Dillinger Hütte: Key data for the 2013 financial year for the Dillinger Hütte Group
25 March 2014
Cyclical and structural problems are straining the heavy plate market – package of measures to implement the “DH 2014 plus” cost-cutting and restructuring program are designed to be socially sustainable
(Press release from Dillinger Hütte)
- The Dillinger Hütte Group suffers primarily from poor order situation for pipe plate
- Consolidated revenue declined from € 2.5 to 2 billion
- Continued high investment spending (€ 310 million)
- Good equity capital and financial structure (equity ratio around 67 %)
- High potential for savings defined by the “DH 2014 plus” cost and restructuring program
The Dillinger Hütte Group (Dillinger Hütte and its subsidiaries) experienced a very difficult financial year in 2013. A weak economic environment and worldwide overcapacities placed extreme pressure on the heavy plate market. With utilization of capacities among heavy plate manufacturers in the EU at only about 60%, and with consumption declining, prices also fell continuously in 2013. The heavy plate market was particularly hard-hit as important pipeline projects were delayed or completely canceled. Because of the declining production and sales volumes as well as a significantly decreased revenue level, the Dillinger Hütte Group concluded the 2013 financial year with a loss.
To counteract this situation, the “DH 2014 plus” structural adjustment and cost-cutting program was launched in the third quarter with the goal of sustained savings of € 130 million per year at the Dillingen site. Implementation of the personnel measures associated with the program are being carried out in a socially responsible way – without terminations for operational reasons – through actions including the shifting of about 200 DH employees to Saarstahl. “We have succeeded in quickly designing an efficient package of measures to improve our earnings situation in a socially sustainable way. We are taking on the serious challenges of the market with this program in order to equip our company for the future,” said Dr. Karlheinz Blessing, Chief Executive Officer of Dillinger Hütte.
Figures for the Dillinger Hütte Group for the 2013 financial year:
- Production at the rolling mills in Dillingen and in Dunkirk at the wholly owned subsidiary, Dillinger France (formerly GTS Industries), amounted to 1.659 million tons, compared with 1.882 million tons in 2012.
- Consolidated sales revenue sank due to lower sales volumes and low revenue levels to € 1.979 billion from around € 2.498 billion in the previous year.
- Consolidated earnings before interest and taxes (EBIT) fell to - € 167 million (2012: € 161 million) and consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to - € 66 million (2012: € 261 million).
- At € 310 million, total expenditures for investments (consolidated cash flow from investment activities) for the Dillinger Hütte Group in 2013 were once again significantly higher than the previous year’s already high level (€ 222 million).
- Despite this high investment spending and the losses that occurred, the DH Group continues to have a positive net debt, and equity capital amounts to 67 % of total assets.
- The focus of investment at Dillinger Hütte itself (€ 193 million) was in the construction of the new CC 6 continuous casting machine, the new VD 4 vacuum treatment line and the new plate edge-milling machine in the heavy fabrication division.
- A total of 5 291 people were employed at the Dillingen location at the end of the financial year (Dec. 31, 2012: 5 377). These employees worked at Dillinger Hütte itself, at Zentralkokerei Saar GmbH (ZKS) and at ROGESA Roheisengesellschaft Saar mbH (ROGESA). A total of 7 614 employees are employed within the Dillinger Hütte Group (2012: 7 854).
- A total of 51 young people began vocational training at Dillinger Hütte during 2013 (2012: 67). As a result, the company employs a total of 207 trainees when all training class years are included.
Energy policy endangers industrial value chain
Dillinger Hütte believes that German and European energy and climate policy has reached a critical point. For instance, costs resulting from levies imposed by German Renewable Energy Act alone have quadrupled since 2009. “Our energy costs are already three times higher than those of our competitors in the United States,” Dr. Blessing emphasized, warning against further endangering the competitiveness of the country’s domestic steel industry with additional costs. “We need to finally have clarity with respect to the course for the future. Dillinger Hütte has placed its faith in the underlying political conditions while investing enormous sums in environmental protections and into generating electric energy. These conditions must have permanence if we want to avoid cutting off the head of the value chain.”
Cautious outlook for 2014
The Dillinger Hütte Group expects business performance to improve overall in 2014, even though it will likely continue to be problematic. A slight increase in demand is expected in the standard range product category, such as the offshore wind, offshore oil and gas sector, and in machine manufacturing. Given the placement of the order in early 2014 for most of the volume needed for the first offshore pipeline of the South Stream project, the pipe plate product range appears destined for a better year, at least in terms of volume. This order ensures an adequate basic utilization of capacity at the Dillingen site starting in the second quarter. Even if this only partially compensates for the missing volumes of pipe plate, it is expected that the production capacities of Dillinger Hütte at the Dillingen site, as well as at Dillinger France in Dunkirk, will be better utilized overall in 2014 than in 2013, although there will be wide variations between the individual quarters.
The announced price increases for the second quarter are now being implemented; further increases are planned for the third quarter. As a result of the systematic implementation of the ongoing “DH 2014 plus” restructuring and cost-cutting program – and on the condition that there are no unexpected increases in raw materials or energy costs – improved revenues and operating results are expected in 2014, even if they continue to be at an unsatisfactory level.
The Dillinger Hütte Group by the numbers:
Ute Engel, tel.: +49 (0)6831-473011, email: email@example.com
Ines Oberhofer, tel.: +49 (0)6831-472002, email: firstname.lastname@example.org