Salzgitter (ETR:SZG) reported a year-over-year improvement across all business segments in the first half of 2026, citing wider steel margins, cost-reduction measures and contributions from its Aurubis investment, while maintaining its full-year outlook.
Chief Executive Officer Gunnar Groebler described the first six months as positive despite weak European steel demand, geopolitical uncertainty and volatile energy markets. He said the company had moved “back in black” and expected to remain profitable during 2026.
Salzgitter said its net financial position was nearly unchanged from a year earlier, differing by €4 million. Cash and securities rose to €1.2 billion. Its equity ratio remained stable at 42%.
Cost measures and market conditions
Management attributed the earnings improvement to both market conditions and internal efficiency initiatives. Potrafki said the company’s cost of materials improved by €122 million year over year, falling to 61% of revenue from 65% a year earlier. The Aurubis participation contributed €113 million to the profit-and-loss statement.
The company’s P28 performance program generated €97 million in benefits after six months, or about 80% of its €122 million full-year target. More than €50 million of those gains came from steel production, Groebler said. The program’s effects exclude restructuring gains in the trading business.
Salzgitter’s trading division generated a positive result of nearly €40 million in the first half after restructuring undertaken in 2025. Groebler said approximately 30% of jobs in the trading operation had been cut. Potrafki said the division also benefited from inventory purchased at favorable material costs and later sold into a stronger pricing environment, while cautioning that the segment was more prudent on the second half because of geopolitical risks to international trade.
Groebler said European steel prices had improved since July 2025, with hot-rolled coil ex-Ruhrgebiet reaching €715 per metric ton. He pointed to the EU’s Carbon Border Adjustment Mechanism, which began Jan. 1, and new steel safeguard measures effective July 1 as factors reducing imports and supporting prices. The company said prices for hot-rolled coil ex-works Italy had increased by about €30.
However, management said underlying demand still needs to improve. Groebler said spending under German special funds for infrastructure and defense is expected to become more visible late in 2026 and particularly in 2027.
HKM acquisition and transformation plans
Salzgitter acquired 100% of Hüttenwerke Krupp Mannesmann GmbH, or HKM, effective July 1 after reaching agreements with former co-owners thyssenkrupp Steel and Vallourec. Management expects HKM to contribute positively to revenue and earnings in the second half, before purchase-price allocation effects.
Potrafki characterized the expected second-half earnings contribution as a mid-double-digit-million-euro amount, but said it reflected a combination of underlying operating performance and accounting effects. She declined to provide an outlook for HKM’s 2027 earnings.
The group plans to reduce HKM’s steelmaking capacity from about 5 million metric tons to 2.5 million metric tons by operating one blast furnace rather than two. A blast furnace undergoing relining is expected to return to operation in the third quarter, after which HKM plans to shut the other furnace. The retained furnace will support operations through the transition period.
HKM currently employs about 3,000 people, and Salzgitter plans to reduce that figure to roughly 1,000 by the end of 2029. Groebler said the workforce measures were negotiated with the works council and unions. He said roughly one-quarter of the restructuring cost is expected in 2026, with the larger share arising in 2029 when further facilities are shut down.
- HKM’s electric-arc-furnace transformation project is budgeted at about €900 million gross.
- The project is expected to receive €200 million in public funding, implying roughly €700 million net investment.
- Salzgitter said the budget includes contingencies and benefits from existing grid infrastructure at the Duisburg site.
- Management targets green-steel production at HKM from late 2029 and a 90% reduction in CO2 emissions.
Potrafki said that, after considering HKM operating cash generation, contributions from former shareholders, public funding, restructuring and investment needs, Salzgitter expects net additional cash requirements of about €100 million over the next three years. The company did not disclose the former shareholders’ contributions.
SALCOS spending and outlook
Construction of the first phase of Salzgitter’s SALCOS low-carbon steel program remains on schedule for commissioning in late summer 2027, Groebler said. The company said weather disruptions early in the year had delayed work initially, but construction had caught up. The hydrogen tower has been fully assembled and major utility and power-supply components have been installed.
Salzgitter expects total investment spending of €650 million in 2026, including €100 million at HKM. For 2027, Potrafki said net SALCOS spending could be around €500 million, while total investment spending could be above €800 million when other investments and HKM spending are included. Groebler said capital expenditures above €1 billion in 2027 would be “very surprising.”
The company maintained its 2026 guidance for revenue of about €10 billion, EBITDA of €725 million to €825 million, and pretax profit of €325 million to €425 million. Potrafki said the second half should continue the positive trend, though at a somewhat more moderate pace because of normal summer and year-end seasonality, maintenance downtime and approximately €20 million of nonrecurring first-half effects.
Groebler also said Salzgitter continues to target improvement in safety performance after its lost-time injury frequency rate exceeded its target in the first half, which he attributed primarily to harsh weather conditions early in the year.
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.
