The sluggish economy is ruining the balance sheet of Germany's second-largest steel group Salzgitter.

After a slump in profits at the start of the year, the Executive Board lowered its targets for the year. The recovery signals were more hesitant and weaker than expected, the Executive Board explained on Tuesday. At the same time, uncertainty about economic development in the second half of the year is increasing. As a result, there have been shifts in incoming orders.

As a result, Salzgitter is now targeting sales of 10.5 billion euros in 2024 instead of 10.5 to 11.0 billion euros. The operating result (EBITDA) is expected to reach 550 to 625 million euros instead of 700 to 750 million euros and the pre-tax result 100 to 175 million euros instead of 250 to 300 million euros.

In the first quarter, turnover fell by 300 million euros to 2.7 billion euros. EBITDA slumped to 126 million euros from 290 million a year ago. Earnings before taxes amounted to only 17 (previous year: 184) million euros.

Salzgitter and its larger rival Thyssenkrupp are suffering as a result of the sluggish economy and falling prices. The year 2023 was the weakest in terms of production since the financial crisis. Production is still at a very low level, according to recent reports.

On the stock market, investors sold their Salgitter shares due to the bleak outlook. The share price plummeted by more than ten percent to 21.52 euros.

(Report by Anneli Palmen, edited by Ralf Banser; if you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).