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Dillinger Hütte Reports Strong Performance for 2008

04/13/2009 - The Dillinger Hütte Group reports EBITDA of €960 million and EBIT of €890 million for the full financial year 2008.

Dillinger Hütte Group (Dillinger Hütte with its subsidiaries) reported EBITDA (earnings before interest, taxes, depreciation and amortization) of €960 million and EBIT (earnings before interest and taxes) of €890 million for the full financial year 2008. Results compare to EBITDA of €811 million and EBIT of €731 million in 2007.
 
The Group noted the 2008 financial year reflects the best turnover and financial results ever achieved by the company, including a consolidated turnover of €3.3 billion, reflecting a 14% increase over the previous year. The Group noted the positive impact of consistent, very high demand in all customer segments for both product groups – line-pipe and normal plate – which kept production facilities operating at high capacity.
 
“The focus on premium-quality heavy plate proved successful once again in 2008, with the best turnover and earnings figures in the company’s history,” said Board of Management Chairman Paul Belche, during the company’s annual press conference. “We have a highly skilled and dedicated workforce, modern facilities and a successful strategy that is also designed for times of crisis."
 
While worldwide demand for heavy plate was very good until autumn 2008, activity in many heavy plate consumer segments decreased at the end of the year, particularly in the construction machinery and ship-building sectors. In contrast, steel processing companies supplying the energy sector have until recently maintained good utilization of capacities, particularly for boiler and pressure vessel construction, the offshore industry, large-diameter pipe production, and heavy machine construction. The company said that in the final months of 2008, the heavy plate market became increasingly uneven, with demand for simple heavy-plate grades weakening significantly and prices falling, after having risen until the middle of the year. However, demand and prices remained stable at a high level in the specialty steels market segment, which involves plate in high-end qualities and with non-standard dimensions.
 
The company said that production at its rolling mills in Dillingen and at its wholly owned subsidiary GTS Industries SA in Dunkirk, France, reached 2.227 million tonnes in 2008, compared with a record-level of 2.388 million tonnes in the previous year. In all, the Group shipped 2.254 million tonnes of heavy plate in 2008, which compares to 2.307 million tonnes in the previous year. Due to the higher revenues, Dillinger Hütte Group achieved double-digit growth in its consolidated sales revenue, which reached approximately €3.3 billion in 2008, as compared to €2.9 billion in 2007. Dillinger Hütte alone achieved turnover of €3.032 billion.
 
As in 2007, Dillinger Hütte and its subsidiaries were able to attain top earnings despite continued high costs for raw materials. Consolidated EBIT increased to approximately €890 million (vs. €731 million in 2007), while EBITDA rose to €960 million (vs. €811 million in 2007). Consolidated return on sales (EBIT margin) amounted to 26.9% (vs. 25.2% in 2007) and the return on capital employed (ROCE) was 34.5% (vs. 38.4% in 2007).
 
The Group increased its workforce at the Dillingen site by 1.7% as compared to the previous year, to a total of 5322 employees at year’s end. These employees worked at Dillinger Hütte itself, at Zentralkokerei Saar GmbH, and at ROGESA Roheisengesellschaft Saar mbH. A total of 8485 employees work within the Dillinger Hütte Group, which compares to 8278 in 2007. In 2008, Dillinger Hütte increased its number of new trainees by 25%, to a total of 96, bringing the total number of young people currently undergoing their initial vocational training to 290; this compares to a total of 274 in the previous year.
 
Dillinger Hütte invested a total of €122 million in 2008 to further develop technological capabilities and modernize facilities and processes, again significantly higher than in the previous year (€79 million). The company also made extensive investments in 2008 amounting to €111 million (vs. €65 million in 2007) in both subsidiaries — ROGESA Roheisengesellschaft Saar mbH and Zentralkokerei Saar GmbH (a 50/50 venture) — at the Dillinger location. Dillinger Hütte carried half of these investment costs, commensurate with the interest it holds in the companies. The investments are part of an ongoing investment program that began in 2007 and will continue through to 2011, with a total of approximately €530 million designed to strengthen the Dillingen location for the future.
 
In contrast to Europe’s other steel producers, Dillinger Hütte was able to produce at full capacity through the last quarter of 2008 and the first quarter of 2009. The first three months of 2009 continued to be marked by persistently good activity and good utilization of facility capacities. In the second quarter, however, the consequences of the worldwide financial and economic crisis also began to be clearly felt at Dillinger Hütte, raising serious uncertainties regarding the rest of the year. Under these circumstances, the company said it would be adjusting production as of the second quarter. Judging from the current situation, significant overall declines are to be anticipated in 2009 at Dillinger Hütte and its subsidiaries with regard to incoming orders, utilization of capacities, trends in sales turnover and financial results.

Based on the company’s consistent strategic alignment as a premium supplier in the worldwide heavy plate market with a highly specialized product mix, and as an internationally recognized supplier of line-pipe plate for a promising energy market, Dillinger Hütte considers itself well armed and prepared to react flexibly and operate profitably within an exceedingly difficult market environment, and, as a results, anticipates positive earnings for 2009.