Key data for the 2015 financial year of the Dillinger Group
05 April 2016
The Dillinger Group (Aktien-Gesellschaft der Dillinger Hüttenwerke with its subsidiaries) improved its production and sales volumes in 2015, despite challenging economic conditions and an extremely competitive heavy plate market.
“Thanks to more favorable prices for raw materials required to make steel and our consistent cost-cutting policy, the Dillinger Group was able to achieve an operating profit despite a decline in sales. This is the result of intensive internal efforts and numerous optimization measures, which we still cannot afford to let up on,” said Fred Metzken, Spokesman for the Board of Directors of Dillinger Hütte, at the annual press conference.
- Dillinger Group earns profit despite challenging market conditions
- Positive consolidated EBIT (€ 10 million) and EBITDA (€ 118 million)
- Good utilization of production plant capacities – high investment volumes
- Consolidated sales (€ 1.838 billion) declined compared to previous year (€ 2 billion) with enormous pressure on revenue and margins
The heavy plate market remained extremely competitive in 2015 and, as in the previous year, was also marked by major structural problems. Factors defining the past financial year included insufficient and further declining utilization of capacities at the European Steel Association (Eurofer) plants, at below 60 %, massive overcapacities and a sharp increase of imports in the EU market. These led to sustained, aggressive predatory competition and enormous pressure on revenue and margins, which further intensified during the year and led to a decline in sales at the Dillinger Group. Falling oil and gas prices also resulted in weak demand on the energy market – the primary sales market for the products of the group of companies. The pipe plate segment in particular suffered from the weak project business in the large-diameter line pipe market.
Figures for the Dillinger Group for 2015:
- Production at the rolling mills in Dillingen and at the wholly owned subsidiary Dillinger France in Dunkirk rose to 1.856 million tons, compared with 1.820 million tons in 2014.
- Despite higher sales volumes, consolidated net sales fell, due to lower revenue levels, to € 1.838 billion, from around € 2.001 billion in the previous year.
- Consolidated earnings before interest and taxes (EBIT) amounted to € 10 million (2014: € 88 million) and consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to € 118 million (2014: € 193 million).
- The ongoing phase of low interest rates had a significant impact on the assessment of pension provisions in the Dillinger Group at the end of the year. The amount discounted, which is reported under interest expense, amounted to a figure in the high tens of millions.
- In 2015 the payments to continue investment measures in fixed assets of the Dillinger Group amounted to € 154 million (previous year: € 210 million).
- Despite the high investment spending, the equity ratio was 67 % of the balance sheet total.
- The focus of investment at Dillinger Hütte itself (€ 105 million) was in the construction of the new CC 6 continuous casting machine, which begin operating in 2016 and which the company is using to secure and further expand its technological competitive edge.
- A total of 5 081 people were employed at the Dillingen location at the end of the financial year (31 Dec 2014: 5 048). These employees worked at Dillinger Hütte itself, at Zentralkokerei Saar GmbH, and at ROGESA Roheisengesellschaft Saar mbH.
A total of 7 536 people are employed within the Dillinger Group (2014: 7 365).
During 2015, 65 young people began vocational training at Dillinger Hütte (2014: 65). As a result, the company employs a total of 206 trainees, when all training class years are included.
Very cautious outlook for 2016 under extremely strained market conditions
Exceedingly problematic conditions are expected to continue for the heavy plate market. Aggressive predatory competition continues to dominate at the start of 2016, low gas and oil prices are significantly hampering investment in the energy market, and ongoing overcapacities and high imports are placing intense pressure on prices, which have reached an extremely low level. In light of the implementation of anti-dumping measures by the European Commission, in the second half of 2016 European heavy plate manufacturers expect the heavy plate market to recover somewhat from its current disarray.
It is therefore imperative that public policymakers set a prudent course with trade and climate policies. Short decision-making paths for effecting antidumping measures, fair market practices and comparable statutory requirements for reducing carbon emissions are needed to prevent the threat of de-industrialization in western Europe.
The Dillinger Group began the year with good utilization of capacities and expects total sales volumes to be at the previous year’s level. In the Production division, 2016 will be marked by the relining of Blast Furnace 4 and the associated relining from July to September. It is hoped that the inadequate price level will recover somewhat in coming months; however, the Dillinger Group anticipates a significant decline on the whole in net sales and a corresponding effect on earnings.
The new “Dillinger” brand identity, being presented for the first time at the annual press conference, is aimed at more sharply defining the brand identity and strengthening the brand’s core values – quality, reliability and partnership. This reinforces the “Dillinger” umbrella brand as a unit within the group of companies and as a distinguishing feature in contrast with the competition.
The Dillinger Group by the numbers:
|Hot metal purchased by Dillinger Hütte (DH*)||In 000 t||2 018||2 060|
|Crude steel production, DH||In 000 t||2 345||2 401|
|Production of heavy plate, DH||In 000 t||1 820||1 856|
|- of which in Dillingen (DH)||In 000 t||1 258||1 296|
|- of which in Dunkirk (Dillinger France)||In 000 t||562||560|
|Heavy plate shipped/sales, DH||In 000 t||1 767||1 843|
|Total workforce, Dillinger Group||as at 31/12||7 365||7 536|
|Total workforce, DH||as at 31/12||5 048||5 081|
|EBITDA (consolidated - Dillinger Group)||In € million||193||118|
|EBIT (consolidated - Dillinger Group)||In € million||88||10|
|Free cash flow (expenditures) from||In € million||- 190||- 121|
|investments (consolidated - Dillinger Group)|
|Net sales (consolidated - Dillinger Group)||In € million||2 001||1 838|
*) Total production of hot metal at ROGESA Roheisengesellschaft Saar mbH, Dillingen, amounted to 4 429 thousand tons (2014: 4 383 thousand tons)