Salzgitter

The Supervisory Board of Salzgitter AG comprises 21 members: specifically ten shareholder and ten employee representatives plus one other member. This composition has been laid down under the provisions of the Co-Determination Amendment Act applicable to the company, in conjunction with Article 7 of the company's Articles of Incorporation.

The core tasks of the Supervisory Board are to advise and supervise the Executive Board in its management of the company. In accordance with the statutory requirements, certain fundamental decisions may only be made with its approval. The Supervisory Board has determined that, in addition, certain types of transactions require its approval.

The Supervisory Board and the Executive Board discussed the corporate plan in detail prepared and submitted by the latter for the financial years 2025 through 2027. The Supervisory Board was also brought up to date on the SALCOS® program. Other topics of consultation in this meeting included the imminent defining of the qualitative criteria determining variable Executive Board remuneration in 2025 for assessing the performance of the individual Executive Board members, as well as the stakeholder objectives for the performance period from 2025 through 2028.

Special expertise in matters of sustainability is represented on the Audit Committee by the person of Prof. Dr. Schindler who has dealt intensively over many years with sustainability reporting and the respective audit as part of his supervisory board activities, and by Ms. Hardekopf.

A recurring, key topic addressed by the Supervisory Board in its work concerns sustainability issues. The Executive Board regularly reports on general developments of significance and progress in the area of sustainability, since May 2024 at each regular meeting of the Supervisory Board.

The Supervisory Board regularly assesses how effectively it performs its tasks overall and the effectiveness of its committees. In the financial year 2024, this self-assessment took place with the aid of an external consultant by way of a survey directed at members of the Executive Board and the Supervisory Board.

The Executive Board regularly reports on general developments of significance and progress in the area of sustainability, since May 2024 at each regular meeting of the Supervisory Board. Regarding these sustainability issues, the SALCOS® program that is geared to the company's virtually climate-neutral steel production forms the centerpiece of this work.

The compliance management system and investigated compliance activities are regularly debated at the Supervisory Board plenum's autumn meeting, prepared beforehand by the Audit Committee's in-depth deliberations on this topic.

In determining the variable remuneration of the Executive Board members, the Supervisory Board also agreed non-financial targets with the members of the Executive Board in 2023 for 2024 and in 2024 for 2025. These non-financial targets are mainly attributable to the area of sustainability (managing demographic change, reducing the number of accidents, increasing the proportion of women in management positions, securing the supply of green electricity).

The variable remuneration amounts granted to Executive Board members are 36 % based on shares. The Supervisory Board considers this proportion appropriate.

The Audit Committee focused on the independence of the statutory auditor and of the auditor of sustainability reporting, in particular the scope of non-audit services provided by the auditor and the quality of the audit. The consultations of further meetings of the Audit Committee concerned IT security and IT structures, monitoring the accounting process, as well as the effectiveness of the accounting-related and non-accounting-related internal control system, the risk management system, and the internal audit system.

The Salzgitter Group operates a groupwide monitoring system for the early risk detection and a risk management system.

Business Activities and Products

With external sales of € 10.0 billion and more than 24,000 employees in the financial year 2024, the Salzgitter Group ranks among Europe's leading steel and technology corporations. The Group has an annual capacity of around 7 million tons of crude steel and comprises more than 130 subsidiaries and affiliated companies.

Our core competences lie, on the one hand, in the production and processing of rolled steel and tubes products and global trading in these products. Strip steel articles, seamless and welded steel pipes and tubes, sections and heavy plate count among our most important products in this field. On the other hand, we also operate a business in special machinery and plant engineering.

Customer Sectors

A breakdown by customer sector shows that around 25 % of our external sales in the reporting year was attributable to trading and the Steel Service Centers that sell directly or process beforehand – generally in smaller batches. Other significant customer sectors include primarily the food and beverages industry (17 %), the vehicle manufacturing (16 %) and the construction sector (11 %).

Geographic Focus

In the financial year 2024, we generated 76 % of our external sales in Europe. With a share of 41 %, Germany is traditionally by far our most important single market.

Group Structure

The Salzgitter Group is structured into four business units:

• Steel Production Business Unit: Including Salzgitter Flachstahl GmbH (SZFG) with crude steel capacity of around 4.7 million tons a year, and Peiner Träger GmbH (PTG) with around one million tons annual capacity
• Steel Processing Business Unit: Concentrates on downstream value chain links and combines heavy plate activities and steel tubes producing companies
• Trading Business Unit: Maintains distribution network with stockholding locations for steel products in Europe
• Technology Business Unit: Three manufacturers of special machinery, with KHS Group accounting for more than 90% of sales

SALCOS® Transformation Program

Virtually climate-neutral steel production is to be achieved as part of the SALCOS® program by incrementally switching to a hydrogen-based route. In contrast to the former process involving blast furnaces, hydrogen and green electricity replace the carbon formerly required for producing steel. This technology enables steel production's carbon footprint to be reduced by around 95%.

Implementing the first stage of SALCOS® commenced back in 2022. At the end of 2026, products from the new production route that are generated with a mix of natural gas and hydrogen should be on the market. Once connected to the hydrogen core network, the proportion of hydrogen can gradually increase. We plan to have completed the technical transformation of the steelworks to accommodate the new procedures by the year 2033.

The technical approach of SALCOS® consists of avoiding carbon emissions directly in the production process (Carbon Direct Avoidance) through replacing the carbon formerly required for producing steel incrementally - initially mainly by natural gas and subsequently by 100% green hydrogen - in direct reduction plants to be built.

Implementation Progress

SALCOS® is being implemented in stages. The first stage that is already underway consists of a direct reduction plant, an electric arc furnace, and a 100 MW electrolysis plant generating hydrogen. With this as a foundation, we aim to supply our customers with low carbon steel on an industrial scale as from 2026. Following a ramping up phase, we will be producing 2 million tons via this route, thereby realizing 30% of Salzgitter Flachstahl GmbH's primary steel production without the use of coking coal.

By the end of 2033, the transition to virtually carbon-neutral steel production at the Salzgitter location is to have been completed – well ahead of statutory requirements. Full alignment to low carbon steel production will be instrumental for us in achieving the target of eliminating 95% of Germany's emissions. As part of the transformation, the technical foundation for reducing emissions by up to 2.5 million tons a year as from 2026 and 8 million tons a year as from 2033 has been set in place.

Climate Targets

Salzgitter AG's ambitious climate targets were ratified by the Science Based Targets Initiative in June 2024. The Salzgitter Group's SBTi reduction targets accord with the 1.5°C target of the Paris Agreement. The year targeted for short-term objectives is 2028. In adopting this time horizon, the Salzgitter Group is underscoring its pioneering role in transforming the steel industry. All Group companies in Germany and abroad have now been taken under responsibility to contribute to achieving the targets. In the long term, Salzgitter AG intends to reach the net zero target by 2050 at the latest.

In 2026, we aim most particularly to have completed the first step in laying the cornerstone of our SALCOS® program that will make it technically possible for us to reduce our Scope 1 and Scope 2 CO₂e emissions by 30% compared with 2018.

Energy Requirements and Renewable Energy

We are rigorously pursuing measures to lower our energy consumption. Wherever economically viable, we are switching our energy supply to renewable sources, which also includes producing power at our own locations. With the planned commissioning of the first development stage of the SALCOS® program, additional electrical energy will be required. Taking account of all relevant parameters in the integrated steelworks, we currently assume that these requirements will amount to around 2.3 TWh in 2027.

To this end, a series of long-dated green power purchase agreements (PPA) have been signed. For 2027, the contractually secured PPA volume for all the Group's major consumers will amount to around 1,200 GWh.

Renewable Energy Goals

The reduction of Scope 2 emissions can only be successful through sourcing power from renewable energies. For this reason, we have plans to source the power for the Salzgitter Group's processes fully from climate-compatible production by 2030.

Moreover, the KHS Group has been using certified green electricity in all its German locations for years and is planning to do so in its international production sites as well.

Circular Economy Strategy

As a key component of the strategy, the PIONEERING FOR CIRCULAR SOLUTIONS vision clearly illustrates the Salzgitter Group's leadership aspiration in the field of circularity. Our understanding of circularity consists of keeping resources once sourced from nature for as long as possible in economic use, thereby minimizing the additional introduction of finite resources into the economic cycle.

In our case, the circular economy is focused on ramping up scrap recycling, considerably accelerating the decarbonization of steel production, as well as sourcing power from renewable energies.

Scrap Recycling Expansion

The primary goal in the field of circularity is to increase the use of scrap in steel production, from currently 2 million tons p.a. to at least 3 million tons p.a. (+50%) through to 2030.

In the second quarter of 2024, Salzgitter AG commissioned the construction of a large shredding facility in Salzgitter. Entailing an investment volume of almost €30 million, the plant will secure the supply of low carbon steel production with qualitatively high-grade scrap in sufficient quantities. Commissioning has been scheduled to coincide with the start of the first stage of the SALCOS® transformation program in 2026.

DEUMU Deutsche Erz- und Metall-Union GmbH set about developing scrap type 4 SALCOS® together with its partners. This scrap is in line with the properties required in the SALCOS® production process.

Workforce Data

As of December 31, 2024, the core workforce of the Salzgitter Group numbered 22,381 employees, which is 757 people less than at the end of the financial year 2023 (23,138). Including trainees and employees in non-active age-related part-time work, the total workforce of the Salzgitter Group came in at 24,473 persons (previous year: 25,183).

Regional Distribution

At the end of the financial year 2024, we also employed 779 temporary staff outsourced (previous year: 835), which corresponds to 56 persons less compared with the previous year. The share of external staff outsourced in the sum total of core workforce members and staff outsourced stood at 3.4% (previous year: 3.5%).

Due to temporary capacity utilization problems in a number of companies, short-time work was also necessary in the financial year 2024. At the end of the reporting period, 201 employees were working short time in the domestic Group companies (previous year: 167). An average of 423 employees a month were affected by short-time work in 2024 (previous year: 290).

Women in Management Targets

Furthermore, we pursue the goal of raising the proportion of women in newly to be filled non-tariff and management positions to 25% by 2025 and to 30% by 2030. In this context, Salzgitter AG is working tirelessly to enhance its employer appeal, particularly also for women.

Women's Networks and Development

Following on from last year when the "Women of Steel" network was set up at Salzgitter Flachstahl GmbH, female employees of Peiner Träger GmbH and the two heavy plate companies came together in the reporting year for a cross-company and a company-specific "women's network meeting", with the aim of expanding the network of female employees. As a flanking measure, cross-departmental input sessions were held in the three companies in which female employees and management developed ideas and measures to increase the proportion of women and promote women in management.

Personnel Development

Our established FORWARD personnel development program functions as a central component for securing specialist and management staff within the Salzgitter Group. With a view to stepping up the program, activities to link our talent management and our mentoring program for women were undertaken in the reporting year. The aim is to involve women mentees from the mentoring program in a more targeted manner in the future in the talent management nomination process and to identify female high potentials in order to promote the process of recruiting female employees for management roles.

A groupwide network event designed to support all mentees took place in 2024. A day was reserved for discussing aspects of career development for women in various workshops, keynotes and presentations, thereby strengthening the groupwide network.

Health and Safety Performance

The Salzgitter Group is striving to reduce the Lost Time Injury Frequency Rate (LTIF rate) by 35% in 2025 measured against the reference year of 2021 and by 50% by the year 2030. The targets assume that, as from 2025, the potential for reducing LTIF further will gradually diminish.

With a view to further reinforcing the Group's safety culture, emphasis in the reporting year was placed on holding action days focused on the issues of health and safety at work. In addition, drawing up a concept for a new health and safety strategy for the Salzgitter Group commenced in the reporting year.

In the financial year 2024, the LTIF came in at 7.1, thereby reflecting an improvement compared with the previous year (2023: 7.6). We hold fast to our objective of reducing the absenteeism rate and avoiding accidents and will continue to work intensively on this matter.

Personnel Expenses

Personnel expenses amounted to €2,015.8 million in 2024, which is 6.8% higher than in the year-earlier period. Along with the marginal upturn in average employment throughout the year and higher collectively agreed wages, the increase in personnel expenses is due in particular to one-off restructuring expenses of €46.8 million.

YOUNITED Corporate Mission

Under its "Salzgitter AG 2030" strategy, the Salzgitter Group has positioned itself to meet the challenges of the future. In our YOUNITED mission statement, we have formulated our understanding of ourselves based on the three pillars of Goals, Paths, Values. A review of the mission in the reporting year produced clear evidence that YOUNITED and its values are instrumental in assisting us to achieve our new strategic goals.

In addition, in the context of an "upgrade" in 2023, ten corporate culture levers were identified that translate our values into specific measures and activities. The four levers of greatest relevance were prioritized for the purpose of evolving our corporate culture: "Focusing on the Customer", "Enabling Agility", "Taking Responsibility" and "Demonstrating and Recognizing Performance".

Compliance Management

The compliance management system and investigated compliance activities are regularly debated at the Supervisory Board plenum's autumn meeting, prepared beforehand by the Audit Committee's in-depth deliberations on this topic. The head of the Group's Legal Department generally reports to the full Supervisory Board and the head of the Group's Compliance Management to the Audit Committee.