Dillinger Hütte: 2007 best year in business history

The 2007 business year of Dillinger Hütte was again marked by records and an improvement of all important operating figures. The turnover increased considerably by 15.9 % to 2.6 billion Euros. EBITDA (Earnings Before Interest, Tax and Depreciation of Assets) rose to 558 million Euros (2006: 455 million Euros) and EBIT (Earnings Before Interest and Tax) to 493 million Euros (2006: 401 million Euros). Dillinger Hütte experienced a strong demand from all customer sectors for both the main product groups line pipe and normal plate, which meant a utilization of all facilities to full capacity. “2007 so far has been the best year in the business history of Dillinger Hütte – for the quantities produced as well as the turnover and results achieved. Our strategy with a focus on an increasingly sophisticated product mix with increasingly higher added-value and demanding steel grades is paying off”, says Dr. Paul Belche, chairman of the Board at the company’s annual press conference. “Due to this successful strategy and the high expertise and motivation of our employees Dillinger Hütte will be well positioned also for the challenges to come.”

Intense demand for heavy plate

2007 was characterized worldwide by a constantly strong demand for heavy plate. Particularly the heavy plate processing companies which belong directly to the energy sector – like the oil and gas industry – as well as the processors working as suppliers for these sectors – like the boiler and pressure vessel industry – were the major drivers of the intensified demand. As already in the previous year import volumes from third countries and particularly China increased drastically. As a result steel prices for simple heavy-plate grades on the European market declined significantly. In the market segment of high-end qualities, in which supply bottle-necks occurred, prices remained stable at a high level.

Double digit increase in turnover

Production at the Dillingen rolling mill, and at Dunkirk, the 100 % subsidiary, GTS Industries S. A., reached a record level with 2.388 million tonnes, which was 3.2 % above the level of the previous year (2.258 million tonnes). All in all, Dillinger Hütte shipped 2.307 million tonnes of heavy plate, compared to 2.235 million tonnes in the previous year while the sales of high-value goods could be raised for normal plate and line pipe. Due to the increased volume and the higher turnover achieved Dillinger Hütte could register a double digit growth of its sales revenue to 2.6 billion Euros (2006: 2.3 billion Euros).

Results again at record level

As in the previous year, Dillinger Hütte achieved top marks for its results, despite persistently high raw material costs. After having doubled in 2006, EBIT again increased by 22.9 % to around 493 million Euros (2006: 401 million Euros). EBITDA, i.e. Earnings Before Interest, Tax and Depreciation of Assets, rose to 558 million Euros (2006: 455 million Euros). Return on Sales (EBIT Margin) amounted to 24.1 % (2006: 22.5 %) and ROCE (Return On Capital Employed), at 44.7 %, amounted to 0.5 percentage points above the already extremely high figure for the previous year (44.2 %).

Stable number of employees – high level of training

With 5233 employees at the end of 2007 the total workforce in Dillingen remained nearly stable, compared with 5231 at the end of the previous year. These employees worked at Dillinger Hütte itself, at Zentralkokerei Saar GmbH and at ROGESA Roheisengesellschaft Saar mbH. In addition, GTS Industries S. A. in Dunkirk employed 618 people (Dec 31st 2006: 622). As in the previous years, Dillinger Hütte again showed an outstanding commitment to training. In 2007 Dillinger Hütte had a total of 274 trainees (2006: 287). A total of 76 trainees were hired in 2007, compared to 68 in 2006. In 2007 work safety could be effectively improved, and the number of notifiable accidents could be reduced to 33, the lowest level of accidents in the history of Dillinger Hütte’s business.

Intensified investment

In order to maintain its technological advantage, Dillinger Hütte continuously invests in the optimization and modernization of its facilities and processes. At 79 million Euros, Dillinger Hütte’s total investment for 2007 was significantly above the level of the previous year (66 million Euros). In addition, further extensive investments of some 65 million Euros were made for the subsidiaries, ROGESA Roheisengesellschaft Saar mbH and Zentralkokerei Saar GmbH (interest DH: 50 % in each) at the Dillingen location, which Dillinger Hütte carried according to its interest in these companies. These sums are part of an investment program started in 2007 and totalling around 500 million Euros to strengthen the position of Dillinger Hütte for the future.

Promising prospects for 2008

Dillinger Hütte entered the new business year with all facilities working at their capacity limits. Demand remained at the high level of the previous year, and all customer segments of the company currently demand large quantities of high-quality heavy plate. Particularly in the segment of mechanical engineering and steel construction as well as in the construction industry and energy sector demand is very lively. The drastic iron ore price hike announced for 2008 leads to a considerable increase of product prices. Dillinger Hütte, correspondingly, has raised its prices and announced further adjustments. As a niche producer with a highly specialized product mix and as a supplier of line pipe for a booming energy market, Dillinger Hütte expects high sales volumes and good earnings for 2008. Thus, Dillinger Hütte is looking forward to good sales revenues and results.