal
Hövelmann&Lueg
Services
DEUMU
Salzgitter Serviceund Technik
Verkehrsbetriebe Peine-Salzgitter
telcat
GESIS
Hansaport (51%)
Salzgitter MannesmannForschung
Salzgitter AutomotiveEngineering
SIT
TechnologyTubesMannesmannröhren-
Werke GmbH
KHS-Group
Klöckner PET-Technologie
Klöckner DESMA Elastomertechnik
Klöckner DESMA Schuhmaschinen
Salzgitter Mannesmann GmbH – Intermediate holding company
TubesMannesmannröhren-
Werke GmbH
Europipe (50%)
Salzgitter Mannesmann Line Pipe
Salzgitter MannesmannPrecision
Salzgitter MannesmannStainless Tubes
Salzgitter Mannesmann Grossrohr
Hüttenwerke Krupp Mannesmann (30%)
Salzgitter Mannesmann Grobblech
Klöckner Hänsel Processing
Klöckner-Werke AG (86%)
NEW!NEW!
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1st Half 2008 with outstanding results
• Consolidates sales at record level• Q2/2008 stronger than first quarter
17,13524,044Core workforce (June 30, 2008):
54.536.8%ROCE from operations:2)
6.947.64€Earnings per share:
398,7436.9€ millionEarnings after taxes:
663.6646.4€ millionEBT:
4,7236,233€ millionGroup sales (cons.):
H1 2007H1 2008
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Key figures of the Salzgitter GroupSalzgitter Group
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-50
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50
100
150
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350
400
1Q 0
42Q
04
3Q 0
44Q
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1Q 0
52Q
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3Q 0
54Q
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1Q 0
62Q
06
3Q 0
64Q
06
1Q 0
72Q
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3Q 0
74Q
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1Q 0
82Q
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0
500
1000
1500
2000
2500
3000
3500
1Q 0
42Q
04
3Q 0
44Q
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1Q 0
52Q
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3Q 0
54Q
05
1Q 0
62Q
06
3Q 0
64Q
06
1Q 0
72Q
07
3Q 0
74Q
07
1Q 0
82Q
08
Sales and earnings development
External Sales [€ mil.] EBT from operations [€ mil.]
Continuous sales growth
Income from associated companiesEBT of consolidated companies
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Quarterly earnings at record level
Salzgitter Group
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50
100
150
200
250
300
350
400
H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 H1 2008 H1 2007 H1 2008
Earnings development (YoY)
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EBT H1 2008 vs. H1 2007 (in € million)
• Steel: raw materials price increases affect earnings • Trading: Margin expansion resulting from “windfall profits”• Tubes: better despite rising costs
Steel Services Technology
Divisions
Trading Tubes
+10%+16%
-9%
+18%
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SZAG: Net cash position
Capital expenditures, acquisitions and dividend payment cause slight decrease
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
Net position due to banks
€bi
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Financials
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0,0
1,0
2,0
3,0
4,0
5,0
6,0
30.09
.9530
.09.96
30.09
.9730
.09.98
30.09
.9930
.09.00
31.12
.0031
.12.01
31.12
.0231
.12.03
31.12
.0431
.12.05
31.12
.0631
.12.07
30.06
.08Development of Group-equity
Since 30/09/99 a total increase of 405% realized (approximately 17% p. a.)
1) Including own shares
Equity SZAG1) Dividends paid (accumulated)
€bi
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+ € 4.0 bn
Financials
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1 Salzgitter Group + Financials
2 Steel Division + Market
3 Tubes Division + Market
4 Strategy
5 Outlook
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Crude steel production H1 2008: 2.7 mt Segment Sales: € 2.3 billionShipments H1 2008: 3.0 mt External Sales: € 1.6 billion
OverviewSteel Division
Steel Division
Heavy plate Sections Processing Strip steel
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50%
75%
100%
125%
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
Shipments, price per tonSteel Division
Shipment in tons Sales in € per ton
Flat steel Heavy plate Sections
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Strong shipments show regular seasonal pattern Sales prices with upward trend
100%
125%
150%
175%
200%
225%
250%
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
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Order intake and backlogSteel Division
Above average order intake
Order bookings Steel Division Order backlog Steel Division
800 kt
900 kt
1000 kt
1100 kt
1200 kt
1300 kt
1400 kt
1500 kt
1600 kt
1700 kt
1800 kt
4Q 012Q 024Q 022Q 034Q 032Q 044Q 042Q 054Q 052Q 064Q 062Q 074Q 072Q 08
800 kt
900 kt
1000 kt
1100 kt
1200 kt
1300 kt
1400 kt
1500 kt
1600 kt
1700 kt
1800 kt
4Q 012Q 024Q 022Q 034Q 032Q 044Q 042Q 054Q 052Q 064Q 062Q 074Q 072Q 08
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Cyclical effects, but at a sufficient level
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0%
100%
200%
300%
400%
500%
600%
700%
2001 2002 2003 2004 2005 2006 2007 2008e
Raw material prices
High inflation of raw material prices drives production costfor steel by more than €100 per ton versus 2007
Average prices of the period; sources: Platt's, Steel Business Briefing, SZAG
Scrap, Europe, ex works, €/t
Iron Ore, FOB, US$/t Coking Coal, FOB, US$/t
Fuel Oil, FOB, US$/t
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Steel Division
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750
1000
1250
Jan03
Jan04
Jan05
Jan06
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Spot markets: World steel prices
Prices have risen strongly in all regions, and seem to have peaked for now
Source: MEPS - HR Coil transaction prices
US-
$/t
Hot rolled coil prices in selected countries / regions
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EU USAJapan China
Aug2008
Steel Division
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01'03
07'03
01'04
07'04
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07'07
01'08
07'08
0250500750
10001250
01'03
07'03
01'04
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250
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01'03
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07'07
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07'08
Spot markets: Steel prices in Europe
Sales prices for steel products have risen additionally
Source: Steel Business Briefing
HRC / N. Europe / ex works HDG / N. Europe / ex works
Plate / Europe / ex works Medium sections / Europe / delivered
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maxmin
maxmin
maxmin
maxmin
Steel Division
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Stock levels and shipments
Normalizing lead times due to high consumption
Source: BDS (Association of German Steel Traders) 1) Stock level in relation to shipments to German processors
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2004
2005
2006
2007
1Q 04
2Q 04
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4Q 05
1Q 06
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4Q 06
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2Q 07
3Q 07
4Q 07
1Q 08
2Q 08
0
1
2
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6
1,00
0 tp
m
Mon
ths
Stock level GermanyShipments GermanyLead time to replenish1)
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Steel Division
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1 Salzgitter Group + Financials
2 Steel Division + Market
3 Tubes Division + Market
4 Strategy
5 Outlook
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Shipments H1 2008: 0.7 mt Segment Sales: € 1.5 billionExternal Sales: € 1.1 billion
OverviewTubes Division
Tubes Division
HFI-welded PipesLarge-diameter Pipes Stainless TubesPrecision Tubes
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Shipments, turnover per tonTubes Division
Shipments in tons Turnover in € per ton
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Good shipment volumes,precision tubes impacted by
acquired companies
Sales prices with positive trend,stainless follows nickel trend
50%
75%
100%
125%
150%
175%
200%
225%
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
50%
75%
100%
125%
150%
175%
200%
225%
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
Large diameter Precision tubesHFI-welded pipes Stainless
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Order intake and backlogTubes Division
Continuing buoyant order intake, Q4 2007 shows effect of
Nord Stream pipeline
Order bookings Tubes Division [€ mil.] Order backlog Tubes Division [€ mil.]
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200
400
600
800
1.000
1.200
1.400
2Q 011Q 024Q 023Q 032Q 041Q 054Q 053Q 062Q 071Q 08
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2000
2500
2Q 011Q 024Q 023Q 032Q 041Q 054Q 053Q 062Q 071Q 08
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Order backlog near record level,shipment of Nord Stream has started
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Prices for large-diameter pipesMarket Situation
Sales prices with worldwide upward trend until July, peak scenario afterwards
Source: MBR – UOE linepipe (X65) fob; sourced from heavy plate to API standards
Prices for large-diameter pipes in selected countries / regions
EU USA JAPAN
US-
$/t
750
1000
1250
1500
1750
2000
2250
2500
2750
3000
Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08
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Sept 2008
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1 Salzgitter Group + Financials
2 Steel Division + Market
3 Tubes Division + Market
4 Strategy
5 Outlook
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Elements of the growth strategyStrategy
External Growth:
• Quality optimization• Increase of Productivity• Expansion of product range• De-bottlenecking• Reduction of dependence on external suppliers
• Selective expansion of regional market positions• Expanding/complementing the product portfolio• Closing of gaps in the value chain• Opportunistic acquisition in steel-related industries
Growth of the Group
No end in itselfbut to enhance
• Profitability• Stability• Independence
Growth of the Group
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Targets: • € 13 to 15 billion in consolidated group sales• ROCE of 15% over the steel cycle
Internal Growth:
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Internal growth – Salzgitter Group Strategy
Focus: Capex of more than € 600 million each in 2008 and in 2009
0.7 0.7
1.70.20.4
0.3
0.0
0.5
1.0
1.5
2.0
1996/97-2001 2002-2006 2007-2010/12
€ 0.9 bn
€bi
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€ 2.0 bn
Steel Division other Divisions
€ 1.1 bn
Projects with a total value of € 2.0 billion currently under construction or planned
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Internal growth – “Steel 2012”Strategy
Strip steel and heavy plate:• Capacity increase of the melt shop (metallurgy, fourth continuous caster)
by 350,000 metric tons• Expansion of the hot strip mill and the heavy plate mill• Production of innovative High-Strength & Ductility grades through strip
casting• CAPEX: € ~350 million; completion: 2012
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Sections:• Construction of a second electric arc furnace• Expansion of the existing continuous casting lines• Optimization of the rolling mill for special sections production• Capacity effect: +950,000 metric tons of crude steel• CAPEX: € ~400 million; completion: 2010
Flexibility and 1.3 million t/a additional crude steel capacity
Aims: • Broadening of the product range• Substitution of third party input material for Steel and Tubes Divisions• Cost reduction through increase of plant efficiency
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Internal growth – CAPEXStrategy
• Steel Division: € 197 million• Tubes: € 42 million • Trading: € 8 million• Technology: € 20 million• Services: € 16 millionSalzgitter Group: € 284 million
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Capital expenditures H1 2008
Projects are progressing on schedule
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External growth – latest deal
Beverages-Group employs approximately 500 employees in several companies with combined sales of ~€ 150 million in 2007.
Transfer of group to Klöckner-Werke AG on July31 in exchange for 8,323,700 new shares of Klöckner-Werke, valued at € 144 million (€ 17.30 per share)
Strategy
Integration continues
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Acquisition of SIG-Beverages
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NA shareholdingStrategy
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Leading integrated copper producer of Europe
Comparable production processes for steel and copper
Profitable and with high technological competence
Salzgitter shareholding: 17.6 %
► Current status: Financial investment with an industrial background
• Next steps: Assessment of synergy potentials of production technology, research and development as well as in procurement and sales
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1 Financials
2 Steel Division + Market
3 Tubes Division + Market
4 Strategy
5 Outlook
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Divisions – Outlook for 2008Outlook
• Higher turnover due to rising prices
• Spotmarketdevelopment will cool down
• Earnings beforetax might exceedprevious year’s level
Trading
• Sales above previous year
• EBT lower than in record year 2007, but still outstanding
• Sales price increases should not be able to fullycompensate for higher raw material costs when comparing 2007 with 2008
Steel
• Sales increase due to brisk demand and high order back log
• To achieve previous year’s EBT is still an ambitious objective
Tubes
• Nearly unchanged sales expectation
• EBT excluding special effects will be slightly above previous year
Services
• Sound development continues, previous years record sales might not be achieved
• EBT should rise
Technology
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Salzgitter Group – Outlook for 2008Outlook
We make express reference to the fact that opportunities and risks arising from selling price, input material price and capacity utilization trends, which are currently not foreseeable, as well as changes in exchange rates may exert a considerable impact on the course of business in the Financial Year 2008. The resulting fluctuation bandwidth of consolidated pre-tax profit can, as seen in previous years, be of considerable dimensions, in both a positive and negative sense.
Forecast of August 14, 2008
“In the financial year 2008, we shall strive to attain notable growth within the Group, 50% of which will be due to the first-time full-year inclusion of the companies of the Klöckner Group in our new Technology Division.
Given our pleasing performance in the first half-year, we consider it justifiable to raise our pre-tax profit forecast for the Group to over one billion euros.”
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