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A Group Management Report and Management Report on Salzgitter AG II. Profitability, Financial Position and Net Assets 128 129
Trading Division
The companies belonging to the Trading Division are described in the section on “Group Structure
and Operations”.
Market conditions in 2007 created a favorable basis for steel trading, enabling the Trading Division
to generate an operating profit which exceeded the previous year’s record. Stockholding trading in
Germany made a particularly notable contribution to this result. Its business volumes reported strong
growth due to high demand on the part of steel-processing operations, particularly in the mechanical
engineering and construction industries.
International business benefited from stable growth rates, especially in emerging economies such
as China, India, Brazil and Russia. These developments largely offset the sluggish growth in North
America.
With sales of steel products totaling 6,663 ktons, the Trading Division sold almost the same volume
(–88 ktons; –1%) as in the previous year (6,751 ktons).
While shipments at the SMHD Group were 79 ktons below the previous year’s level, HLG raised
its shipments by 34 ktons. UES held the previous year’s level (+3 ktons). With regard to the yearon-year
comparison of shipment volumes it should be noted that RSA was deconsolidated from
October 1, 2006 (–46 ktons).
The decline in shipments at SMHD Group relates to the North American trading companies, SMIH
and SMIV, where volumes fell substantially (–416 ktons) as a result of the economic slowdown in
North America and the discontinuation of business with one major customer. The problems of the
US economy worsened during the year owing to the subprime mortgage crisis and the ensuing turbulence
in American financial markets. The vigorous activity at SMID (+289 ktons), generated by the
projects in the Near and Middle East, as well as high-volume business with input materials, especially
slabs, for Salzgitter production companies, was unable to fully compensate for lower volumes in North
America. As a result, the shipments of all trading companies fell by 127 ktons.
The stockholding German and Benelux companies of the SMHD Group expanded their shipment
volumes by 48 ktons.
Trading Division Shipments
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
in kt FY 2007 FY 2006
6,663
6,751
Sales in the Trading Division rose € 508 million (+11%) to € 5,021 million as a result of the higher
average price level.
Profitability, Financial
Position & Net Assets