Expansion in Tubes Pays Off for Salzgitter | Business| Economy and finance news from a German perspective | DW | 14.11.2001
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Expansion in Tubes Pays Off for Salzgitter

Salzgitter's nine-month figures show its tubes business, expanded through last year's purchase of the former Mannesmannrohren-Werke, to be performing strongly, offsetting weaknesses in its core steel business.


Nine-month figures announced Tuesday by steel producer Salzgitter AG show the group's 2000 acquisition of Mannesmannrohren-Werke AG, the tubes business of the former Mannesmann AG, to be paying off.

Salzgitter's nine-month net earnings came in at 111 million euros, a 100% rise on the year-ago figure. The consolidation of the tubes business pushed up sales revenue by 33% to 3.4 billion euros.

The group is now expecting to top its full-year forecast of 135 million euros pretax earnings. Its return on capital employed (roce) came in at 15.2%, clearly above its 12% goal. In its core business of steel, Salzgitter had to contend with a difficult market environment; but only its smallest division, processing, actually incurred a loss.

The steel activities overall lifted sales 15% to 1.1 billion euros, and its profit remained at the year-ago level of 41 million euros. But all profits were generated in the first six months of the year; in the third quarter, the group did no more than to break even.

Salzgitter is not expecting any economic upturn before spring 2002, but its tubes business is more or less immune from the effects of economic downturn.

The division's profit has been on the increase during the course of the year, and on the basis of high incoming orders, the company expects this to continue.

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