Published by Global Banking and Finance Review
Posted on March 21, 2025
By Bernadette Hogg and Isabel Demetz
(Reuters) -German steel group Salzgitter said on Friday there was no end in sight to the stagnation of the German economy, and that uncertainty is on the rise when it comes to exports as tensions escalate between the United States and its trading partners.
The German steel sector has been struggling with high energy prices, poor demand from customers - especially in the automotive, construction, and mechanical engineering industries - and foreign competition, mostly from China.
Germany's economy has meanwhile weakened, and the parties in line to create the new government this month proposed a spending package that will create a 500 billion euro ($541.70 billion) fund to spend on infrastructure over 12 years.
Salzgitter, which produces and processes steel, said in its full-year report that the new German government's economic policy measures could have a positive effect from the second half of 2025, depending on the measures implemented.
The company's sales last year were hurt by "an economic recovery that has failed to materialize and an economic environment marked by high imports and uncompetitive energy costs."
"The underlying conditions will remain challenging," CEO Gunnar Groebler said in a statement. "Our expectations of policy makers to finally ensure significant reduction in energy costs, and to lower the high regulatory hurdles, are all the greater."
At the same time the European steel industry has come under pressure from U.S. President Donald Trump imposing 25% tariffs on all imports. European steelmakers have warned about a possible flood of steel from diversions caused by U.S. tariffs, with Salzgitter among those who have called on the EU to adopt protective measures.
The European Commission published an action plan on March 19 intended to increase the EU's steel industry competitiveness against U.S. and Chinese rivals and shield it from the impact of U.S. tariffs on steel and aluminium imports.
Salzgitter in February reported preliminary full-year earnings results and said it expected a potential decline in 2025 sales. It said on Friday that net debt had risen less than expected in 2024 despite an increase in its investment towards the green transition.
Net debt for 2024 stands at 574 million euros compared to 214 million euros the year before, the company said in a statement.
Analysts had expected net debt to rise to 972.27 million euros, a poll provided by LSEG showed.
The Saxony-based company also announced it would pay a dividend of 0.20 euros per share.
($1 = 0.9230 euros)
(Reporting by Bernadette Hogg and Isabel Demetz; Editing by Richa Naidu)
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