Salzgitter Q3 Earnings Call Highlights

Key Points

• Revenue rose nearly €500 million to €7.3 billion in the first nine months of 2026, driven by HKM’s consolidation and higher steel prices. EBITDA excluding the Aurubis exchangeable bond was €660 million, with improvements across several segments.
• Salzgitter is integrating HKM after reducing the site’s capacity to 2–2.5 million metric tons; it expects HKM to contribute a mid-double-digit million-euro result this year. Steel-production earnings before tax are expected to be higher in Q4 than in Q3.
• The company remains on track for SALCOS’ first-phase ramp-up in late summer 2027 and has exceeded its 2026 cost-savings target, achieving €146 million against €122 million. Management is cautiously optimistic about 2027, while noting limited market growth and continued challenges.

Salzgitter ETR: SZG reported higher sales and improved results across all of its business segments for the first nine months of 2026, as the acquisition of HKM and higher steel prices helped lift revenue.

Sales rose by almost €500 million to €7.3 billion, Chief Executive Gunnar Groebler said on the company’s earnings call. He attributed the increase primarily to the full consolidation of HKM in the third quarter, as well as higher prices.

Nine-month EBITDA excluding the exchangeable bond on Aurubis shares was €660 million. Groebler said Aurubis was the primary driver, while steel production, trading and technology also improved.

The CEO described the outlook for 2027 as cautiously optimistic, although he said growth momentum remained limited across Salzgitter’s markets. “We see certain stabilization, yes, but still major challenges in most of our customer segments,” he said.

HKM integration and steel margins

Groebler said the acquisition of HKM secures long-term steel production capacity and gives Salzgitter responsibility for transforming the site toward lower-carbon production using an electric arc furnace. The company is integrating HKM and pursuing transaction-related synergies.

Salzgitter has closed one blast furnace and half of the coking unit at HKM, reducing the site’s installed capacity from 5.2 million metric tons to between 2 million and 2.5 million tons, Groebler said. Roughly 500 people were let go, but operations and deliveries to customers, including thyssenkrupp Steel, have remained stable, he added.

HKM is expected to contribute a mid-double-digit million-euro result for the year. Asked whether the amount could be doubled to estimate next year’s contribution, Groebler cautioned that Salzgitter held a 30% participation in the first half and 100% for the remainder of the year. He said the figure contained no major one-off effect.

Groebler attributed Salzgitter’s steady third-quarter steel production margin to a widening spread, despite the addition of lower-margin slab sales from HKM. He said raw-material hedges had not provided a particularly positive tailwind compared with other quarters. In discussing steel production, he said fourth-quarter earnings before tax were expected to exceed the third-quarter level.

The company has recommissioned blast furnace C at its Salzgitter site. Groebler stressed that the restart was intended to increase production flexibility and reduce technical stress on other furnaces, rather than increase overall output.

Cash targets and cost savings

Chief Financial Officer Christoph Martin said Salzgitter was targeting a net financial position of approximately negative €750 million at year-end, compared with approximately negative €700 million at the end of September.

Martin said the company expected to reduce working capital across its business units in the coming months. Working capital had risen from the end of 2025 partly because HKM was fully included in the books and receivables increased at Salzgitter Flachstahl and KHS.

He forecast full-year operating cash flow of around €500 million and cash outflow from investing activities of less than €650 million. For 2027, he expected investing cash outflow of between €800 million and €1 billion as the company continues transformation projects, including at HKM.

Under its P28 performance program, Salzgitter had achieved €146 million in cost savings, exceeding its €122 million full-year target, Groebler said. He expressed confidence that the overall target of €575 million would be exceeded by the end of 2027, allowing the measures to have a full-year effect in 2028.

SALCOS and portfolio review

Groebler said Salzgitter remains on track for a late-summer 2027 ramp-up of the first phase of its SALCOS low-carbon steel project. He rejected an analyst’s suggestion that a further delay had been announced and said the company had no plans to postpone the project because of energy prices.

Salzgitter has built a portfolio of green power purchase agreements for the project’s electric arc furnace. Its direct-reduced iron plant will initially run predominantly on natural gas, supplemented by hydrogen from a 100-megawatt electrolyzer, Groebler said.

The company plans to present an updated group strategy by the end of the first quarter of 2027, including a review of its portfolio. Asked about potential transactions involving Aurubis and KHS, Groebler said both would be considered as part of that review. He said Salzgitter was happy with KHS’s performance and would not pursue a transaction involving the business in the short term.

Groebler also said Salzgitter had reached its initial target of selling roughly 5% in treasury shares and was not in a hurry to sell more. Future sales would be adjusted to market conditions, he said.

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.

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