Salzgitter AG (SZG) Earnings Call Transcript & Summary

Dear shareholders and shareholder representatives, ladies and gentlemen, my name is Heinz-Gerhard Wente. As Chairman of the Supervisory Board, I herewith open this year's AGM of the Salzgitter AG and in accordance with the articles of association, will also chair the meeting. I warmly welcome you all also on behalf of the Board of Management and the Supervisory Board. I would have enlightened you personally to our AGM this year as well; however, the [Technical Difficulty] make this impossible in this year. As you can see from invitation to the AGM, due to the health risk with the coronavirus, the Board decided with the approval of the Executive Board to hold this AGM as a virtual AGM without the physical presence of the shareholders and their authorized representatives. In doing so, we are making use of the options granted under law to stock corporations also for the year 2021. Due to the existing contact restrictions, we also have also limited the number of participants at the meeting here in our information center in Salzgitter to a few people. In addition to the management Board, which is fully represented by Professor Fuhrmann, Mr. Becker, Mr. Groebler and Mr. Kieckbusch, I also welcome the Deputy Chairman of the Supervisory Board Dr. Urban and also our notary public, Dr. [ Goueli ], and he is here to prepare the minutes of 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 and can be seen on screen and, as I say, can communicate with me if necessary. The company's proxies are also present in the room. Having a virtual AGM enables us to protect your health as well as the health of our service providers and employees as we comply with current legal requirements. In addition, holding as a virtual AGM and -- ensures that you, our shareholders, can pass all upcoming resolutions promptly and that this year's AGM is also not postponed indefinitely. We are aware holding a virtual general meeting necessarily involves certain restrictions on the rights of shareholders. In particular, shareholders and the company's management cannot enter into the usual dialogue and general debate. In order that you can exercise your shareholder rights appropriately at the virtual AGM, the company has created various options to exercise your voting rights as are legally permissible and technically feasible. Using the online service, you can do that until I call for a vote as it would be in a normal Annual General Meeting. And it's also possible using the online service to file an objection via the online service up to a point in time at which I close the meeting. In addition, registered holders who were able to put questions to the Management Board in advance of the General Meeting, we will deal with these questions today following the reports from Professor Fuhrmann and myself. We therefore assume that by holding this General Meeting as a virtual AGM, at this time, we are also acting in your interest. This year, again, we are offering you a simultaneous translation of Professor Fuhrmann's speech from Germany into English. And if necessary, you can change the language setting on your website. Ladies and gentlemen, I would like to take this opportunity to express my thanks to everyone who worked on the preparation of this Annual General Meeting. If you have ever personally attended an AGM, you will know that we traditionally remember those of our company who had passed away since the last meeting before we kick off with the agenda. They all gave their best for our company. This year, however, we would also like to remember not only our deceased colleagues, but also those people who have died as a result of the pandemic. And we are aware that the pandemic is also a human tragedy for many people. May I ask those present here to hold a few moments of silence in sympathy? Ladies and gentlemen, before we kick off with the agenda, I would like to point out that there have been no changes in the Supervisory Board since July 8, 2020, the data of the last AGM. However, 4 members of the Supervisory Board have resigned their mandate after many years of service with effect from the end of today's meeting or the end of June. Dr. Tegtmeier, the additional or neutral member, which is a special feature of the code -- INCL code -- I think code defamation laws; and Dr. Köster, a representative of shareholders. Successors will be elected today under Item 5 of the agenda. In addition, Ms. Buntenbach and Mr. Lauenroth have also resigned their mandates with effect from the end of June. They are our employee representatives on the Supervisory Board. The successors will be appointed by the registry court in due course with the consent of the employee representatives of the company. There's also been a change in the Board of Management or there will be a change coming shortly. In view of the fact that Professor Fuhrmann will be stepping down from the Management Board on June 30 this year, after many years of service. The Supervisory Board last year appointed Dr. Dipl.-Ing. Gunnar Groebler as member of the Management Board from May 17, 2021, and with effect from July 1, 2021, as Chairman of the Board. I welcome Mr. Groebler. As a member of the Board, I would like to ask him to introduce himself briefly.

Thank you very much, Mr. Wente, shareholders, ladies and gentlemen. I would have liked to introduce myself personally today, but the pandemic means that it cannot be done. Therefore, let me give you a brief insight into myself in this way. My name is Gunnar Groebler. I'm 49 years old, married, have 4 children ages between 10 and 16 years. I grew up in the rural area. My father worked for the crop company. So I kind of grew up with coal and steel in my blood. I currently live with my family in Hamburg. After studying mechanical engineering at the RWTH Aachen University, I started my professional career with the European energy company Vattenfall in 1999. Initially in the area corporate development strategy, I then went through various positions at Vattenfall in Germany and in Sweden, including as head of various business sections. In January 2014, I set up the wind business action. In 2015, I was responsible for it as a member of the Vattenfall Group Management Board. During my work at one of the largest energy supply companies in Europe, I experienced the complete transformation of an industry which had been so for many years. And I consider this as a privilege. I helped shape it from a business and a social perspective. What is my motivation for switching to Salzgitter? The steel industry is in a situation similar to that of the energy providers a few years back. Massive upheavals are imminent or we are in the -- right in the middle of them already. Neither the market nor politics will be able to save us from this transformation. At most, they can and must create the framework for a successful transformation. It is paramount that we set the agenda from within, changing structures, adapting processes, always keeping an eye on the profitability of the core business. Similar applies to the technology sector, which -- where we need to open up new models and opportunities. And this diversification means it's something we have to do successfully. My goal is to align Salzgitter AG together with all the people who belong to it and also with you, our shareholders, aligned for the future and to strengthen it as an economically stable, sustainable and attractive company. I look forward to the challenges there and to tackling them together with a very strong team. Of course, I am particularly looking forward to welcoming you personally to our next AGM personally next year as Chairman of the Board.

Thank you very much, [Audio Gap] and he was experiencing the field of renewable energies and in corporate management. We are aware that the transformation from the coal base to hydrogen-based steel production means that we are facing a major challenge over the medium and long term. Mr. Groebler, let me wish you and us both and all of us every success in the further development of our strong steel technology group. Moving on to the formalities. To date, AGM was convened by publication in the Federal Gazette on April 8, 2021, with notification of the full agenda and the proposed resolutions the Supervisory Board and, as applicable, the Management Board on Items 2 to 6 on the agenda. I note that the AGM has thus been convened in a timely and due fashion. In addition to the announcement of the Federal Gazette, the fact that the General Meeting was called with the information provided by the Management Board has been communicated to the bank's shareholder associations and other persons entitled to such information in accordance with the statutory provisions. This invitation was forwarded to the media for dissemination throughout the European Union. I note that the following documents were -- are available for inspection on the company's premises in accordance with the provisions since the AGM was called. The convening of today's AGM, including the agenda, with the management's proposed resolutions, the approval, the approved annual financial statements of Salzgitter AG and the approved consolidated financial statements as of December 31, 2020, the joint management report of Salzgitter AG and the group for the 2020 financial year and the report of the Supervisory Board. The same applies to the explanatory report via the Management Board on the information in accordance with Section 289A and Section 315A of the commercial code that is in the management report. So these documents are also available here in the room. The information and documents to be made available in accordance with Section 124 of the German Stock Corporation Act have been on the Internet since the meeting was convened on the Internet site, which is salzgitterag.com./agm. This year, we will also keep a list of participants. The company's proxies present in the room and the shareholders they represent will be recorded in the list of participants. The list of shareholders represented will change depending upon the powers of authority granted or revoted by the company's -- to the company's proxies in the course of today's AGM. I would now like to inform you of the current presence as it results from the list of participants. The -- of the capital the 6 million shares currently represented 8,212,299 are currently represented and with the similar amount of votes that is a major portion of the votes. There are also 6 million votes that was being cast by post. Together, this makes up 39 million votes, and that represents 65% of the registered capital. The number of votes cast via the company's proxies and the number of votes cast by postal vote is decisive for the vote. Ladies and gentlemen, after my introductory remarks and the report of the Management Board, we will respond to the questions submitted by the shareholders in a timely manner. After answering the questions, we will then vote on the agenda items and the resolutions. Ladies and gentlemen, in advance now, just a few pointers on the voting. Voting in today's virtual AGM is possible via the online service using the individual access data printed on the voting card by a postal vote or by authorizing the company's proxies. And that is possible after the point in time at today's General Meeting when I close the agenda. I will announce the closing of the voting in advance. Until voting is closed, you may still change the votes you have already cast as described. I'll remind you to vote as the time comes, but I would also like to ask you now to cast your votes in good time. Information on how to exercise voting rights is presented in the invitation and on the company's website. The proxies, who will process the votes cast in accordance with the -- with your instructions. Postal votes received on time will also be taken into account when determining the results. Votes will be counted today using a simple addition method, which means that yes and the no votes are simply added together. The total is then the share capital represented at the meeting. It is then determined whether the proposed resolution was approved with the required majority. Any abstentions are not counted. The voting process and the counting of votes will be monitored by the notary public, who has checked the technical requirements in advance. Ladies and gentlemen, we are now starting with the agenda. First of all, I would like to introduce you to the agenda items that is Items 1 to 6. Point 1, presentation of the approved annual financial statements of Salzgitter AG and the consolidated financial statements as of December 31, 2020, together with the joint management report and the report of the Supervisory Board. Point 2, resolution on the discharge of the members of the Board of Directors. Point 3, resolution on the discharge of the members of the Supervisory Board. Point 4, election of the auditor for the financial year 2021. Point 5 by-election of members of the Supervisory Board. Point 6, resolution to change the remuneration of the Supervisory Board. In the invitation, you will find the resolution proposed by the Management Board and the Supervisory Board for the individual items on the agenda, ladies and gentlemen, and 4 was the election of the auditor for the financial year 2021, obviously. Before the report of the management report, I would like to briefly report on the work of the Supervisory Board for the 2020 financial year. The Board met 5 times in the past financial year. It discussed the course of business and the company situation in detail with the Board of Management. Between the meetings, the Board was also kept informed about developments in the individual business sections and at the major group companies. We questioned any deviations on the course from the plans. The focus of the work of the Board was the following 3 main topics. From the second quarter of the financial year 2020, the effects of the corona pandemic on the group was a dominant topic. Incoming orders fell significantly in all business areas. It was here that large numbers of employees would be hit and the production could possibly not be maintained in some areas. The consequence for the group was simply not foreseeable. In order to be able to support the Management Board in mastering the associated major challenges, the Supervisory Board received monthly special reports on the current situation and developments and all measures taken. The individual reports were followed by telephone conferences between the Management Board and the Supervisory Board, in which we exchanged views with the Management Board. By considering various conceivable scenarios, it was determined in each case what the company's situation might or was -- would be. Only towards the end of the year was there a noticeable recovery in most business areas in which respect and against the background of the catastrophic consequences for the group in the second quarter, the Management Board actually succeeded in limiting the detrimental effects. In 2020, the Supervisory Board prepared -- discussed and showed the successor for the departing CEO. The long-standing CEO, Professor Fuhrmann will retire as planned in the middle of this year, so that his successor had to be arranged. After a careful search and selection process, the Supervisory Board appointed Dipl.-Ing. Gunnar Groebler as a member of the Board of Management from May 17, 2021, and with effect from July 2021 as the Chairman of the Board. He has already introduced himself to you. And in the opinion of the Supervisory Board, he has the necessary skills to lead the company successfully over the next few years. And ultimately, the Supervisory Board dealt with very -- dealt very intensively with the important future topic of low-carbon steel production. In steel production, iron ore has always been smelted using coal as a reducing agent and energy source. This results in considerable amounts of carbon dioxide emissions. In order to emit carbon dioxide, quantity-based emission certificates have to be purchased by -- in accordance with the rules passed by the European Union. This creates additional cost. We want to contribute as much as possible to achieving the goal of a significant reduction in global CO2 emissions. Well, this will be necessary, they use completely new process technologies in steel production. This will also involve considerable investments over the medium term. And so the Supervisory Board dealt exclusively with this complex topic in an Extraordinary Meeting in February of this year in order to familiarize itself early on with the various assets of this upcoming transformation process. So much for my report on the focus of the Supervisory Board. The detailed report of the Supervisory Board can be found on the company's website in the annual report. It starts on Page 6. Ladies and gentlemen, I would now like to give you a few explanations on the resolutions proposed by the Board. Under Point 4 of the -- under Item 4 of the agenda, the Supervisory Board proposed that Ernst & Young auditors be reelected as auditors for 2021. The company first started working with us in 2020. The Audit Committee of the Supervisory Board has monitored the auditing activities and is convinced of the quality of the audit so that we can suggest with a clear caution that this company should be reelected as our auditor. The shareholder [ Hans Henning Rove ] expressly spoke against reelection of Ernst & Young. In support of this, he points out that E&Y auditors was also the auditor of the Wirecard AG, over which insolvency proceedings are currently underway. [ Mr. Rove ] quotes various media reports that there is a suspicion that Ernst & Young had not properly audited Wirecard's annual financial statements in the previous years. As far as the Supervisory Board of Salzgitter AG is concerned, I'd like to say the following. On the basis of a very careful and detailed selection process, the Board proposed a change to Ernst & Young in 2020 on the recommendation of its Audit Committee. The AGM was approved at the AGM on July 8, 2020. After another thorough examination also due to the suspicion of possible inadequacies in connection with Wirecard, the Board submitted the present election proposal to elect Ernst & Young, again, as auditor for 2021. In the course of the audit of the 2020 annual and consolidated financial statements, Ernst & Young distinguished itself through a professional and conscientious audit procedure. The Supervisory Board sees no reason to doubt the suitability and the integrity of the Ernst & Young audit teams that were responsible for the Salzgitter AG audit. The people involved show high degree of business understanding. And in the opinion of the Audit Committee of the Supervisory Board, it has the necessary qualifications and experience to provide a high-quality audit. The Supervisory Board is, therefore, sticking to its proposal to elect Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft as auditor and group auditor for the year 2021. And now a few comments on Item 5 of the agenda. Due to the resignation of the Supervisory Board mentioned above, the by-election of 2 members of the Supervisory Board is pending under this agenda item. Let me briefly introduce the candidates. Mr. Klaus Papenburg is a member of the Board of the Günter Papenburg AG, a group of companies that is particularly active in the building and transport sectors, but also in the building materials industry and the waste disposal. This is a family company. So the company -- Mr. Papenburg can bring the point of view of an entrepreneur to the Board. He is a business graduate and has many years of experience in the management of companies. The Supervisory Board proposes him for election as the shareholder representatives. Frank Klingebiel has been the full-time Lord Mayor of the independent City of Salzgitter for many years. Both the employee representatives and the shareholders' representatives on the Supervisory Board jointly propose him for election as member of the Supervisory Board, the 21st members. The 21st member of the Board is a special feature of the Coal, Iron and Steel Act. He does not belong to the representatives of the shareholders on the Board. He is still an employee representative. Therefore, he's a neutral member. Due to his long-standing function as a Lord Mayor, Mr. Klingebiel has extensive experience in dealing with different interest groups, different interests and reconciling them. This is an excellent prerequisite for balancing the interest of the stakeholders involved in the company when advising the Board of Management. Finally, Item 6 of the agenda. The Board of Management and Supervisory Board ask you for your consent to change the Supervisory Board's remuneration. According to previous regulations, it is unclear whether the Board meeting taking place in the form of telephone or video conferences requires an independent attendancy to be granted. Last year, as confirmed that it may be necessary to hold meetings by telephone or video conference. The preparation for emerging a meeting in this form and participation required demand -- the same effort as with face-to-face meetings. It should, therefore, now be clarified that unattendancy is also to be granted in such cases, so much for the resolution proposed by the Supervisory Board and the Management Board. Ladies and gentlemen, I would now like to ask Professor Fuhrmann, Salzgitter AG's CEO, to present his additional information on the 2020 management and group management report and to give the annual general report -- Annual General Meeting report on the current financial year. Mr. Fuhrmann.

I'm glad to see that so many of you are participating in our Annual General Meeting under the special circumstances. Before we turn to the details of the business development, I would like to thank you as our valued shareholders most sincerely for the trust you have placed in us. Your decision to invest in Salzgitter AG bolsters our strategy, and you play an important part in realizing our ambitious but realistic goals. Let us now take a look at the last financial year 2020. All in all, the year was exceptionally challenging for our group, to say the least. The outbreak of the pandemic led to a sudden major plunge in demand above all in the first half of the year, which necessitated our decisive intervention on the employment and on the cost front. Nevertheless, or perhaps precisely because of this, we can look back on the year and say we can be satisfied with what has been achieved. More on that later. Our pretax result of minus EUR 196 million was obviously anything but satisfactory. In the final analysis, however, it is an improvement compared with the previous year of 2019, so notably better than we had feared back in midyear 2020. This we owe especially to immediate measures swiftly and rigorously implemented. Our holding in Aurubis also made a significant contribution to supporting this result. The negative result for the year precludes dividend distribution for the year 2020. Our assumption is that we will be able to resume payment of dividend for the current year. Since the fourth quarter of 2020, most of our companies have been reporting that their businesses are trending upwards. At no time in 2020 was our economic and financial stability under threat. Injections of external capital were not necessary. At the end of last year, the equity ratio stood at 32.5%, and has thus remained on solid ground. On the operational level, we worked through our management teams to ensure that our staff across the entire group could carry out their tasks, while keeping operations up and running as securely as possible. The social partnerships between management and employee representatives has passed its stress test. But quite apart from everyday business, we have set a great deal in motion and reached important milestones. This applies to our course as a pioneer of low CO2 steel production as well as to implementing our strategic investment projects. Dear shareholders, the all-pervasive topic in the past year was the COVID-19 pandemic with its impact on society, the economy, the public finances, culture and, most importantly, for some of us, sport. The pandemic presented us all individually and collectively with enormous challenges and continues to do so. At our last Annual General Meeting in July 2020, I described how, in the months ahead, the Salzgitter Group would be essentially focused on weighing up interests as between the best possible protection of our workforce's health while maintaining the group's operational capacity. Today, just a year down the line, I can lay claim to the following: we have succeeded. As opposed to many other domestic and international companies, none of the companies within our group experienced any infection or clusters of note -- of disease infection clusters of note. We achieved this by moving swiftly to take comprehensive precautions aimed at minimizing the risk, creating exemplary transparency regarding infection rates and business activity within the entire group flanked by ongoing detailed monitoring of the situation. We assumed social responsibility for our staff not only at our domestic sites but also at numerous locations abroad. Rigorous liquidity management, the rapid and complicated introduction of short-time working across large parts of the group, the selective scaling back of investments and targeted working capital management enabled us to ensure that, at no point in time, the Salzgitter AG need to have resource to additional external funding. One aspect was significantly upgraded in the past year: the area of information technology. Today, more than 5,000 of our jobs in Germany are remote working compatible. The other positions are concentrated mainly in the area of production where teleworking is naturally not an option. Almost all employees in jobs permitting telework use the possibility of working from home over the course of the crisis, not excessively but responsibly in due consideration of the company and of colleagues. This was made possible by our GESIS and TELCAT IT companies that adapted swiftly and unbureaucratically to the new requirements. In close cooperation with the group companies, they put suitable solutions in place within a short time window, thus securing the group's ability to function. Ladies and gentlemen, to illustrate what has been achieved, let us take a brief look at the reconciliation of the results from 2019 and 2020. Two things, above all, become evident. Firstly, that the economic impact of the coronavirus crisis on our company was severe. The effects of collapsing demand and margin erosion on profit translated into more than EUR 0.5 billion for our group as a whole. And secondly, the immediate measures I have outlined suffice to cushion almost half of these effects. This is a huge achievement with thanks due to everyone who developed these measures at short notice without freezing in shock and implemented them with a great measure of discipline, identification and notification. Ladies and gentlemen, may I be permitted to comment that in comparison with other companies and public institutions also, this performance is far above average. The workforce's strong identification with our Salzgitter AG undertaking is similarly reflected in several hundred of our managers, including members of the Executive Board, the Group Management Board and the Supervisory Board, forgoing parts of their salaries voluntarily, irrevocably and without any compensation at a later date. Yes, we are good at handling crises, but we're also good at a great deal more. We're also capable strategists. No high-minded pronouncements, but deeds indeed -- instead. And these then speak larger than words. On many occasions, we have read in the media about the lost year the pandemic has imposed on us all. In some respects, that may be the case. In business education and in the cultural area, many plans and projects were postponed, curtailed or scrapped completely. But this does not apply to your and our Salzgitter AG. Quite the opposite. We achieved a great deal again in 2020. Despite the considerable restrictions and burdens with which we had to cope, this did not deter us from pressing ahead successfully with our strategic investment projects and even bringing some of them to a conclusion. We also set important milestones in our course towards decarbonization. To get a first impression, please take a look for yourself. [Presentation]

Many thanks. Achieving what the film shows is not something that we can -- that can be taken for granted. It was possible because everyone involved was dedicated for their individual projects with huge commitment and staying power. These graphs show the development of the demand for steel in Europe divided by key customer sectors. The chart shows the change against the same quarter of the previous year and an initial growth forecast for 2022 in comparison with the expectations for 2021. Patently evident from the chart is how dramatic the impact of the coronavirus pandemic was in the spring and summer of 2020. The plunge in the demand for steel was especially sharp in the automotive center. As a consequence, German car production to merely 11,000 vehicles in the month of April 2020, down from the normal level of monthly 350,000 to 400,000 vehicles. Only in the second half of the year did steel demand in this sector pick up again. The development in the mechanical engineering and steel tubes business is gravitating in the same direction. The much more stable construction industry was somewhat quicker to recover during the crisis. By the summer, demand for steel in this sector was stronger than in the corresponding period of 2019. Almost all the markets relevant for our business have meanwhile recovered. Moreover, the forecasts reveal a positive picture. We anticipate a strong upturn in demand in the current and coming year. The tapering off that you see in the second half of 2021 reflects the base effect of better figures in the previous year. The rising demand for steel is also mirrored by the development of rolled steel pipes. Since the late summer of 2020, prices have shown an upward trend that was hesitant at first and, from the turn of the year onward, mutated into an unexpectedly dynamic boom for strip steel products. The price of hot strip soared by almost EUR 200 per tonne in the first quarter of 2021 to reach EUR 1,000 per tonne at the start of May, marking a new record high. Along with the economic recovery, this price trend was also based on backlog effects. Over the course of the pandemic, many customers had pared down their stock to an absolute minimum and now had to replenish their inventories at a rapid pace. The development of the heavy plate product group always lags the economic cycle by some months. Similar to the price of rolled steel, in the raw materials side, iron ore prices also put in a new record high. The recovery in China's steel industry that had already set in, in the early summer of 2020, coincided with still limited supply due to the international restrictions based on business and the consequence of the breached dam in Berlin -- in Brazil, sorry, I beg your pardon. The official coking coal price stagnated at a low level as China imposed economic sanctions last year against Australia, one of the world's most important producers of coal. The market has been divided since then. Coking coal originating from other countries is considerably more expensive. Dear shareholders, while the financial year 2020 proved to be extremely demanding, the first months of 2021 sent very positive signs. As just mentioned, the recovery had already commenced in the late summer of last year. It only gained genuine momentum in the fourth quarter, however. With the time line customary in our sector, the uptrend in our financials that we published last week in full, following back the ad hoc announcement released previously, manifested itself in the first quarter of 2021. Rolled steel production and external sales remained stable compared with the first quarter of 2020, which was the last quarter not impacted by the COVID-19 pandemic. By contrast, earnings before taxes rose significantly by almost EUR 150 million to EUR 117.3 million. The dynamic uptrend in steel prices is the key driver here. The Strip Steel and Trading business units delivered pleasing contributions to earnings. In addition, a contribution of EUR 42.5 million from Aurubis AG, a holding consolidated by the equity measure method, was recorded. Almost all segments reported a steady increase in their monthly results over the course of the year, an encouraging start to the year. This positive trend, my esteemed shareholders, should hold firm from today's standpoint and confer pleasing half year results. And this is simply because we are currently processing orders from the spring due to the time delay between receiving the order and delivery that is applicable to many steel and tube products. And for the time thereafter, we are not currently perceiving any material deteriorations either. At this point, I nevertheless make explicit reference to the fact that we are still in a phase of considerable volatility. The global pandemic could spring fresh surprises at any time. We are fundamentally confident, however, and ascertain the following for the current financial year. If the overall situation holds steady, external sales should rise to more than EUR 8.5 billion, thus almost to pre-pandemic levels. We estimate profit before taxes in a range of between EUR 300 million and EUR 400 million. As much as the coronavirus pandemic has held us in thrall in past quarters, it is not the only challenge we have to deal with in civic society and as an enterprise. The most important topic of this decade, without a shadow of a doubt, is decarbonization, meaning the drastic reduction of CO2 emissions to curb climate change. We at Salzgitter AG have long since quit the domain of declarations of intent and mere announcements and have been in the midst of implementation processes for many years. I showed you this chart last year. Its fundamental message still applies. We are vigorously pursuing the implementation of our decarbonization strategy with SALCOS as its cornerstone. This stands for Salzgitter Low Carbon Dioxide Steelmaking. On the other hand, 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 by procuring CO2 emission permits. You are already familiar with this. But one important detail has changed. The difference between the cost of purchasing and the market value of the CO2 permits we purchased as a precautionary measure has risen from over EUR 300 million at the time of the last Annual General Meeting in July 2020 and is now more than EUR 800 million. Over the period since January 2021 alone, fungible CO2 permits have climbed from around EUR 30 per tonne of CO2 to a good EUR 50 at the present time. Given that on the so-called integrated route of steel production via the blast furnace and converter steelworks, around 2 tonnes of CO2 per tonne of steel products are produced. This delivers a medium-term advantage for our group that should not be underestimated. The decision to operate going forward with 2 safety nets has evidently been the right one. Buying emission permits at an early stage, thus as a precautionary measure, while at the same time, stepping up the technological development of alternative modi operandi and processes of steel production. Ladies and gentlemen, what is exactly is SALCOS, the second and most important safety net shown here -- important in traversing the gulf between the Second Industrial Revolution to the other emission-free side with energy-intensive production of indispensable industrial raw materials? This is nothing less than a reinvention of the contemporary steel production, fortunately, based on established technologies. Iron ore, which occurs naturally only in a compound with oxygen, has to date only been reduced via the blast furnace process by introducing carbon, which essentially removes the oxygen atoms from the compounds. The result is pig iron and carbon dioxide. This process that you can see mapped out in the chart along the gray line is already very efficient -- energy-efficient and sophisticated, which is why the volume of CO2 inherent in the process cannot be further reduced. This is where SALCOS comes in. Iron ore can also be reduced using hydrogen or natural gas instead of carbon. The route mapped out below with the orange line. This direct reduction process produces firm iron sponge, so not the molten pig iron, which comes out of the blast furnace. And the directly reduced material, DRI for short, can then be processed further to produce crude steel in the appropriate meltdown aggregates in electric arc furnaces, for instance. Nowadays, direct reduction harnessing natural gas is the more complex, but also technically well-developed process that is mainly used in countries with large quantities of natural gas available. Salzgitter AG is one of the world's first companies to engage committedly in combining the direct reduction technology with the alternating development of natural gas and hydrogen. Under our concept, national gas in conventional direct reduction plants, whose use is already achieving CO2 savings of as much as 2/3 compared with the carbon-based blast furnace route, would gradually be replaced by hydrogen generated via electrolysis using electricity from renewable energy sources. Consequently, crude steel production at the end of the process harnessing so-called green hydrogen is almost CO2 free. How specifically are we going to set about realizing the industrial scale integration of hydrogen-based direct reduction technology in our integrated steelworks in Salzgitter? We have planned for modular implementation of SALCOS in 3 development stages. The 3 existing blast furnaces and 3 converters will be replaced successively by SALCOS modules and electric arc furnaces. A computer simulation of the facilities looks like this. [Presentation]

Thank you. Together with the Fraunhofer Society and the world-renowned plant engineering company Tenova, our partners in the project, we will be able to realize the first of the 3 stages involved in the technological implementation of SALCOS within 5 years. SALCOS will enable us to save than 2 million tonnes of CO2 per year even before 2030. Combined with flanking measures, this corresponds to 30% of our current CO2 emissions. To understand the dimensions of this, one needs to know that these 2 million tonnes of CO2 savings are equivalent to the impact of converting no less than 1 million combustion engine motor cars to fully electric drive systems. Stage 2 and 3 are to follow on step-by-step so that Salzgitter's entire crude steel production would have been switched to SALCOS by 2050 or 2045, if need be, and achieve savings of up to 95% of today's CO2 emissions generated during the steel production process. We are very confident that policymakers, society at large and also the economy will embrace our ecologically and commercially entirely convincing offerings for sustainable decarbonization. We assume that policymakers will soon create the indispensable framework conditions for the implementation and economic operations. Time is of the essence. Setting ever more ambitious targets for reducing CO2 is one thing, but defining the framework conditions and the measures for complying with them without deindustrializing or demobilizing the country is quite another and by far more complex. In any event, Salzgitter AG stands ready for action. Ladies and gentlemen, the availability of preferably green electricity is the ultimate bottleneck for decarbonization. As there will not be sufficient quantities available in the coming decades, it will be a question of deploying existing renewable energy as effectively as is humanly possible. We then have to ask ourselves the question, how much CO2 can be avoided per megawatt hour of electricity used? Possibly the most important advantage SALCOS offers can be seen from this chart. It illustrates the various approaches to decarbonizing our civil society, applying the criterion of energetic efficiency, depicted by the size of the circles. The larger the circle, the greater the volume of CO2 that can be avoided per megawatt hour of electrical energy or at least converted. The hydrogen-based direct reduction of iron ore as a substitution for today's blast furnace route holds the promise of the second highest energy efficiency of all decarbonization approaches, only outperformed by converting CO2 into formic acid. On a worldwide scale, however, a very negligible amount of this is required, meaning that this is not a solution. Other approaches, such as synthetic fuels that are garnering a great deal of media coverage at present significantly underperform in terms of energy efficiency, although there are sufficient market volumes for the uptake of these products, which is not the case with formic acid. Factoring in these circumstances, hydrogen-based direct reduction, which embodies our approach with SALCOS, is the most promising approach in a sector and energy-related comparison for achieving society's rapid and sustainable decarbonization. Political decision-makers, especially in this country, have evidently grasped this concept and, in the meantime, have become very open to the steel industry's measures to reduce CO2. Our Salzgitter AG has ascribed a pioneering role in this domain and justifiably so, not least reflected by the numerous visits of top politicians to Salzgitter even during the coronavirus phase. Dear shareholders, Salzgitter AG is steadily pursuing its course towards low CO2 steel production without embellishments and no empty or dubious showiness, that's not our style. All our endeavors in recent years, what you see on the chart, are geared to realizing this one project and to its success. In the meantime, we have expedited projects, partly by joining forces with partners, in an overall volume of close to EUR 100 million. Added to this are research projects that we carry out together with, among others, the Fraunhofer Society, Europe's largest applied research organization. Some of these milestones I explained to you last year. I would like to touch on 3 projects in the following. On the 1st of March of this year, our Wind Hydrogen Salzgitter project went online. With this EUR 50 million project, we implemented the first industrial cross-sector combination of renewable energy, hydrogen production and industrial consumption at a single location in Germany. Wind Hydrogen Salzgitter consists of 7 wind turbines, Germany's largest onshore aggregates, by the way, and 2 PEM electrolyzers used for the environmentally compatible generation of hydrogen needed for the Salzgitter steelworks. This project enables us to gain operational experience in the field of hydrogen from renewable energies important for SALCOS. The decision to build the micro SALCOS direct reduction plant in demonstration scale is an expression of our claim to leadership within the steel sector in the decarbonization area. The new plant subsidized by the German Federal Ministry for the Environment is the world's first direct reduction plant operated flexibly by hydrogen and natural gas. The first cut for this -- the first sold was cut for this 2 days ago. Commissioning is already scheduled for the coming year. We will then set about gathering important insights and experience in operating SALCOS on an industrial sale -- scale. Our green strip steel from Salzgitter also boasts similarly excellent standing, while already being available for delivery today. We don't only talk the talk, we walk the walk. We are, therefore, the first in Northwest Europe to be able to offer our customers green strip steel since the end of 2020. And that with a CO2 footprint of electric steel reduced by more than 3/4 in slabs and over 2/3 to the end product of hot-dip galvanized strip compared with the conventional blast furnace route. In contrast to completing -- competing offerings, this strip steel is physically tangible and not merely a more or less theoretically reduced CO2 footprint projection. Production is effectively and transparently taking place and achieving significantly lower CO2 emissions. German technical Inspectorate TÜV SÜD, has examined the production processes and certified the results of its investigation by way of a conformity statement in accordance with the VERIsteel standard. Customer response to this new product is strong, which shows acting sustainably while keeping a sharp competitive edge are not necessarily mutually exclusive. Quite the opposite. I'm convinced that the path we are currently on will ultimately significantly improve our opportunities in the market going forward. Ladies and gentlemen, dear shareholders, decarbonizing metallurgy is not the only issue we addressed in 2020. We have also forged ahead with our Hot-Dip Galvanizing Line 3 and New Heat Treatment Line investment projects as our 2 most important strategic projects. The New Heat Treatment Line in Ilsenburg is aimed at expanding our market position in the higher-end grade segment and in ultra-strength and wear-resistant water-quenched steels. The process of taking these facilities into operation is making good headway. And the first deliveries to customers have already been made. The market stands ready to absorb products from these new facilities. More can be seen in the following film. [Presentation]

Ladies and gentlemen, let me condense my elaborations of the past minutes into 2 points. Firstly, based on sound and well-founded consideration and a strategy that is therefore forward-looking, we have emerged relatively unscathed from the most severe economic crisis our country has faced since the Second World War, together with ourselves, our owners and with our almost 25,000 employees who took on numerous tasks with a great deal of energy and discipline. And secondly, we are well equipped with our SALCOS concept to step up to the imminent challenge of generations, the decarbonization of our society. We not only declare our willingness to make an important contribution, we have already taken the first concrete steps to produce reduced CO2 steel and are moving towards the ultimate aim of a CO2 neutral product. Ladies and gentlemen, our listing in 1998 marked the point when the company embarked on a completely new chapter of its, at that point, already 140-year history. Since then, we have actively taken the development of our group further with a view to positioning it on a broader basis with a steady increase in quality and product diversity. Moreover, we tapped further areas of growth. In 2000, we supplemented our core activities rooted in a long tradition by adding the tubes business through our takeover of Mannesmannröhren-Werke AG, today known as Mannesmann Business Unit. In 2007, we acquired Klöckner-Werke AG, thereby laying the foundations for the Technology Business Unit. Both of these were attractive acquisitions made at extremely favorable purchase prices. A further key element is our substantial participating investment in the successful copper producer, Aurubis AG. Today, Salzgitter AG as the management holding heads up a modern and innovative steel and technology group that operates across the globe through its subsidiaries and affiliated companies. The fact that we have achieved a great deal over the past 20 years and more is also reflected in a comparison between the financial year 1997-'98, the year of our listing, and today. Consolidated revenue. Here, we have taken the figure from the first quarter of the current financial year 2021 on an annualized basis, has risen by 160% compared with the point of departure. The workforce has doubled and equity has even increased more than fourfold. Dear shareholders, we have achieved all this by drawing fully on our own resources. In the history of our new Salzgitter AG, not one cent is attributable to a capital increase and no financial aid to see us through the coronavirus pandemic was necessary in the year now ended. On the contrary, since our listing on the stock exchange, we have distributed dividend of EUR 13.14 per share in total. Together with the share price uptrend since 1998, we -- despite a snapshot of the outcome of the corona crisis, this means that the invested capital has increased 3.5x. Market capitalization has doubled as the number of shares traded has been reduced due to shares withdrawn and 10% in treasury shares. Dear shareholders, the Salzgitter Group is very well positioned with its financial stability and sound balance sheet, including a higher level of reserves, also as the coronavirus pandemic eases. We therefore have every reason to look optimistically to the future together. Ladies and gentlemen, the Chairman of our Supervisory Board has already gone into the agenda items. So I will refrain from further explanations. Permit me to say a few personal words to round off my presentation. As you know, today's Annual General Meeting will be my last as Salzgitter AG's Chief Executive Officer. At the end of June, after 41 years in the steel industry, of which 26 years were spent in the Salzgitter Group, I will retire. When I came on board here in 1995, the Internet was something most people were not familiar with. Electromobility was essentially a topic reserved for science and in our understanding of everyday life, an area which we assigned more to the history of technology. Yes, your ears have not deceived you, 100 years ago, half of the cars registered in Berlin were equipped with fully electric drive systems. So not everything is as new as it seems to be. And Preussag Stahl AG, the predecessor of today's Salzgitter AG, was a pure steel producer within a large conglomerate. A lot has happened since then. There have been a few sea changes in society, in the steel industry and in our company. I'd like to think back -- admitted today with a degree of wistfulness on these 26 years, 25 years of which have been on the Salzgitter Group's Executive Board. When one has had the privilege of spending more than 2 decades in a company through all the ups and downs, the company inevitably becomes part of oneself. At this point, I express my great thanks to all Salzgitter AG's employees that today's Salzgitter Group is a commercially successful and independent enterprise is a huge joint achievement that we can be all very proud of. We have spoken much about the future today, about SALCOS, about hydrogen. I have saved 2 images for my left slide -- last slide that I think are especially poignant for the future of the group. They show my Executive Board colleagues and myself together with some of our trainees. In 2016, we introduced the Executive Board meets Trainee format that was and is very close to my heart. Ever since then, we meet up with our trainees to exchange ideas as we did here in 2019 and 2020. These meetings were very important to me. I always enjoyed them and would like to thank all the trainees of the Salzgitter Group for seeing their future careers in our company. And finally, last but not least, esteemed shareholders, may I thank you and our business partners for your trust in Salzgitter AG. For your largely long-standing commitment, you also embody the future of Salzgitter AG. I wish Gunnar Groebler as my successor, together with colleagues on the Executive Board and the Group Management Board, a steady and felicitous hand and the purpose -- and the perpetuation of the excellent cooperation with our Supervisory Board. Please stay safe, and stay healthy and stay true to our -- your Salzgitter AG. Good luck.

Thank you, Professor Fuhrmann, for your detailed report and your detailed comments on the current situation. Again, your last speech as CEO at the General Meeting of our company was again peppered with clear statements, conclusions about the situation and the necessary actions of the Salzgitter AG. My special thanks for that as well. I'll return to the change in the position of our CEO later on. We will now respond to the questions submitted by the shareholders in the run-up to the AGM. The freely accessible broadcast of the meeting on the Internet ends at this point. Obviously, shareholders still have the option of following the meeting through our online service using their access data.