Dillinger Hütte Group: Challenging financial year ends with positive earnings

The Dillinger Hütte Group (Dillinger Hütte and its subsidiaries) performed well during the 2012 financial year in the face of difficult economic circumstances. Despite declines in production volumes and sales revenues (€ 2.5 billion compared to € 2.8 billion in the previous year), positive earnings were once again achieved. “We have meanwhile continued our strategy of continuously investing in the sustainability of Dillinger Hütte, even in difficult times,” said CEO Dr. Karlheinz Blessing at the annual press conference. Investments in the Dillinger Hütte Group increased considerably once again in 2012 to € 244 million. A general decline in demand in the heavy plate market set in during the second quarter in the wake of economic uncertainty, and prices came under increasing pressure.

Dillinger Hütte Group figures for 2012:

• Production at the rolling mills in Dillingen and at the wholly owned subsidiary, GTS Industries S.A. (GTS) in Dunkirk, France, reached 1.882 million tons, compared with 2.110 million tons in 2011. In all, Dillinger Hütte shipped 1.856 million tons of heavy plate (2011: 2.104 million).
• Consolidated sales revenue sank, primarily due to lower sales volumes, from around € 2.753 billion in the previous year to € 2.498 billion.
• Consolidated earnings before interest and taxes (EBIT) amounted to € 161 million (2011: € 205 million) and consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 261 million (2011: € 304 million). Consolidated return on sales (EBIT margin) amounted to 6.4 % (2011: 7.4 %) and the return on capital employed (ROCE) was 4.9 % (2011: 6.4 %).
• A total of 5 377 people were employed at the Dillingen location at the end of the financial year (Dec. 31, 2011: 5 464). These employees worked at Dillinger Hütte itself, at Zentralkokerei Saar GmbH (ZKS) and at ROGESA Roheisengesellschaft Saar mbH (ROGESA). A total of 7 854 employees are employed within the Dillinger Hütte Group (2011: 7 960). A total of 67 young people began vocational training at Dillinger Hütte during 2012 (2011: 73). As a result, the company employs a total of 232 trainees when all training class years are included.
  
• At € 244 million, Dillinger Hütte's total investments for the year were once again significantly higher than for the previous year (€ 154 million). The primary focus of the € 171 million invested in Dillinger Hütte itself was the new CC 6 continuous casting machine. With a total investment volume of more than € 300 million, it represents the biggest single investment at the Dillingen site. Despite the high level of investment spending, free cash flow improved to € 240 million.

Energy and climate policy must not endanger competitiveness

Like the rest of the German steel industry, Dillinger Hütte is concerned about burdens imposed by the energy and climate policies of Germany and the European Union. For instance, costs resulting from burdens imposed by German Renewable Energy Act have quadrupled since 2009. “Our energy costs are already three times higher than those of our competitors in the United States,” Dr. Blessing said, warning against further endangering the competitiveness of the country’s domestic steel industry with further costs. “Dillinger Hütte is investing large sums in improving environmental protection and is contributing to achieving the energy revolution with its products. But for this, the company also requires the right underlying conditions.”

Cautious outlook for 2013

Widespread improvement of the economy and an associated significant growth in demand for heavy plate are expected during 2013. For this reason, the Dillinger Hütte Group anticipates that 2013 will be a challenging year overall. Current low revenues coupled with high raw material and energy costs are dampening expectations for returns in 2013 and are making it necessary to increase prices in the coming months. On the whole, however, the Dillinger Hütte Group finds itself well positioned: “Market conditions are challenging, but we are well equipped with our product mix. All of the important conditions have been created for process optimization and for developing the strategic market positions,” Blessing said. Sales volume for 2013 is expected to be at the level of the previous year, and positive earnings are also anticipated.

The Dillinger Hütte Group by the numbers: