Salzgitter ETR: SZG reported a stronger start to 2026, with Chief Financial Officer Birgit Potrafki saying the steel group generated EUR 280 million in adjusted EBITDA in the first quarter, helped by a particularly strong contribution from its stake in Aurubis and improvements across its core business units.
“After two challenging years, that feels really good,” Potrafki told analysts on the company’s first-quarter earnings call. She said Aurubis’ contribution was “exceptionally strong,” driven by high precious metals prices, but emphasized that the improvement was not limited to the investment holding. “All our core business units also contributed to the earnings improvements versus a year earlier,” she said.
Potrafki credited the company’s P28 performance program as a key driver of the turnaround, saying Salzgitter realized EUR 43 million in efficiency gains in the first quarter. The company’s net financial position also improved to minus EUR 679 million from minus EUR 954 million at the beginning of the year, mainly due to the receipt of EUR 253 million in additional public funding.
Guidance Raised, but Management Remains Cautious
Salzgitter raised its full-year profit outlook after the strong first quarter, but Potrafki said the company was not “getting carried away” given ongoing economic and geopolitical uncertainty. The company now expects sales of around EUR 9.5 billion and EBITDA ex of between EUR 625 million and EUR 725 million.
Potrafki said the market environment contains “some glimmers of hope” but remains challenging overall. She pointed to expected European Union trade measures as a potential support for the steel industry. A new trade defense instrument proposed by the European Commission is expected to be formally adopted in the coming weeks and, from July, will allow the EU to reset duty-free imports to levels seen a decade ago, she said. She also said the carbon border adjustment mechanism, introduced at the start of the year, is already having a positive effect on pricing.
At the same time, Potrafki cited high economic uncertainty, hostilities in the Gulf region and the closure of the Strait of Hormuz as pressures on the outlook. Those developments have contributed to rising energy prices and freight rates, she said. While Salzgitter is well hedged for gas and electricity in 2026, Potrafki said the broader price pressures are weighing on global growth projections.
Steel Production Outlook Focuses on Stability
Analysts pressed management on the outlook for the steel production business after order intake rose 7% year over year. Potrafki said the higher order intake supports the company’s expectation for improved sales in steel production and for the group overall compared with last year.
On profitability, Potrafki said the steel production segment had a good first quarter and was significantly stronger than a year earlier. She said Salzgitter sees “a continued strong performance” for the year and described the cost base as stable. Asked whether first-quarter profitability could be extrapolated, she said she saw “really good stability.”
Potrafki was more measured on steel pricing. She said hot-rolled coil prices of around EUR 700 to EUR 710 per ton, or slightly below EUR 700, were near levels seen in the second quarter of last year and had not yet exceeded some prior-year levels. She said contracts are being negotiated based on current pricing, and that the company has incorporated those assumptions into guidance.
She added that some of the expected pricing effect from safeguards and CBAM has likely already materialized. Potrafki said Salzgitter expects additional effects from safeguard measures to appear more toward the end of the year rather than immediately in July, partly because inventories may be built ahead of the change.
Potrafki also said the company plans to restart blast furnace C in the autumn.
Steel Processing, Technology and Trade Updates
In steel processing, Potrafki said Salzgitter expects margin improvement in upcoming quarters, including the second quarter, though she stopped short of confirming the division would turn positive. She said the market remains challenging, especially in precision tubes, where underutilization continues. Ilsenburg is “quite nicely booked,” she said, while capacity remains available in large-diameter tubes and MGB if the economy improves.
The technology business posted a strong first quarter, which Potrafki attributed in part to ongoing deliveries from PLUSMAX orders. She said KHS is expected to deliver another record year for both sales and profit, and that all four quarters are expected to be stronger on the profit side than the comparable periods last year. She also noted the segment typically has a strong fourth quarter.
Salzgitter also disclosed a positive one-off effect outside steel production. Potrafki said the trade segment benefited from EUR 11 million related to reduced restructuring costs following negotiations.
HKM Talks Continue; Treasury Share Sales Underway
Potrafki said Salzgitter has received EU antitrust approval related to HKM, but negotiations with ThyssenKrupp Steel are continuing. She said the company is confident it can close the deal “in the near future,” but declined to discuss negotiation terms or provide financial impacts before an agreement is finalized.
Management also addressed Salzgitter’s plan to dispose of treasury shares. Potrafki said the company has started selling some of its own shares and has moved below the 10% threshold. She said Salzgitter is not under pressure to sell, but decided to use market conditions to increase the liquidity of its stock and support financial stability. The current target is to move toward 5% treasury shares, with no set time limit. Potrafki said the company would provide further information when regulatory requirements call for disclosure at the 5% level.
Funding and Balance Sheet Outlook
Potrafki said Salzgitter still expects its net financial position to be slightly above minus EUR 1 billion toward the end of the year, implying maximum leverage of about 2 times based on the company’s EBITDA guidance.
On capital spending, Potrafki said Salzgitter had previously anticipated EUR 875 million of capital expenditure for 2026, with additional public funding reducing the impact. She said capital spending is typically weighted toward the second half of the year and that the company continues to evaluate larger investments carefully.
Asked about green steel subsidies, Potrafki said Salzgitter has already received more than EUR 1 billion and expects EUR 1.3 billion in total. She said almost EUR 300 million is expected by the end of this year, with only a minor portion remaining for 2027.
Regarding Aurubis, Potrafki said Salzgitter continues to view the stake as an integral part of the company and does not currently plan to change how Aurubis contributions are included in guidance. However, she said the 2026 outlook does not assume further positive contributions from precious metals valuation effects in the remaining quarters.
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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Salzgitter, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Salzgitter wasn't on the list.
While Salzgitter currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Click the link to see MarketBeat's guide to investing in 5G and which 5G stocks show the most promise.
Get This Free Report
