Salzgitter (ETR:SZG) executives told analysts that fiscal 2025 was marked by a difficult steel market—“perhaps even slightly worse than 2024”—but said internal performance measures and restructuring helped the group return to profitability on an adjusted basis. CEO Gunnar Gröbler described the year under the theme “back in black,” pointing to a slight positive adjusted pre-tax result, improved cash generation, and progress on the company’s decarbonization roadmap.
2025 results: lower sales, improved earnings stability
CFO Birgit Potrafki said group sales fell to “almost EUR 9 billion,” roughly EUR 1 billion below the prior year. She attributed the decline mainly to the deconsolidation of Mannesmann Stainless Tubes (which was still included in 2024) and weaker turnover across steel segments, with trading additionally affected by lower volumes.
Potrafki highlighted the income statement’s main cost drivers—material costs of around EUR 5.8 billion, personnel expenses of EUR 1.9 billion, and other operating expenses of EUR 1.5 billion—and said lower material costs helped offset the sales decline. She also noted that depreciation and amortization comparisons were influenced by impairments recorded in 2024 related to Mannesmann Precision Tubes and HKM.
Restructuring and performance program exceed targets
Management emphasized restructuring steps across several areas. Gröbler said the European trading business underwent a “deep restructuring,” including the removal of certain product lines and customer groups and job reductions, with the unit returning to profitability in 2025. He also cited restructuring moves in steel processing and Mannesmann Precision Tubes, including the closure of a site in Helmond and a halving of operations at a site in Mexico.
Potrafki said the group’s P28 performance program exceeded its 2025 target: the company aimed for EUR 97 million and achieved EUR 129 million, an overperformance of 33%. She said EUR 110 million of the 2025 contribution is expected to be sustainable. Examples she gave included changes to the material mix in Peine’s electric arc furnace and logistics initiatives such as shifting transport from trucks to rail and combining shipments.
Potrafki added that the company increased the overall ambition for the program to EUR 575 million, with a 2026 target contribution of EUR 122 million.
SALCOS funding increased; phase-one timeline unchanged
On decarbonization, Gröbler reiterated that there was “no intention whatsoever to postpone SALCOS phase one,” stating the project is well advanced in construction and moving toward commissioning. He also said the company is expanding customer discussions aimed at signing contracts for “green steel,” noting earlier projects delivered using Peine slabs and that Salzgitter has obtained certification under the Low Emission Steel Standard (LESS) for multiple sites including Salzgitter and Peine as well as downstream locations.
Gröbler said the company secured an additional EUR 322 million tranche of funding in 2025, bringing total public support for SALCOS to EUR 1.3 billion. He acknowledged project cost increases from roughly EUR 2.5 billion to EUR 2.7 billion, but said the additional funding “exceeds the additional cost,” improving the project’s net position.
While phase one is proceeding, Gröbler said the company decided to postpone SALCOS phase two to 2028–2029 using the program’s modular design to maintain flexibility. He stressed the company still intends to build the second electric arc furnace, but will adjust timing based on market and regulatory conditions.
HKM bid and defense market push
Gröbler said Salzgitter has offered to purchase the shares of HKM held by thyssenkrupp Steel and Vallourec, aiming for full ownership and a plan to transform HKM into a “one electric arc furnace steel mill” in 2029–2030. He argued the move has industrial logic tied to value-chain integration, feedstock security for defense products, and synergies in decarbonization. Gröbler also pointed to expected demand for slabs as Russian slab imports are pushed out under sanctions in 2028, calling HKM well positioned in that context.
Management said HKM has secured EUR 200 million in public grant funding and estimated the acquisition process could be closed by summer. On a call Q&A, Gröbler said HKM’s current capacity is about 5 million tons and the end-state after transformation would be about 2 to 2.5 million tons. He added that the business plan targets HKM becoming a positive contributor to the group by 2027.
Salzgitter also highlighted a push into defense steel, including the acquisition of Thyrolf & Uhle together with Universal Eisen und Stahl to expand from plate supply into components for system integrators. Gröbler told analysts defense volumes will remain niche, but margins are more attractive than standard grades. He said the company expects defense to represent a single-digit percentage of sales within 2–3 years, potentially reaching mid- to high-single-digit levels as the business ramps.
2026 outlook: modest recovery and higher earnings guidance
Looking to 2026, Potrafki said headwinds would continue, including the absence of certain one-time effects in trading that benefited 2025 results. Still, she described management as “cautiously optimistic,” expecting stronger momentum in 2026 and more pronounced upside from 2027 as policy measures take fuller effect.
Management reiterated 2026 guidance of:
- Sales of EUR 9.5 billion
- Adjusted EBITDA (VX) of EUR 500 million to EUR 600 million
- Pre-tax result (VX) of EUR 75 million to EUR 175 million
Potrafki said the company expects increased sales in all segments and specifically forecast improved results in steel producing and steel processing, with steel production returning to profitability. Gröbler also proposed a dividend of EUR 0.20 per share, unchanged from 2024, citing continued investment needs and ongoing market uncertainty.
On risk factors discussed in Q&A, Gröbler said the company’s assessment of higher energy costs tied to geopolitical developments suggested an impact of about EUR 10 million to EUR 15 million at the EBT level based on current knowledge, supported by hedging levels above 50% for natural gas and significant electricity hedging via CO2-free PPAs. He said freight-rate increases were being discussed with customers, but cost-sharing outcomes were still too early to quantify.
About Salzgitter (ETR:SZG)
Salzgitter AG, together with its subsidiaries, engages in steel and technology businesses worldwide. It operates through four segments: Steel Production, Steel Processing, Trading, and Technology. The Steel Production segment manufactures steel and special steels, such as hot-rolled wide strip, steel sheet, sections, tailored blanks, as well as scrap trading. The Steel Processing segment produces various high-grade heavy plates; and manufactures line pipes, HFI-welded tubes, and precision and stainless-steel tubes.
