DGAP-News: SKW Stahl-Metallurgie Holding AG

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Press release

SKW group shows positive operational development in 2017

- revenue and earnings targets reached despite current insolvency procedure

- 12-months total revenue at EUR 259 Mio., adjusted EBITDA increases to EUR 13.2, Mio.

- CEO Dr. Kay Michel: "The positive trend in our operative business has been stabilized."

Munich, March 20, 2018 - Regardless of the current insolvency procedure under self-administration of the parent company SKW Stahl-Metallurgie Holding AG, SKW group has shown a continuously positive trend in operational business in the past year. The group sales and the adjusted operation result of the world market leader of products for the treatment of iron and steel surpass the comparable results of the prior year. Thereby, SKW benefited on the one hand from the positive economic activity in the steel market since the beginning of 2017 and on the other hand from the consequent implementation of the restructuring and efficiency-enhancement programme "ReMaKe". Today the group publishes the annual report, as well as the separate financial statement 2017*.

- The group revenue increased by 4.1% from EUR 249 Mio. in the prior year to EUR 259.2 Mio.; the produced and realised volume in tons was approx. 3% higher than in the prior year.

- The gross profit margin (defined as the difference between the overall performance and cost of materials in relation to revenue), being significant for the SKW business, reached 31.5% and therefore nearly the already high amount of 31.6% of the prior year.

- The consolidated group result before interest, taxes and depreciation and amortisations (EBITDA) adjusted by extraordinary and non-recurring effects (e.g. restructuring costs) exceeded with EUR 13.2 Mio. not only the previous year amount of EUR 11.9 Mio., but also the original forecast of about EUR 10 Mio.. The effects of the program "ReMaKe", which had already been initiated in 2014, provided a positive contribution of EUR 5.7 Mio to the EBITDA (after EUR 16.6 Mio. in total in the previous years).

- SKW Group finished 2017 with earnings from continuing operations after taxes of EUR 0.4 Mio. after a loss of 12.7 Mio. during the previous year.

Dr. Kay Michel, CEO of SKW Stahl-Metallurgie Holding AG: "The figures show clearly that we have been able to put our operative business on a solid basis, the sustainability of which we have to continue working on intensively. In the past year, our affiliates adapted very flexibly to the changed and intensified market and competition conditions and were partially able to compensate the decrease in volumes by increasing the market share. It is, then, all the more regrettable, that irrespective of the positive operational trend, the financial restructuring of our group, necessary for the elimination of the massive overindebtedness, did not succeed in the last year due to the obstruction of some shareholders and therefore now has to be reached by means of the insolvency procedure."

Equity situation shows still massive overindebtedness

- On November 30, 2017 SKW group showed a negative equity of EUR 6.0 Mio., after EUR -5.4 EUR end of December 2016. Already included are the positive equity shares of third parties, which increased from EUR 10.4 Mio. slightly to EUR 10.5. Mio..

- The individual financial statement of SKW Stahl-Metallurgie Holding shows a deficit in the amount of EUR 21.8. Mio. which is not covered by equity (last year's reporting date: EUR 23.4 Mio.).

Operational Outlook on 2018
The positive trend of SKW group has continued in the first months of the ongoing year in nearly all segments. Important risk and uncertainty factors are the expected decrease of the steel market in South America and the impact of the tariff barriers for steel on world trade, established in March 2018 by the US. Also, competitive intensity is increasing further, which is accompanied by erosion of margins.

Against this background the management expects for 2018 a turnover of approx. EUR 270 Mio. and an adjusted EBITDA of about EUR 15 Mio. for SKW group.

After a first creditors' meeting, where the self-administration proceedings and the custodian have been approved, during a second creditors' meeting the insolvency plan will be voted on. As is well known, the insolvency plan aims at the financial restructuring by means of conversion of the majority of credit claims acquired by the US-American investor Speyside Equity into equity of SKW Stahl-Metallurgie Holding AG, associated with the withdrawal of the current shareholders. The remaining credit claims of Speyside shall remain at the disposal of the company as a long-term shareholder loan. Thereby, SKW would, during the term of this shareholder loan until December 31, 2020, have sufficient liquidity to finance its current operations at its disposal.

The individual financial statements and the consolidated financial statement as per November 30, 2017 are published under https://www.skw-steel.com/en/ir-press/2015-12-17-08-13-42.html.

Contact

Frank Elsner
Frank Elsner Kommunikation für Unternehmen GmbH
Telefon: +49 89 99 24 96 30
E-Mail: office@elsner-kommunikation.de
Internet: www.skw-steel.com

About SKW Stahl-Metallurgie Holding AG and the SKW Metallurgie Group
The SKW Metallurgie Group is a global market leader for chemical additives for hot metal desulphurization and for cored wire and other products for secondary metallurgy. The Group's products enable steel-makers to efficiently manufacture high-quality steel products. Clients include the world's leading companies in the steel industry. The SKW Metallurgie Group has more than 50 years of metallurgical know how, and currently operates in more than 40 countries. What is more, the Group is a leading supplier of Quab specialty chemicals, which are mainly used in the global production of industrial starch for the paper industry. The SKW Metallurgie Group is headquartered in Germany with production facilities in France, the US, Canada, Mexico, Brazil, South Korea, Russia, the Peoples' Republic of China and India (joint venture). Shares of SKW Stahl-Metallurgie Holding AG have been listed in Frankfurt Stock Exchange's Prime Standard since December 1, 2006; since 2011 (conversion to name shares) with ISIN DE000SKWM021.

Disclaimer

This press release may include certain forward-looking statements which are based on currently available assumptions and predictions of the SKW Metallurgie Group's management as well as on other currently available information. Various identified as well as unidentified risks and uncertainties as well as other factors may result in a deviation of actual results, financial situation, development or achievement of the company compared to the assessments made herein. SKW Stahl-Metallurgie Holding AG does not intend and assumes no liability to update such forward-looking statements and to adjust them to future events and developments.