SKW Stahl Metallurgie : Metallurgie leitet Wende in 2016 ein – erste Indikatoren für eine Geschäftserholung im laufenden Jahr

• Development of steel market until autumn 2016 still below expectations
• Improvement program ReMaKe yields approx. EUR 16 Mio. on earnings
• Published business figures 2016 exceed forecast with revenue of EUR 249.0 Mio. and adjusted EBITDA of EUR 11.7 Mio.
• Annual general meeting will be held on July 6, 2017 in Munich

München (Germany), March 24, 2017. In 2016, the SKW Metallurgie Group, globally leading provider of primary and secondary metallurgy solutions for the steel industry, had to cope with a decline in the global steel industry, the extent of which has even exceeded the already low expectation until autumn of 2016. Concurrently, price erosion and pressure on margins have increased in all important market segments. Also, the negative development of prices of processed core materials, an important indicator for SKW Group, has continued.

The company was able to compensate the gaps left by lacking revenue and declining margins by persistent improvement of the group-wide restructuring and efficiency improvement program ReMaKe with effects on earning of approx. EUR 16 Mio. until year end 2016. The consolidated EBITDA forecast 2016 of slightly above EUR 10 Mio. threshold was thus surpassed despite the worsened conditions of the steel crisis generating an operative EBITDA of EUR 11.9 Mio. (2015: EUR 13.2 Mio.). This result was achieved on sharply lower revenues-Guidance relevant revenue of EUR 249 Mio. compared to EUR 286 Mio. in 2015. This equals the reported revenue of EUR 228 Mio. (after adjustments, according to IFRS 5), as compared to EUR 264 Mio. in 2015. The corresponding operative EBITDA amounts to EUR 11.7 Mio., although the tonnage produced and sold was only about 4% less than the corresponding prior-year figure.

Therefore, SKW's expectations for the future are still based on conservative scenarios for market development, based on which it is expected that revenues and adjusted operative EBITDA will remain stagnant in 2017; a resumption of modest growth can be expected until 2019, whereby the operative EBITDA should exceed the EUR 15 Mio. threshold. In addition, the Company would like to point out that the steel production is picking up again in its core markets, particularly as a positive trend of business in nearly all segments since the fourth quarter of last year is detectable, and this trend has continued in the early months of the current year. 'Particularly in our key market of North America, the new political framework has fueled a clear upward trend of steel production' - explains Kay Michel, CEO of SKW Stahl-Metallurgie Holding AG, and adds: 'However, it remains to be seen if these trends are sustainable - especially considering the complex situation of our company at the present time. If this will be the case, we could absolutely exceed our business forecast significantly.' On this basis during the first two month of the current year 2017, triggered by the achievements of ReMaKe and more attractive parameters than projected, SKW Group shows a clear up-ward trend with respect to revenue and operative EBITDA compared to the previous-year period.

As reported, SKW Metallurgie is striving to implement a comprehensive financial restructuring plan consisting of three main elements:

• Debt redemption by selling assets, primarily of non-core activities,
• The basic willingness of the financing banks to agree to a conditional haircut,
• A substantial cash capital increase to which shareholders will be granted subscription rights.

By means of these measures, SKW Metallurgie is striving to reduce its debt to an economically viable level in relation to its profitability, which is regarded as an indispensable prerequisite for the strategic and operational development of the company and for obtaining appropriate follow-on financing. In addition to the hitherto effected implementation of the operative repositioning of SKW Group, it is planned to strengthen the Group's capital and thus to financially support the Group's restructuring. Besides selling non-core activities, it is the company's clear preference to find a strategic partner, with which to develop its business and strengthen its competitive position by realizing synergy potential. 'We will strive to actively participate in the coming market consolidation of the steel suppliers' industry as a relevant player, so that we can return to creating value for our shareholders after the lean period of operational consolidation', was added by Kay Michel.