UBS downgrades Salzgitter on valuation and cash flow concerns

Vallourec SA

22/01/2026 10:05

** UBS cuts Salzgitter SZGG.DE to "neutral" from "buy"

** Cites stock's rally in the last few months and concerns over potential extra capital expenditures over the next few years

** Says stock currently trading at 9 times its EV/EBITDA ratio

** Decarbonisation project SALCOS remains on track for completion in 2027, but impact on free cash flow remains high - Brokerage

** Notes joint venture HKM's future is unclear as partners Thyssenkrupp TKAG.DE and Vallourec VLLP.PA are considering closure; adds plans on converting it into an electric arc furnace would further weigh on expenditures

** Says potential portfolio break-ups "unlikely" in the near-term, as management sees KHS and Aurubis NAFG.DE remaining in the group for earnings diversification

** But strategic fit of Aurubis NAFG.DE with core steel operations is "less clear" and debt costs outweigh dividends - Brokerage

** Out of 13 analysts covering the stock, 4 rate it "strong buy" or "buy", 6 "hold" and 3 "sell" - LSEG data

(Reporting by Emanuele Berro)

((Emanuele.berro@thomsonreuters.com))