Annual Shareholders‘ Meeting of Salzgitter AG...Th f il th i i ti [Euro am Sonntag, 15.03.2014] [Frankfurter Allgem eine Zeitung, 12.05.2014] Hauptversammlung der e lations The fragile

Annual Shareholders‘ Meetinggof Salzgitter AG

Prof Dr -Ing Heinz Jörg FuhrmannProf. Dr.-Ing. Heinz Jörg Fuhrmann Chairman of the Executive Board of Salzgitter AG

Braunschweig, May 22, 2014

At first: 2013 – No remorse when looking back Shareholders’ Meeting May 22, 2014

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2013: Extremely unsatisfying2013: Extremely unsatisfying earnings situation

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nsNonetheless, we

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have set a great deal in motion! 2

1 Market environment and challenges2 Business development of Salzgitter Group3 Excursus on energy policy and competitiveness4 360° Concept – We are actively shaping our future!5 Guidance6 Annotations on the agenda

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Economic developments in the pressShareholders’ Meeting May 22, 2014

p p

New grief from China’s economyGermany remains Europe‘s Growth engine

Lagarde warns Europe about“deceptive sense of security”

[Börsen Zeitung, 14.05.2014]

Eurozone economy has grown surprisingly slowly

g[Frankfurter Allgemeine Zeitung, 15.05.2014]

p yEurope’s crisis is far from over.

[Handelsblatt, 12.05.2014]

p g y yReason: weak economic data in France and Italy. [Reuters, 15.05.2014]

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Everyone‘s losing outCrimean Crisis: The conflict could affect the entire global economy – and the capitalmarkets with it.

Boom in the USAEconomists expect a dramatic recovery forthe ongoing second quarter.

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Open flanksTh f il th i i ti

[Euro am Sonntag, 15.03.2014] [Frankfurter Allgemeine Zeitung, 12.05.2014]

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The fragile growth in many emerging nations has become a systemic risk for the global economy. [Manager Magazin, 16.04.2014]

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Europe: in crisis mode with Germany as the “Island of the Blissful”World: mixed signals – effects of the Ukrainian Crisis still unclear

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Economic growth in the European UnionShareholders’ Meeting May 22, 2014

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Industrial production in selected EU 27 countries (Jan. 2007 = 100)

110

100

110

104 %

90 87 %89 %

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80

72 %78 %

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60

70

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Deutschland Italien FrankreichGB Spanien

Source: Eurostat, own chart, last data point December 2013; Germany: February 2014

60 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14

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Germany Italy FranceGB Spain

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Recession in in southern Europe continues–German industrial production since 2011 at a pre-crisis level

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Automotive IndustryShareholders’ Meeting May 22, 2014

y

Production of automobiles in selected EU countries (passenger car units, 1993 = 100)

%

140

160

146 %

%

100

120 119 %101 %

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60

80

53 %

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20

4035 %

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Source: VDA, April 2014

Germany Italy FranceEU-15 Spain Orde

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Germany currently produces 40 % more cars than 20 years ago; conversely, France 40 % and Italy more than 60 % less!

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Mechanical EngineeringShareholders’ Meeting May 22, 2014

120

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Production of selected EU countries (Index 2007 = 100)

110

120

90

100

96 %98 %

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70

80

70 %

75 %73 %

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50

60

2007 2008 2009 2010 2011 2012 2013 2014

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Source: Eurostat, own chart, last data point February 2014

Germany Italy FranceGB Spain Orde

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The mechanical engineering sector in southern Europe has collapsed …

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Construction SectorShareholders’ Meeting May 22, 2014

Surface construction building permits in selected EU countries (Index 2007 = 100)

100

120115 %

60

8068 %68 % eig,

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40

60

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0

20

2006 2007 2008 2009 2010 2011 2012 2013 2014

9 %10 %

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Source: Eurostat, own chart as of April 2014; last data point Q4/2013

German Italy GreeceGB Spain Orde

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… the situation in the construction sector is even more catastrophic.

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Steel market supply – EU vs GermanyShareholders’ Meeting May 22, 2014

pp y y

161160

mt

145

111116

106 109120

160EU (ex. GE) – Avg. 2002 – 2008 = 144 mt/year

GE – Avg. 2002 – 2008 = 38.5 mt/year

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111 104 100106 109

80

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43 43

2937 41 38 38 40 4140

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02007 2008 2009 2010 2011 2012 2013 2014* 2015*

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Market supply EU exx. Germany Market supply Germany

Source: WV Stahl, as of: January 2014 | * Forecast

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Germany is the main stabilizing force, also in the EU steel market. Nonetheless, underutilized capacities in the EU …

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ImportsShareholders’ Meeting May 22, 2014

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Steel imports into Germany (in tons per months)Jan – Feb 2014 (Jan – Feb 2013)

84,134 (48,810)

274,378(256,046)

?

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47,857 (37,172) 171,160(188,451)

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248,058(207,144)

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Source: WV Stahl, German Federal Statistical Office, as of May 2014, last data point: February 2014

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… as well as in other countries lead to import pressure on our home market …

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Spot markets: steel prices in EuropeShareholders’ Meeting May 22, 2014

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€/t

700

650

600

550

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500

450 Salzg

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1/12 4/12 8/12 12/12 4/13 8/13 12/13

450

400

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HR coil HR plateCR coil Hot-dip galvanized CR coil

Source: MEPS

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… and have pushed steel prices in Europe down to an insufficient level since 2012!

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Financial Year 2013 – key data of the Salzgitter GroupShareholders’ Meeting May 22, 2014

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FY 2013 FY 2012 D 2013 – 2012

Crude steel production* kt 7,149.40 7,647.30 -497.90

Group sales (consolidated) € million 9.244,20 10,397.20 -1,153.00

Earnings before taxes € million -477.80 -29.40 -448.40

Earnings after taxes € million -489.60 -99.80 -389.80

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Earnings per share (basic) € -9.10 -1.89 -7.21

ROCE % -10.50 1.30 -11.80

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Core workforce (12/31) 23,164 23,247 -83

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* incl. the pro-rata volume of Hüttenwerke Krupp Mannesmann GmbH

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Unsatisfactory results for 2013 –focus on consistent implementation of “Salzgitter AG 2015“

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Financial Year 2013 – comparison of EBT vs previous yearShareholders’ Meeting May 22, 2014

EBT 2013 EBT 2012 ∆

p p y

Steel € million -428.20 -176.30 -251.90

Trading € million 25.70 77.10 -51.40

Tubes € million -94.80 7.80 -102.60

Services € million 5.20 15.90 -10.70

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Technology € million 13.90 9.50 4.40

Other / Consolidation € million 0.40 36.70 -36.60

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Group € million -477.80 -29.40 -448.40

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* Incl. 25% Aurubis

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Technology: turnaround strengthened • Trading: presentable in light of environment! Steel: insufficient margins• Tubes: underutilization of LD pipes and precision tubes

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Financial Year 2013 – comparison of EBT vs previous yearShareholders’ Meeting May 22, 2014

100

p p y

€ million

0 [SMP] -31 [SMP]-33

8

PTG+ 9385 EP

-200

-100

-176

[PTG]-62 -29-95

+SMP -93

PTG

-85 EP+MGB

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-300-291[PTG]Impair-

ment185

PTG+

SMP+

EP+

MGB

-409

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-500

-400-185

-428-478 Hau

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500Steel Tubes Group

2013 2012 Orde

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Major part of Group losses in the financial years 2012 and 2013 were generated by only a few companies in Steel and Tubes Divisions

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First Quarter 2014Shareholders’ Meeting May 22, 2014

first tangible success …

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Still loss-making, but

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First Quarter 2014 –comparison of EBT vs previous yearShareholders’ Meeting May 22, 2014

EBT Q1 2014 EBT Q1 2013 ∆

p p y

Strip Steel € million -2.2 -7.3 5.1

Plate/Section Steel € million -22.4 -32.0 9.6

Energy € million -12.3 -11.1 -1.2

Trading € million 4.9 11.4 -6.5

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Technology € million 9.2 2.8 6.4

Other/Consolidation € million 14.1 20.1 -6.0

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• Of which Aurubis investment € million 8.2 5.8

Group € million -8.7 -16.1 7.4

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* Q1 2013 as at equity contribution

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“Salzgitter AG 2015“ program well under way – tangible success in first quarter!

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Development of Peiner Träger and precision tubes Shareholders’ Meeting May 22, 2014

p g p

Earnings before taxes in € million (excluding non-recurrent effects)

5

Peiner Träger GmbH [PTG]5

Precision Tubes Group [SMP]

-22 -22 -24 -14

0

-5

0-9 -4 -6 -6 0

-5

0

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-10 -10

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-20

-15

-20

-15

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-25Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

-25Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

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First tangible success!

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Energy costs endanger value chainsShareholders’ Meeting May 22, 2014

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Review AGM 2013: “EEG” worst case scenario Shareholders’ Meeting May 22, 2014

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As of today: worst case scenario has become more unlikely, however …

21

Speech of Barack Obama at ArcelorMittal in Cleveland, 11/14/2013 Shareholders’ Meeting May 22, 2014

thi l t if it' l t d i

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… this plant, if it's located in Germany, energy costs are double, maybe triple … So this gives us a big edgeedge. … And if you're saving money on energy costs, that means you can invest in equipment invest in workers hire more e

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equipment, invest in workers, hire more people, produce more products. Our economy keeps growing, creating new jobs which means that strengthening Sal

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jobs, which means that strengthening our energy security and increasing energy efficiency doesn't have to bea choice between the environment Hau

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a choice between the environmentand the economy – we can do both.

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… the competitive disadvantage versus the US is considerable: EU on the verge of falling behind in global competition for industry and prosperity!

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Scenarios of effects on earningsShareholders’ Meeting May 22, 2014

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more than € +140m p.a.

Theoretical earnings improvement:Theoretical earnings improvement:Assuming similar costs for electricity and natural gas as in the US

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Impending burden from energy and climate policies (unfavorable, not most unvaforable scenario) Salz

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most unvaforable scenario)

Up to € -80m p.a.

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Ongoing threat of additional burdens in Germany and the EU versus more advantageous framework conditions in other regions.

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Winner “Energy Efficiency Award 2013”Shareholders’ Meeting May 22, 2014

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Ulrich Grethe and Ralph Schaper with other awardees (Foto: dena*)

87 bids from 11 countries

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“For outstanding contribution to the improvement of energy efficiency in industry

d b i t S l itt Fl h t hl G bH” Hau

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and business to Salzgitter Flachstahl GmbH”

* dena (Deutsche Energie Agentur) is the competence center for energy efficiency, renewable energies and intelligent energy systems. Main shareholder of dena is the Federal Republic of Germany

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Energy efficiency and conservation of resources –we are at the “forefront of the movement”!

24

Determinants for Salzgitter AGShareholders’ Meeting May 22, 2014

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Structural crisis of the EU steel industry

EU/GE specific b d

Currently: risk for b i / R i d e

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burdens on competitiveness

business w/ Russia and threat of Ukrainian imports

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High social standards Haup

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High social standards in EU- and GE steel industries

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There is no lack of challenges …

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360° ConceptShareholders’ Meeting May 22, 2014

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CORPORATE POLICYMISSION STATEMENTMotivation & Qualification

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SZAG 2015Stabilize competitiveness

INNOVATIONSOpening up new opportunities

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Process efficiency

Group organization

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DEVELOPMENT OF BUSINESS UNITSFostering potential

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We are actively shaping the future of our Group through a coordinated, holistic concept!

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Corporate PolicyShareholders’ Meeting May 22, 2014

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Above competitor's average

Profitability

Above competitor s averagein the medium and long term

Emotional affinity andidentification with the com-pany and its employees

Independ-ence as

l t

Identity LiquidityFlexibility that allows

opportunities to be seizedPreserving our independence

Stick to agreements,communicate, practice

pany and its employees

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core elementof corporate

policyDiscipline Agility

Preserving our independencetransparency,understand the big picture, and act accordingly

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Profession-alism

p g y… in the market

and in decision processes

Employees are supposed Haupt

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p y ppto act as if they owned the company

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All decisions pursue the goal of optimizing the sustainable value of the Group for shareholders and stakeholders

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Process efficiency

Group organization

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New Group structure as of January 1, 2014Shareholders’ Meeting May 22, 2014

p y ,

Salzgitter AG

Salzgitter Mannesmann/Salzgitter Klöckner-Werke

SalzgitterFlachstahl

IlsenburgerGrobblech

Mannesmannröhren-Werke

Salzgitter Mannesmann Handel

KHS Verkehrsbetriebe Peine-Salzgitter

Strip Steel BU Plate/Section Steel BU

Energy BU Trading BU Technology BU Other/Consolidation

Salzgitter Mannesmann Grobblech

Europipe Salzgitter Mannesmann Stahlhandel

SalzgitterEuroplatinen

Peiner Träger Salzgitter Mannesmann International

KHS Corpoplast

Salzgitter Bauelemente Salzgitter Mannesmann Line Pipe

KHS Plasmax

Hansaport

Gesis Gesellschaft für Informationssysteme

50% 51%

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Salzgitter Mannesmann Großrohr

HSP Hoesch Spundwand und Profil

Universal Eisenund Stahl

DEUMU Deutsche Erz- und Metall-Union

Salzgitter Mannesmann Precision

Klöckner DESMA Elastomertechnik

Salzgitter Mannesmann Stahlservice

Klöckner DESMA Schuhmaschinen

Telcat

Salzgitter Mannesmann Forschung

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Salzgitter Mannesmann Stainless Tubes

Hüttenwerke Krupp Mannesmann

Salzgitter Automotive Engineering

SalzgitterHydroforming30% Ha

uptv

ersa

mm

lung

der

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As of January 2014 | BU = Business Unit

Borusan Mannesmann Boru

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Aurubis23% 25% Or

dent

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Strong customer and market orientation is a key attribute of the new organizational structure

30

Group Management BoardShareholders’ Meeting May 22, 2014

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( )Michael Kieckbusch, Burkhard Becker, Prof. Dr.-Ing. Heinz Jörg Fuhrmann, Dr.-Ing. Roger Schlim, Heinz Groschke, Prof. Dr.-Ing. Matthias Niemeyer, Ulrich Grethe, Wolfgang Eging

31

Business Unit headsShareholders’ Meeting May 22, 2014

Dipl.-Ing. Dr.-Ing.p gULRICH

GRETHE

gROGERSCHLIM

Strip Steel Plate/Section Steel

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Prof Dr -Ing Prof Dr jur Salzgi

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Prof. Dr.-Ing.MATTHIAS NIEMEYER

Prof. Dr. jur.GERDSCHÖLER

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Technology Trading Ordent

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(as from October 1, 2014)

32

Salzgitter AG 2015 – effectsShareholders’ Meeting May 22, 2014

g

Identified earnings improvement potential backed by concrete projects …

> € 90 m Staff reduction in excess of 1,500 FTE

> € 70 m Optimization of technical production processes

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> € 40 m Other measures (e.g. procurement, steel logistic and IT)

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… amounts to more than € 200 million per year

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In addition, there is a continuous improvement process:with no closing date for ideas and measures!

33

Example of the optimization of technical processesShareholders’ Meeting May 22, 2014

p p p

Coal drying, grinding and injection plant

• Substitution of liquid reduction agentsand external coke (in part) with pulverized coal– Coal is economically very attractive due

to the price differential s oilto the price differential vs oil – Crude coal will be ground and dried

in the plant and then injected intoBlast Furnaces A and B eig,

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Blast Furnaces A and B• Capital expenditure: € 70 million• Commissioning: 2015

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• Amortization period: approx. two years(on the basis of current energy carrier prices)

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Potential cost savings: upper double-digit million euro amount per year

34

STIL Employee Magazine, issue 04/2013Shareholders’ Meeting May 22, 2014

p y g ,

Interview on the “Salzgitter AG 2015“ program and confidence in challenging timesand confidence in challenging times

We have done very well in the past by not y p yrushing our fences. So let us first of all deal with the extensive as well as urgent chores we have in hand. This must be eig, 2

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chores we have in hand. This must be our top priority!It is an unavoidable necessity that we streamline our processes and reduce our Sa

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streamline our processes and reduce our costs. However, it is equally certain that cost reductions alone are a long way f bli t l it H

aupt

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from enabling us to exploit our opportunities. It is much more a matter of applying a coherent and holistic concept to

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shape the future of the Group!

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Initiated!

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Process efficiency

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Fostering potential: example of “Automotive Performance”Shareholders’ Meeting May 22, 2014

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The Salzgitter Group presented solutions for chassis, suspension and drivetrainunder the motto of "Automotive Performance”under the motto of Automotive Performance

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Customer drive with a consistent and convincing Group presentation

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Initiated!

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Intensification! Orden

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Innovation: belt caster before casting commencesShareholders’ Meeting May 22, 2014

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Innovation: belt caster – filling of the tundishShareholders’ Meeting May 22, 2014

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Innovation: belt caster – discharge Shareholders’ Meeting May 22, 2014

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Innovation: belt caster – outlet Shareholders’ Meeting May 22, 2014

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Innovation: new products of KHS Shareholders’ Meeting May 22, 2014

Innoprint®:Direct printing on PET bottles without

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Direct printing on PET bottles without labelling materials

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Nature MultiPack®: New patented procedures dispenses with Salz

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New, patented procedures dispenses with repackaging materials in the future

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Innoprint®: TOP 5 at the Hermes Award 2014!

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YOUNITED –New mission statement!

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Initiated!Duty first…

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Process efficiency

Group organization

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New mission statementShareholders’ Meeting May 22, 2014

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Success rests on our employees.Our joint success is always also the Salz

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Our joint success is always also the success each individual. We express this with YOUNITED.

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New mission statementShareholders’ Meeting May 22, 2014

I ti th t I i t d thI notice that I am appreciated – the company will also support me in my future plans.

Dr. Daniela John, aged 33, Salzgitter Flachstahl GmbH, Head of Competence Unit Process Development/Downstream

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You have to be motivated and want to get ahead I would recommend Salz

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get ahead – I would recommend applying to us any time!

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Julia Junge, aged 26, Salzgitter Flachstahl GmbH, Training Instructor O

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The Group is and will remain an attractive employer.

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Initiated!Duty first…

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Salzgitter Group – guidance on May 15, 2014Shareholders’ Meeting May 22, 2014

g p g y ,

Based on planning by the individual business units, and taking account of significant effects from measures as well as structural improvements from the "Salzgitter AG 2015" groupwidep g g pproject, we assume the following in the year 2014:

• sales of almost € 10 billion• sales of almost € 10 billion …• … a significant increase in the pre-tax result, approximating breakeven,

compared with the financial year 2013 and …

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• … another moderately positive return on capital employed.

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As in recent years, we make reference to the fact that opportunities and risks from currently unforeseeable trends in selling prices, input material prices and capacity level developments, as well as changes in the currency parity, may considerably affect performance in the course of the financial year 2014. The resulting fluctuation in the consolidated pre-tax result may, as current events show, be within a

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ey g p y, ,considerable range, either to the positive or to the negative. Moreover, the accuracy of the company's planning is restricted by the volatile cost of raw materials and shorter contractual durations, on the procurement as well as on the sales side.

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Annotations on the agenda – share price performanceShareholders’ Meeting May 22, 2014

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45 08/14/2013 :Announcement key data SZAG 2015

in €

40 08/05/2013:Ad-hoc release 05/08/2014:

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Guidance FY 2013 Ad-hoc release Q1 FY 2014

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20 23.05.2013 23.07.2013 23.09.2013 23.11.2013 23.01.2014 23.03.2014

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Capital market rewards “Salzgitter AG 2015” program

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Annotations to the agendaShareholders’ Meeting May 22, 2014

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Agenda items

2. Resolution on the appropriation of unappropriated retained earnings

Dividend for the Financial Year 2013Shareholders receive € 0.20 per share*• Dividend payment €10,817,460.00

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• Profit brought forward to new account € 1,282,540.00• Annual net income € 12,100,000.00

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3. Resolution on the Approval of Activities of the Members of the Board of Directors

4. Resolution on the Approval of Activities of the Members of the Supervisory Board Hauptv

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5. Appointing of the Auditor for the Annual Financial Statement for the Financial Year 2014 Ord

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* Subject to approval by the Shareholders‘ Meeting on May 22, 2014 53

Annual Shareholders‘ Meetinggof Salzgitter AG

Prof Dr -Ing Heinz Jörg FuhrmannProf. Dr.-Ing. Heinz Jörg Fuhrmann Chairman of the Executive Board of Salzgitter AG

Braunschweig, May 22, 2014

Documents

Annual Shareholders‘ Meeting of Salzgitter AG...Th f il th i i ti [Euro am Sonntag, 15.03.2014] [Frankfurter Allgem eine Zeitung, 12.05.2014] Hauptversammlung der e lations The fragile