Salzgitter AG (SZG) Earnings Call Transcript & Summary

[Foreign Language] Professor Fuhrmann, Mr. Becker and Mr. Kieckbusch, also represent the Deputy Chairman of the Supervisory Board, Dr. Urban and our Notary, Dr. [ Goueli ], who is here to prepare the minutes for the AGM. The other members of the Supervisory Board are connected via the Internet and have the opportunity to communicate with me and the members of the Management Board if necessary. The company's proxy is also present here in this room. With this virtual general meeting without the physical presence of the shareholders and their proxies, we are taking advantage of an opportunity or possibility granted for AGMs just a few weeks ago. The virtual AGM means we can protect your health and the health of our service providers and employees and also comply with current official requirements. In addition, the implementation of a virtual AGM means that you, our shareholders, can take -- can take part in all resolutions promptly and means that this year's AGM takes place now and is not postponed indefinitely. We are aware that the conducting of a virtual AGM is obviously associated with certain restrictions to the rights of shareholders. In particular, shareholders and the company's administration cannot enter into a dialogue as would usually be the case. So that you can exercise your shareholder rights at this AGM, this virtual AGM, the company has created a number of options for you to exercise your voting rights within the scope required legally and which as is technically feasible. So just as in a normal AGM, I will call for a vote. And it's also possible to use the online service until I close the meeting to lodge any objections you have. Registered shareholders can also -- were also able to address questions through the Management Board and the Supervisory Board prior to the AGM. After the speech by Professor Fuhrmann and myself, we will then deal with those questions. We assume that by holding this AGM as a virtual AGM at this time, we are acting in your interest. This year, we are also offering you a simultaneous translation of Professor Fuhrmann's speech from German to English. You can choose your preferred language setting on the website. Ladies and gentlemen, I would like to take this opportunity to express my gratitude to everyone who has worked on the preparation of this AGM. Before we move on to the agenda, let me point out that since May 23, 2019, the date of the last AGM, there have been the following changes to the Supervisory Board. Mr. Ulrich Kimpel resigned on July 31, 2019. Mr. Norbert Keller takes his place with the exception of this Braunschweig District Court with effect from August 30. The Supervisory Board would like to thank Mr. Kimpel for his work for the company. Ladies and gentlemen, if you have ever attended one of our normal AGMs, you will know that it is a tradition to commemorate those who have died from -- who have worked for the company. They made all the best efforts to support our company. This year, however, we don't wish to just commemorate the deceased colleagues of our company. But reflecting this pandemic, this is more than just a global economic catastrophe. We are very much aware that it's also a human strategy for many people. So may I ask all of those in this room to stand for a few seconds as a sign of empathy. Thank you for your active condolence. Ladies and gentlemen, I'm now moving on to the formalities. Today's AGM was convened by publication in the Federal Gazette on May 29, 2020, including the full agenda and the proposed resolutions of the Supervisory Board and, as applicable, the Executive Board for agenda items 2 and 8. I note that the AGM has been called in due form and on time. In addition to the announcement in the Federal Gazette, the invitation to the AGM as advised to me by the Management Board was communicated to the credit institution, shareholder associations and other persons entitled to such information in accordance with the statutory provisions. The invitation to the AGM was forwarded on May 29 through media, and it can be assumed that they will disseminate the information throughout the European Union. I determine that the following documents have been available for inspection at the company's business premises in accordance with the statutory provisions. The convening of today's AGM, including the agenda, the proposal for the Management Board for the appropriation of balance sheet profit and the other proposed resolutions by the administration. The approved annual financial statements of Salzgitter AG and the approved consolidated financial statements as of December 31, '29 (sic) [ December 31, '19 ]. The joint management report of Salzgitter AG and the Group for the 2019 financial year and the report of the Supervisory Board. The same applies to the explanatory report of the management report in accordance with Section 289a and Section 315 of the German Commercial Code, and that is in the management report. These documents are also available here in the meeting room. The information and documents in accordance with the German Corporation Bank, and they are available here. We will be keeping a list of participants as well this year. The company's voting -- the company's proxy and the shareholders he represents is included in the directory of participants. The list -- the shareholders' list will change according to the passwords already granted or revoked today during the course of the meeting. I would also like to inform you of the current presence. At the moment, the -- I have the list of participants of the registered -- of the shares that are currently represented, [ 34,000,600 ] and firms represented and the according voting rights. That represents 57% of the registered capital. In addition, postal votes have been made for 3 million shares. And together, this represents 37 million shares, and that represents 62% of the registered capital. Ladies and gentlemen, the decisive for the vote is the number of votes cast by the company's proxy and the number of votes cast by postal vote. Ladies and gentlemen, following my introductory remarks and the report of the Management Board, we will then deal with the questions submitted by the shareholders on time. After answering those questions, we will then move on to the vote on the agenda items and the decision-making process. Just a few notes on the voting. Voting in today's virtual general meeting is possible via the online service using the access data and also the voting card by postal vote or by proxy -- with the company's proxy. And I will announce that this voting is possible until I announce that the closure of the vote is to take place. Until that is the time -- until that time arrives, you can still change your votes you have already cast in the way I described above, also online. I'll remind you again of your vote, that you vote at the appropriate time. I would also like you -- to ask that you cast your vote in good time. Information is available on these -- on the invitation and also on the website. The postal votes received on time will also be taken into account when determining the voting results. The vote counting takes place today in the so-called addition process. That means the yes votes and the no votes will be added together. The total is the share capital represented in the company. It is then determined whether the proposal resolution was approved by the required majority, abstentions are not relevant. The voting process and the vote counting will be monitored by the notary, and he has checked the technical requirements for this in advance. Ladies and gentlemen, we are now entering the agenda. First of all, I will present agenda points 1 to 8. Point 1, presentation of the approved annual financial statements of Salzgitter AG and the consolidated financial statements as of December 31, 2019 with the joint Management Board and the report of the Supervisory Board. Point 2, resolution on the appropriation of retained earnings. Point 3, resolution on the discharge of the members of the Executive Board. Point 4, resolution on the discharge of the members of the Supervisory Board. Point 5, election of the auditor for financial year 2020. Point 6, resolution on the approval of the remuneration system for the members of the Executive Board. Point 7, resolution on the remuneration of the members of the Supervisory Board. Point 8, authorization to acquire, sell and retire treasury shares with the option of excluding subscription rights in accordance with Section 71 of the Company Act. In the invitation, you received the proposed resolutions of the Management Board and the Supervisory Board. Ladies and gentlemen, before the -- I would like to give you a brief report on the work of the Supervisory Board. In 2019, the Supervisory Board held 4 meetings during the financial year. It discussed the course of business and the situation of the company in detail, together with the Management Board. Between meetings, it was informed continuously about developments in the individual divisions of the company and the major group companies. It questioned as appropriate deviations in the course of the year, in the view of the increasingly unsatisfactory earnings situation over the course of the year. It also paid particular attention to the consistent implementation of the group-wide efficiency program, Fit Structure, Salzgitter AG. The following 3 topics were the focus of the work of the Supervisory Board. Firstly, the switch to low-carbon steel production. If the goal of massively reducing CO2 emissions in -- is to be achieved in Europe, steelmakers will also have to reduce their CO2 emissions. In order to secure the future of a company over the long term, this goal must be tackled with all of our efforts. And to this end, the company has been pursuing its in-house program, Salzgitter Low CO2 steelmaking, SALCOS. So that -- and that in that -- course of that, the use of coal is largely replaced by hydrogen. This concept requires a major renovation of the facilities for the production of pig iron from iron ore. It cannot be achieved on its own. For this reason, the Executive Board is making every effort to create the appropriate boundary conditions at a political level, and anti-trust procedure in the heavy plate product area. The Supervisory Board dealt intensively with the allegation of anti-trust behavior for the heavy plate segment. Although this was -- this alleged act took place many years ago, the Supervisory Board voted after considering all aspects and the possibility of further legal action. It ultimately decided to an amicable termination of the proceedings by the payment of a fine. The proposal for a new auditor. The audit committee of the Supervisory Board carried out an extensive selection process prior to achieving -- arriving at its decision for the auditor. It became necessary because the new EU regulations require that auditors are changed after a certain number of years. After careful evaluation, the Supervisory Board decided to propose Ernst & Young auditors as auditor because it provided the most technically convincing proposal for this task. In March 2020, the Supervisory Board considered the annual and consolidated financial statements as of December 31, 2019. Both financial statements were audited by PricewaterhouseCoopers and issued with an unqualified audit certificate. After its own review, the Supervisory Board also approved the financial statements. In March, the first impact on restrictions of movements and behavior arrived in order to curtail the spread of coronavirus. These impacted both Germany and our company. The Supervisory Board was informed about this and also via video conferences and also discussed all issues with the Management Board. I, as Chairman of the Supervisory Board, have been in particularly close contact with Professor Fuhrmann, and we have discussed and informed immediate measures taken to protect employees, but also to minimize the economic impact. Massive drops in employment amongst our customers, especially the automotive and automotive supply sector, but also mechanical and plant engineering have also resulted in extreme reluctance to buy and also some cancellations of orders. As a result, it was not possible to maintain earnings within various areas of the company. We still have a difficult year ahead of us. Professor Fuhrmann will tell you more about this in a second. We all hope that the economic activity in Europe and the world will increase significantly in the coming weeks and months. So much from my report on the focus of the Supervisory Board's work. For more details, see the company's report on the website. That is from Page 6 of the annual report. Let me now give you some explanations for the proposed resolutions. After the negative group result in financial year 2019, which doesn't provide the basis for a dividend distribution, and together with the many uncertainties due to the corona crisis, the Supervisory Board does not consider it appropriate to pay dividends this year. Therefore, we propose in item 2 to carry forward the net profits and thus keep them within the company. I have also already justified the resolution for agenda item 5, the election of an auditor for 2020. I've already given you details of that. Point 6 presents the system for remuneration of the members of the Management Board. The background of this is the new Stock Corporation Act, which requires this to be done every 4 years. We are presenting this to you 1 year earlier. The Executive Board -- the board of the Supervisory Board has designed the structure of this remuneration system together with the support of an independent external consultant. It was then discussed intensively in the absence of the Management Board members and finally decided in March 28, the system as required by the Stock Corporation Act and the government and the corporate governance code to arrive at a sustainable and long-term development of the company. And we think it will also help achieve and promote the implementation of our business strategy. The system is described in many -- in great detail in the draft to this AGM. Let me give a few highlights. The system is based on the sustainable development of Salzgitter in that the variable remuneration components are included in the form of a performance cash award, that depends on the development of the return on capital employed, the ROCE, in the financial year and the following 3 financial years. In addition, half of the annual bonus is linked to the development of the share price. And therefore, will ensure that the Management Board focuses on the interests of the shareholders. The variable remuneration is based solely on performance, taking into account both financial and nonfinancial performance criteria. There is no general discretion provided for the super -- provided for the Supervisory Board, and it [ can ] also make any changes to the target values. Finally, the system also contains elements such as a reduction and clawback regulation. So there is the option of reimbursement. The system has been in action since 2019 with 1 exception, the pension commitment, after the Executive Board contracts were changed accordingly. So much for the board remuneration system, which is available for approval today. May we ask that you provide your approval. Agenda point 7 includes our proposed, let me confirm, the remuneration of the members of the Supervisory Board as resolved by the AGM in May 23, 2013, that is 7 years ago, but we -- nonetheless, we consider that the remuneration rates are still applicable. And it also includes only the payment of a fixed annual remuneration. This is EUR 60,000 for each normal member, EUR 120,000 for the Deputy Chairman, EUR 180,000 for the Chairman. In addition, the remuneration for work on committees and the payment of attendance fees is also provided for. So much for the resolutions proposed by the Supervisory Board. Ladies and gentlemen, I would now like to ask Professor Fuhrmann, CEO of Salzgitter AG, to present his supplementary comments on the management and group management report 2019 and to give the AGM report on the current financial year. Professor Fuhrmann, the floor is yours.

Thank you very much, Mr. Wente. Ladies and gentlemen, valued shareholders, it would have been my pleasure to welcome you personally to the Annual General Meeting of the Shareholders of Salzgitter AG on behalf of the Executive Board, the Group Management Board and all the employees and to have engaged in dialogue with you. But as you know, circumstances as they stand, do not permit us to hold this event in the customary manner. Together, we are treading new ground with the first Virtual Annual General Meeting in the history of the Salzgitter Group. Notwithstanding, I am delighted that so many of you are able to participate again in our Annual General Meeting this year, despite the changed and possibly difficult circumstances. May I thank you most warmly for your investment decision, which we take as an expression of confidence in our work. Ladies and gentlemen, we are aware that the events that have gripped the world both in the political and social environment have taken precedence over the results recorded by the Salzgitter Group in the financial year 2019. Nevertheless, or perhaps specifically because of this, our Annual General Meeting is aimed at informing you about your company in the financial year 2019. A company in the midst of a turbulent slew of current events, but which must and can continue to firmly chart its course into the future. For this reason, I would like to begin by taking stock before entering into a discussion of the current situation. Four major topics have made headlines for Europe's economy and for the steel industry as part of that economy. Firstly, the global trade conflicts that have incidentally not yet been resolved, in this case, particularly the disputes between the United States and China, have been exacerbated. But also the EU is still a focus of imperial American trade policy and is facing further deliberations on antidumping duties right through to exterritorial sanctions in hitherto unforeseen dimensions. In the face of an economy that was cooling even before corona -- and this is our second topic, export-oriented economies, such as Germany's are particularly hard hit. Topic 3 and one that places a huge burden on us. The duty-free steel imports permitted under EU safeguard measures are much too high to allow an effective shielding of the local industry to unfold, with the result that our sector continues to suffer from the aggressive steel imports from non-EU countries. And as you will see, especially at the moment. And finally, the fourth topic, the climate debate. The overarching and dominant sociopolitical topic up until the outbreak of the corona pandemic has been pushed into the background only at a superficial glance, originating in a youth movement cleverly orchestrated in the media. Issues concerning environmental protection and emissions harmful to the climate were finally transported away from expert committees and out into the public at large, where they became the subject of controversial and generally emotionally charged discussions above all in Germany. In this increasingly difficult environment after the good years of 2017 and 2018 and having absorbed the burdens on earnings from special items, the Salzgitter Group recorded a pretax loss of EUR 253 million. Adjusted for the one-off negative effects, we nevertheless succeeded in generating a presentable operating result of plus EUR 143 million, that even remained within the range of the forecast originally released in February 2019. A large part of the EUR 396 million in one-off items consists of impairments on fixed assets that will, however, ease the burden on our consolidated results to the tune of around EUR 30 million per year in the future. In terms of the operating units, the KHS Group stood out positively, delivering the best results since joining the Salzgitter Group. In strategic terms, valued shareholders, our company also continued to develop further in 2019. We forged ahead with the Salzgitter AG 2021 corporate strategy. Key elements consisted of raising our investment in Aurubis to currently 29.99%, putting by CO2 certificates for the fourth period of the EU's trading system for greenhouse gas emissions as well as initiating the new FitStructure 2.0 profit improvement program. While the aforementioned first topics already pertain to tangible assets with an overall value of more than EUR 1 billion, the full implementation of the FitStructure 2.0 program of measures over the period up until the end of 2022 should lift earnings by a total of EUR 240 million per year. We have made similar progress with SALCOS, our approach launched in 2015 and pursued with the aim of lowering CO2 in steel production. The affiliated Wind Hydrogen Salzgitter project marks the next important step on the path towards more environmentally compatible steel production. As part of this project, we will be commissioning a 2.5 MW PEM electrolysis plant at Salzgitter Flachstahl GmbH by the end of 2020. This plant will fully cover the Salzgitter site's hydrogen requirements. At the present point in time, several -- 7 wind turbines are being built on the premises of the Salzgitter Group by our partner, Avacon AG. With a total output of 30 megawatts, these turbines will produce more electricity than we need to operate the PEM electrolysis process. Joining the Foundation 2 Degrees, German CEOs for Climate Protection in December 2019 demonstrates our ambition to actively engage in promoting a solution for the economy's imminent sea change and of successfully implementing this change through joint initiatives, which, as I mentioned before, is anything but easy. Let us now take a look at the performance of the business units. The result of the Strip Steel business unit reflects the European economic slowdown. And above all, the impact this has had on the business unit's most important customer, namely the automotive sector. A positive pretax result was nevertheless achieved, excluding the special items from impairment and restructuring expenses, which totaled EUR 120 million. That's the positive tax result. The bleak conditions of the market also placed a significant burden on the Plate/Section Steel and Mannesmann Business Units. These business units each recorded pretax losses. The Trading business unit performed somewhat better than you might think at first glance. Despite the hugely adverse effects emanating from the all-pervasive trading conflicts, the business unit achieved an operating result at breakeven. After offsetting EUR 31 million worth of impairment and EUR 5 million in restructuring provisions for FitStructure 2.0 against this, the reported end result was ultimately in the red. The KHS Group stands in positive contrast and is clear evidence of how expedient our diversification strategy is. Over the 12 years it has belonged to the group, it delivered its highest profit in 2019, a performance we can be proud of. The fact that the Technology Business Unit did not achieve a record result in full, is down to the 2 DESMA companies that were unable to repeat their outstanding performance in previous years due to market conditions. The result of the Industrial Participations/Consolidation consists on the one hand of EUR 99.5 million in earnings contribution from the Aurubis investment; and on the other, of EUR 149 million in negative special items above all due to the mutually agreed end to the cartel proceedings in regard to heavy plate. If we now look at the composition of the consolidated earnings before taxes, we will see, without further ado, that the operating profit of EUR 143 million has settled within the range of the original forecast of February 2019. Given the slowdown in the economy this year, achieving this is not something that could necessarily be taken for granted. The negative special items amounting to EUR 396 million break down as follows: an amount of EUR 141 million in connection with the anti-trust proceedings, EUR 62 million for restructuring above all in the Strip Steel, Plate/Section Steel and Mannesmann Business Units and EUR 193 million in impairments and predominantly -- also predominantly in the Strip Steel, Plate/Section Steel and Mannesmann Business Units. As already mentioned, these measures will ease the burden on the consolidated result by around EUR 30 million per annum as from the financial year 2020. The restructuring expenses of 162 -- of EUR 62 million are the precondition for implementing the FitStructure 2.0 program of measures, and therefore, for enabling significantly greater profit improvement in the years ahead. Ladies and gentlemen, the start to the financial year 2020 was quite encouraging until the outbreak of the corona pandemic in Europe. Although the German economy had not yet overcome its phase of weakness at the turn of the year, the first signs of a stabilizing process were showing in order intake and the pessimistic mood based on business expectations had been taking a turn for the better for a few months. Compared with the excellent start to 2019, the decline in sales proved to be moderate. The pretax loss of EUR 31 million in the first 3 months of 2020 included minus EUR 19 million in the earnings contribution from the Aurubis investment. This result was determined by reporting date valuation effects caused by fluctuations in the price of precious metals and not by Aurubis AG's otherwise thoroughly satisfactory performance. Ladies and gentlemen, 2 conclusions can be derived from the key data of the first quarter. Firstly, the corona pandemic did not have a significant impact on performance until the end of March. Secondly, the Salzgitter Group is now able to deliver results close to breakeven, also under more unfavorable economic conditions thanks to its rigorous implementation of profit improvement programs for many years, flanked by the diversification of our portfolio. Ladies and gentlemen, the first half of March 2020 turned the situation in Germany on its head within a few days. While the German government was still declaring as late as March 2 that closing borders or restricting travel in Europe were inappropriate decisions and out of proportion with the situation, it was precisely these measures that the European Union implemented on all Schengen borders 15 days later. Blockades at numerous borders within the EU had already been set up by this time. In the days thereafter, Germany followed suit. The number of infections rose by leaps and bounds. Schools and businesses were closed and public life was effectively brought to a standstill. Business was stimulated -- simulated in many areas rather than actually practiced. Shocking images from Northern Italy, where we also have a plant with around 300 employees were disseminated throughout the world. Ladies and gentlemen, in Germany, in particular, it is customary to criticize those in power and to accuse them of failing with hindsight. But leveling criticisms at the German government for their management of the corona crisis would be most inappropriate. Above all, with regard to the situation in other countries, one would have to conclude that the crisis in Germany has been extremely well-handled so far. Nevertheless, while the measures introduced meant that the pandemic ran a relatively mild course in Germany, when compared on an international scale, its impact on the economy is devastating. The OECD anticipates the worst recession in peacetime for 100 years. This is illustrated by the chart on the right. The production of cars in Germany, a not unimportant indicator for our company, slumped in April from its normal level of between 300,000 and 450,000 units a month to a mere 11,300 vehicles. Other customer sectors also important to the steel industry reported similar trends. In fact, demand for steel in the European Union fell only marginally short of the previous year's figure in the first quarter. But in the second quarter, it is likely to have contracted by more than 50%. Viewed as a whole, the year 2020 is likely to see a year-on-year decline of around 1 quarter. Unfortunately, steel imports into the EU have not kept pace with this downturn. Although there has been a reduction in tons, due mainly to the rather more unattractive price levels in Europe by international comparison, the share of steel imports in the market is nevertheless on the rise. Even before the current crisis, excessive quotas for duty-free imports were failing to deliver any protection whatsoever. The slight revision of these safeguarding measures on July 1 this year is also unlikely to have any significant effect in throttling imports. All in all, the situation is more than merely unsatisfactory for us. We see a weak glimmer of hope from a number of ongoing trade defense proceedings, exemplified by the one recently opened against dumped and subsidized hot-rolled steel imports from Turkey. Since, however, everything is somehow interconnected, I ask myself how the European Commission intends to actually protect producers, and not only of primary materials such as steel, against unfair trade practices during the protected, very sensitive phase of decarbonization in the context of the Green Deal, if it is so evidently unable to protect its own industry against permanent damage in such a full-on crisis. Ladies and gentlemen, keeping things is better than having to build them up again afterwards. What lies in store for the market? After April, when business expectations of the German economy essentially imploded, May saw the first signs of a slight recovery. The most recent Ifo survey for June then recorded the strongest increase in the business climate index ever measured. When presenting the report, the President of Ifo made reference to the fact that the index's good data had been driven more by hope than by the genuine business situation. Although the extreme pessimism about the economy from the lockdown period has dissipated, one should not succumb to illusions. It looks as if our prediction for the second and third quarter reaching rock bottom may well turn out to be correct. We will probably all have to exercise patience until the economy returns to normal levels, even if we are spared a second corona wave in the European Union. The extremely dynamic situation makes reliable assumptions difficult even for the near future. For this reason, the economic research institutes themselves have regularly made mention in recent weeks of the potentially short-lived nature of their forecasts. Ladies and gentlemen, here too, we are also flying with short visibility at the moment. Preparing an earnings forecast for the current financial year cannot be done in the usual manner in the current environment. The range of feasible scenarios puts any attempt at a precise quantification into the realms of speculation. Depending on the customer group, we experienced decline of between 10% and 70% in capacity utilization of our subsidiaries in the second quarter as compared with 2019. The companies delivering principally to the automotive industry recorded the most severe declines. Needless to say, the result of the second quarter of 2020 will clearly be in negative territory despite rigorous countermeasures. At the same time, there is reason to believe that this will mark a point when the worst point -- part of the bad weather front is behind us. To continue the metaphor of flying, autopilot has been switched off for the time being. Visibility is poor, and the aircraft is being veritably rocked. It is therefore all the more important that the crew we have works together both professionally and harmoniously, that everyone knows what to do and that we have enough fuel on board in the form of available liquidity. Hence, we can carry on flying for a while without making any unscheduled landing or costly in-flight refueling. My dear shareholders. In the face of this unprecedented challenge, we take our guidance from the principles of proportionality and weighing up the benefits between the best possible protection of our employees' health and safeguarding our company's ability to operate. Finding the right balance is much easier if we are all pulling on the same rope and keeping ourselves focused on shared values. Such values include identification, motivation and discipline. Within a very short space of time, we, therefore, took extensive risk mitigating precautions, introduced workflows with increased protection against the infection, implemented guidelines and created transparency with respect to incidences of infection throughout the group. The Executive Board and our senior managers are kept informed on the actual situation in all the Group's locations by a detailed monitoring system. At the start of June, we recorded the highest infection rate within the extended group of consolidated companies with 45 employees infected by COVID-19. Around 1 month later, on July 3, 2020, the number of persons ill dropped to 21, 18 of whom are employed in international locations, specifically 12 in Mexico and 4 in Nigeria. Sadly, we have had 2 deaths in the group, also abroad in connection with COVID-19. Ladies and gentlemen, in these difficult times, which are also difficult for many individuals personally, we embrace our social responsibility for the people who work for our company equally in countries where there are no short-time working allowances or a social security that can equate to the one we have here in Germany. We, therefore, continue to voluntarily pay remuneration to our core workforce and to our temporary staff after the closure of the KHS plant in India due to the nationwide lockdown. We intend to keep the temporary staff, which are typical of the country on the payroll also after lockdown. This is our understanding of loyalty to our workforce, very real and very pragmatic. One thing is for sure, the time after the corona crisis will come. Along with the health of our employees, it is, therefore, also our duty to concentrate on the economic aspects of the effects from the pandemic, securing the group's liquidity has the utmost priority. In many areas, we have temporarily scaled back production and introduced short-time working in many parts of the group. The voluntary and absolutely low-key waiving of remuneration by many hundreds of managers in Germany and abroad, including the Executive Board, the Group Management Board and the Supervisory Board is not just the contribution by this particular group of employees to securing liquidity. It is also prime testimony of the solidarity felt with many colleagues who are currently in short-time work and a strong identification with our company. And we went even further in the measures we took. Investments that are not already being implemented or that are not directly linked with our operating ability are triggered -- are being triggered on only a very restricted basis. At the same time, it's not about saving at the cost of our future. That is why we have continued on with both major strategic projects, namely, the new heat treatment line in Ilsenburg and the hot dip galvanizing line 3 in Salzgitter. When the corona crisis subsides, we will be ideally positioned in terms of our technical production capabilities. Our overriding aim is not to have to rely on additional equity and/or debt capital measures or to not to do that for as long as we can. As far as our liquidity planning is concerned, we are looking at 3 basic scenarios that map a potential course for the pandemic: easy, more difficult and worst case. From today's standpoint, we would only need a capital injection in the worst-case scenario, and we do not believe this to be the case at the moment. Ladies and gentlemen, it could be a source of pleasure that our company is regularly brought into play as a partner for merger scenarios. This reflects the attractiveness and stability of Salzgitter AG. And it is also completely understandable that whether in macroeconomic terms or with respect to the individual company, it may appear tempting to view business combinations as panaceas in times of crisis. Naturally, from our point of view, that is precisely the wrong approach because it is too superficial. A leap which falls well short. Many of you will know parts of what I explained a few weeks ago in an interview, also from other Annual General Meetings. We do not currently see any scenario that would improve our situation when measured against the yardstick of our independence. This, by no means, precludes us from considering concepts for collaboration with other companies with an open mind if they are suitable and offer the prospect of gaining advantages. Also for you, as our valued shareholders. I would like to emphasize the following clearly once again. The Salzgitter Group does not see any grounds for short-term hasty action even in these turbulent times, and accordingly, it does not feel any pressure from any quarter whatsoever. We have achieved a great deal since 1998. We have never questioned our steel business as the DNA of our company. We are sufficiently self-confident to affirm that our consistent strategy that is based on diversification with sound judgment and balance within the group portfolio is the right one. We have, therefore, made considerable headway in approaching our midterm goal of having equal proportions in the weighting of steel-related and less steel-related activities in the period up to 2019. We believe that a future business concept can therefore only be based on this fundamental idea. Ladies and gentlemen, as I've already mentioned, decarbonization, the drastic reduction of CO2 emissions is decisive for future-proofing, is particularly of energy-intensive industries in Europe. In the time after corona, this will become issue #1 in society and in the political arena and be again accorded a very high priority. We are also committed to the current climate targets of the European Union and are actively engaged in their implementations. Joining the Foundation 2 Degrees, German CEOs for Climate Protection underscores our intention of shaping the transformation of the economy and of taking it forward with the aid of joint initiatives and tangible projects. In this context, the corona crisis can also serve as a catalyst. We have a decidedly positive opinion of the German government's most recent measures, both the economic stimulus passage as well as the government's strategic concept for steel, along with the national hydrogen strategy, are suitable for supporting rapid progress in the decarbonization of industry. We are all the more delighted as the Salzgitter Group has been a pioneer in this field since 2015. We have used the last 5 years to set ourselves up as best as we can for the imminent change. To this end, we pursued a two-pronged strategy. That we have covered a large part of the expected shortfall in the fourth period of the EU emissions trading scheme through to 2030 at an early stage and with foresight, by procuring CO2 emissions allocations is likely to be a unique characteristic of the Salzgitter Group in Europe. The necessary preconditions -- prerequisites for this were the sound balance sheet and healthy financial position of our company. This gives us an advantage that we do not intend to fritter away by relaxing. In SALCOS, we have developed a compelling concept to reduce the CO2 emissions associated with steel production in Salzgitter by up to 95%. SALCOS is based on established technologies and, spanning sectors, is also one of the most promising approaches to decarbonizing the economy and civil society since the CO2 reduction per megawatt hour of electricity used is virtually unrivaled. In terms of transformation, we have permission-ed (sic) [positioned] the Salzgitter Group extremely well with these 2 safety nets. Over the past financial year, we have made significant progress following MACOR as the SALCOS' proof-of-concept study and the construction of the world's first steam electrolysis plant built to megawatt scale in 2017 and 2018, further key preliminary stages of SALCOS were expedited. A bigger, considerably more powerful steam electrolysis facility is currently being installed in the Salzgitter steelworks under the Green Industrial hydrogen 2.0 project. In addition, we have planned a demonstration plant for hydrogen-based direct reduction. We call it Mini-SALCOS. Another visible landmark component of our Wind Hydrogen Salzgitter project has most certainly caught the attention of those of you who frequent the Salzgitter region more often. Several wind turbines are under construction. As part of this project, we'll be erecting wind turbines with an overall output of about 30 megawatts on the company's premises. Four of these turbines have already been installed, and the completion of all 7 of them has been planned before the end of the current quarter. The electricity that these turbines generate by far exceeds our current requirements for hydrogen. By deploying an equally new 2.5 megawatt electrolysis plant, this ultrapure hydrogen generated on site will replace the volume of hydrogen formally produced from natural gas and delivered by a third-party in a cost-neutral manner. This hydrogen is required as shielding gas in annealing and galvanizing processes. Ladies and gentlemen, Wind Hydrogen Salzgitter is the first industrial cross-sector combining of renewable energy, hydrogen production and industrial consumption in a single location in Germany. A good 14 days ago, we took another step in our transformation process toward low CO2 hydrogen-based steel production underpinned by SALCOS. Together with the Federal State of Lower Saxony, the city of Wilhelmshaven and the industrial partners of Rhenus and Uniper, we have commissioned a feasibility study for the construction of a direct iron ore reduction plant with an upstream hydrogen electrolyzer at the deepwater port of Wilhelmshaven. Thanks to its location and its existing infrastructure, Wilhelmshaven is possibly the best site for realizing a project of this nature on Germany's coastline. The results are to be available by 31st of March 2021 at the latest. If the findings are positive, follow-up in the form of joint implementation of the project has been planned for. The target envisaged is to produce 2 million tons of directly reduced iron per year that will be brought by rail to Salzgitter and processed in the integrated steelworks there into high-grade environmentally compatible strip steel products. Valued shareholders, allow me to summarize once more. We have been able to withstand the current crisis-induced events based on our sound and equally future-oriented course. The so far successful weighing up of aspects concerning health protection and securing operations, our focus on transparency, consistency and liquidity management as well as, on a more general note, our core virtues of identification, motivation and discipline have guaranteed our ability to sustain the stability of the Salzgitter Group during the pandemic. From a moral standpoint, we may even emerge stronger from the crisis. The diversification strategy that we have pursued for many years has delivered renewed proof of its validity in these times. We owe 2 decades of successful independence, not least to this strategy. We have continued to optimize our structures as part of programs of measures even during the corona crisis with the rigorous approach you have come to expect. Last but not least, our state-of-the-art plant technology, the double safety net of CO2 certificates acquired as a precautionary measure and our SALCOS concept, along with other dovetailing measures for the future, mean that we are well equipped for that future. Apparently, dear shareholders, our most recent major shareholder sees it this way as we do. As you may have gleaned from the voting rights notification dated June 10 and June 15, the Hanover-based, family-owned construction company, GP Günter Papenburg AG, has meanwhile acquired a stake of 5.13% in Salzgitter AG. We wholeheartedly welcome this commitment with own funds, particularly in these difficult times. Is this not clear proof of the trust and confidence placed in the positive prospects of our group? Ladies and gentlemen, we cannot change water into wine. But you and our company have paved the way for producing steel and water by hydrogen. And otherwise, we will make every effort to ensure that the glass is at least half full after corona, and not half empty. Please allow me to conclude with a few remarks about today's agenda. In view of the negative impact of the corona crisis on the performance of the Salzgitter Group, the Executive Board and the Supervisory Board do not consider it appropriate to distribute dividend -- a dividend for the financial year 2019. For the first time since the company's listing in 1998, we therefore propose under agenda item 2 to carry forward the unappropriated retained earnings to the new account and leave the funds in the company. The proposals regarding to agenda items 3 and 4, discharge of the Executive Board and the Supervisory Board need no explanation before being put into debate. The Chairman of the Supervisory Board has already made statements on items 5 and 6. The approved -- acquisition own shares, which was resolved in 2018 has been expired on May 2020. This present empowerment, as you know, is standard for companies nowadays. The new proposal that we have today, which -- for your approval under item [ 8 ] of the agenda will allow us to acquire up to 10%, a maximum of 10%, of the share capital and to sell this amount again, if necessary. That the company holds treasury shares in a maximum amount of 10% of the share capital is insured. We have always exercised caution and responsibility in using this instrument. The authorization expressly includes the option of acquiring treasury shares by way of option transactions, which facilitates the attempt to optimize the purchasing process from a financial standpoint. The authorizations of numerous other stock corporations also provide for this option. Ladies and gentlemen, I now come to the end of my explanations of the agenda. On behalf of the Executive Board and the Supervisory Board, may I kindly request you to approve all the proposed resolutions. Thank you for your attention. And as we say, in the German [Foreign Language].

Thank you very much, Mr. Fuhrmann, [ the professor ], for your detailed report and your detailed explanations of the current situation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]