Salzgitter has lowered its sales forecast for 2024

The company notes that signs of recovery in the steel market are weaker than expected

German steelmaker Salzgitter has lowered its 2024 forecast for the steel market as signs of recovery are weaker than previously expected. This is stated in the company’s report for the first quarter of this year.

Salzgitter currently expects sales this year to be around €10.5 billion, compared to its previous forecast of €10.5-11 billion.

According to Birgit Potrafki, the company’s chief financial officer, there has been neither a continuation of the slight recovery trends that were visible at the beginning of the year nor the expected gradual improvement in the market environment.

«An economic rebound in Germany and in Europe is only likely to manifest at a later point in time and be weaker than predicted a few months ago. In Germany, our key customer markets of construction, automotive and mechanical engineering in particular experienced a partly pronounced phase of weakness throughout the first quarter,» she said.

Salzgitter added that these factors have had and continue to have a direct impact primarily on the performance of the group’s steel companies.

Due to lower prices compared to last year, Salzgitter Group’s external sales in the first quarter of 2024 fell by 10.2% – to €2.7 billion.

In January-March 2024, the company’s total steel production increased by 5.9% y/y – to 1.68 million tons. At the same time, the volume of orders and shipments decreased at all the company’s enterprises.

Salzgitter also reported that the transformation towards low-carbon production of SALCOS steel is on schedule. The group will invest approximately €2.3 billion in the first phase of the project by the end of 2026. At this stage, SALCOS will receive support of about €700 million from the German government and €300 million from the federal state. The company’s contribution will be about €1.3 billion.

As a reminder, two German shareholders of Hüttenwerke Krupp-Mannesmann (HKM) – Thyssenkrupp Steel and Salzgitter – are negotiating with the third owner, Vallourec, to transfer its stake in the Duisburg plant. Salzgitter holds a 30% stake in the plant, while Thyssenkrupp holds 50%, but Salzgitter may be more serious about taking 20% of Vallourec, as it has similar activities in pipe production.