HKM Transformation on Fast Track

Research evidence excerpt

HKM Transformation on Fast Track

Update

July 29, 2026 11:09 AM GMT

Morgan Stanley & Co. International plc+MSalzgitter AG | Europe Alain Gabriel, CFA

Equity Analyst

HKM Transformation on Fast Alain.Gabriel@MorganStanley.comIoannis Masvoulas, CFA +44 20 7425-8959

Ioannis.Masvoulas@morganstanley.com +44 20 7425-0427

Track Adahna Ekoku

Adahna.Ekoku@morganstanley.com +44 20 7425-0578

Ferdinand Huber

Research Associate

What’s new? Salzgitter announced that its recently-acquired HKM subsidiary has Ferdinand.Huber@morganstanley.com +44 20 7677-2702

contracted the engineering works of a new electric arc furnace (EAF) at the

Salzgitter AG (SZGG.DE, SZG GY)

Duisburg site. The EAF will have capacity of up to 2.5mtpa, with a planned

Carbon Steel | Germany

production target of ~2.0mtpa. Implementation will start in August 2026, with

Stock Rating Overweight

completion scheduled for 2029. The project will receive €200mn of funding from Industry View In-Line

Price target €67.00

the federal government and the state of North Rhine-Westphalia (this is not new

Shr price, close (Jul 28, 2026) €54.20

information). The company press release did not disclose the total spending of the 52-Week Range €67.60-20.62

Mkt cap, curr (mn) €3,094

project. Net debt (12/26e) (mn)* €1,251

EV, curr (mn)* €5,376

Our view: The award has come earlier than we expected, suggesting HKM

* = GAAP or approximated based on GAAP

transformation planning is more advanced than assumed.

Fiscal Year Ending 12/25 12/26e 12/27e 12/28e

We will seek clarity on: (1) The overall project budget – as a preliminary estimate, Sales / Revenue 8,904 9,203 9,766 9,735

(€mn)**

using average EAF capital intensity of ~US$500/t on the stated 2.5mt capacity EBITDA (€mn)** 406 818 926 957

implies gross investment of ~US$1.25bn, or ~€1.1bn.