Salzgitter shares fall 3% on €83.8 mln loss as weak demand, prices hit sales

German steelmaker Salzgitter AG reported a significant pre-tax loss of €83.8 million for H1 2025, reversing a prior-year profit, primarily due to weaker steel demand, falling prices, and substantial derivative charges, which led to a more than 3% decline in its shares. Revenue dropped 11% to €4.66 billion with EBITDA halving, as losses deepened in its core steel production units despite positive contributions from its Technology and Aurubis investments. The company also disclosed delays for its SALCOS low-carbon steel program, pushing first-stage production to H1 2027, and forecasts a challenging 2025 with potential pre-tax losses between €100 million and breakeven.

Analysis

Salzgitter AG (SZGG) reported a significant deterioration in its financial performance for the first half of 2025, swinging to a pre-tax loss of €83.8 million from a €11.5 million profit in the prior-year period, triggering a more than 3% decline in its share price. The downturn was driven by a confluence of weaker steel demand, falling prices, and substantial one-off charges, including €79.9 million from the valuation of derivative positions. Top-line revenue fell 11% to €4.66 billion, while EBITDA was nearly halved to €116.8 million. The core steel operations bore the brunt of the weakness, with crude steel output declining 12% and the Steel Production segment's pre-tax loss widening to €55.6 million. While positive contributions from the Technology Business Unit, a €71.5 million gain from the Aurubis AG investment, and a return to profitability for the Trading Business Unit provided some offset, they were insufficient to counteract the core business decline. Compounding these operational challenges, the company announced a delay in its strategic SALCOS low-carbon steel program, with initial production now pushed to the first half of 2027 and the €2.3 billion first-stage investment under review. The full-year 2025 guidance reinforces this negative outlook, forecasting sales between €9.0 billion and €9.5 billion and a pre-tax result ranging from a €100 million loss to breakeven.

Key Decisions for Investors

• Given the sharp deterioration in H1 2025 results and a pessimistic full-year forecast projecting a pre-tax loss of up to €100 million, investors should consider reducing long positions or implementing hedges to protect against further downside.
• The announced delay and investment review of the critical SALCOS low-carbon project introduces significant execution risk, and its progress should be a key monitoring point for assessing the long-term viability of the company's strategy.
• The inability of positive contributions from the Technology unit and the Aurubis investment to offset the deep cyclical downturn in the core steel business underscores the stock's high sensitivity to steel market fundamentals, making any recovery dependent on a macro turnaround.