euro adhoc: Salzgitter AG / Earnings / Effect on income statement of share price hedging transactions in connection with the sharp rise in the market value of Vallourec shares held by Salzgitter AG

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Disclosure announcement transmitted by euro adhoc.
The issuer is responsible for the content of this announcement.
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06.04.2006

As already stated in the 2005 annual report, Salzgitter AG has
decided to retain the shareholding in Vallourec S.A. at its current
level, due to the fact that the resultant industrial and financial
perspectives appear better and more reliable than alternative
arrangements that can be currently envisaged. It was also reported
that, in January 2006, structured option transactions with maturities
of up to 28 months were concluded, in order to hedge the book values
of shareholdings. These option contracts hedge the book value of the
shareholding against share price losses during the contract period.
In order to refinance in part the costs of the option premiums,
participation in increases in the share price above a certain level
was waived. This transaction concerns just under one third of
Salzgitter AG's 17.2% shareholding in Vallourec S.A. In the meantime,
the maximum maturity has been extended to 36 months.

Current IFRS rules require that the expenditure arising from the
current market value of the option structure, which has a long period
to expiry, be recognized in the income statement of the Salzgitter
Group. As a result, the continued rise in the value of Vallourec
stock, in particular the sharp rise witnessed in the last two days
and hours, leads to a current non-cash expenditure of around EUR170
million. This prompted us to issue an ad hoc announcement.

A significant portion of this expenditure (EUR 148 million) has
arisen as of the end of the first quarter period of the 2006
financial year. In Q1 2006, Group operating business has developed
better than originally planned; we are expecting a pre-tax profit in
excess of EUR150 million from this period.

The capital appreciation of the Vallourec shares held by Salzgitter
AG, compared with the IFRS balance sheet entry and taking into
account the above-mentioned expenditure, is over EUR1 billion.
Current IFRS rules do not permit this share price driven capital
appreciation to be reported either in the balance sheet or in the
income statement of the Salzgitter Group.

We would like to point out expressly that the above-mentioned
expenditure refers to a purely accounting-driven non-cash loss. In
contrast to this, the transaction carried out partially hedges the
considerable value of the Vallourec shareholding against unexpected
medium-term economic or political events.

end of announcement euro adhoc 06.04.2006 19:39:39
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ots Originaltext: Salzgitter AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:
Bernhard Kleinermann
Tel.: +49 (0) 5341-21-3783
E-Mail: kleinermann.b@salzgitter-ag.de
Tel.:49 (0) 5341-21-01
FAX: +49 (0) 5341-21-2727
Email: gersdorff.b@salzgitter-ag.de

Branche: Iron & Steel
ISIN: DE0006202005
WKN: 620200
Index: MDAX, CDAX, HDAX
Börsen: Frankfurter Wertpapierbörse / official dealing/prime standard
Börse Berlin-Bremen / free trade
Hamburger Wertpapierbörse / free trade
Baden-Württembergische Wertpapierbörse / free trade
Börse Düsseldorf / free trade
Bayerische Börse / free trade
Niedersächsische Börse zu Hannover / official dealing