Looking at the TV, I guess we are very, very well attended analyst conference. Ladies and gentlemen, hello from Salzgitter and welcome to our analyst conference regarding the results of the first half 2022. Six months that were obviously. CFO, Mr. Becker, will comment on that in a minute. Concerning our CEO and CFO before jumping into Q&A. Without further ado, I'd like to hand over to Mr. Groebler.
Thank you very much, and to guide you through some of the topics and then hand over to Burkhard Becker for financials. If you look at the highlights of this first half, we'd like to point out five points, and we certainly will go through them in more detail through the presentation. Of course, we are very proud to deliver the highest operating result for a first half year in company history, which is, I would say, a very good combination of high productivity of our assets and our people and high prices across all sectors, and we will go through that later.
Where our board has taken an investment decision and allocated own funds in the order of magnitude of EUR 223 million to realize the SALCOS program stage one, which will allow us to deliver green steel as of the end of 2025 with a target of 1.9 million tons of green steel once this first phase is completely operational. We also continue to work with our strategy. As you might recall, our mission is partnering for transformation. Hence, we have further developed partnerships with partners like customers, like suppliers of energy and raw material as well as plant manufacturers to ensure that the strategy that we're on is well accompanied by partners and is also safeguarded on the critical points.
Of course, we are also looking at energy and how to overcome the energy crisis that we're, I think, all facing these days. We at Salzgitter are happy to be part of the solution how to overcome this crisis by delivering pipes for both Wilhelmshaven and Brunsbüttel with pipes coming out of Salzgitter to enable them to get operational as fast as possible. Last but not least, our guidance that we laid out in June is confirmed. With all the aspects that we can look at these days, we can confirm our 2022. If we have a short look at the economic development, or let me perhaps start with occupational safety. You know by now that this is something that is very, very important to us as a company, very important to me as a CEO.
We are looking at the right trend when it comes to occupational safety. 2022 looks much better than 2021, and you see the trend since 2018, so we're on the right path here. Still, there's way to go given that our group-wide goal is to have zero accidents throughout the entire company. Well underway, but still a bit to go, and work also for us in the future. I think what is important is to make some workplaces safer. It's also a culture question, how to approach health and safety as an individual, for myself, but also for me and for my colleagues. That's certainly those two elements are part of the program that we're looking at.
Now, looking at the economic development, we have seen, and you all have followed that, sharp rising raw material prices, Ukraine war. We have seen also steel prices with a sharp increase at the same time. We now also see a certain normalization, especially on the raw material side, and as you can see on the right-hand side of the graph also, spot prices for steel have come down a bit, and we're back to levels that I think we all know. Even though normalization both of raw material and steel prices is ongoing, we operate still at positive margins. I mentioned energy before.
If you look at energy supply a bit more, it's for the entire industry, it's for the entire German situation, and it cannot be ruled out that the situation deteriorates further. However, I think that's also what is important to. For the foreseeable future also, no changes in sight. However, we have seen high prices, very volatile prices for electricity, but also for natural gas, which of course affect also our production. We have seen production cuts, especially at Peiner Träger, PTG, as a response to hourly electricity price peaks. We cut those peaks by reducing our consumption, especially at the electric arc furnaces in Peine.
Of course, we have continuous monitoring in place of the risk coming out of the energy supply right now. We're really looking at possibilities to reduce energy consumption. At the price levels, energy efficiency measures might become viable, so we're looking at those and implementing those wherever possible and meaningful. We also look at alternative operation with the focus of saving energy to the detriment of people working longer for the same volume or the third quarter is a bit weaker than what we have seen before. We are also looking at that. Early on we have done an analysis for all technical equipment in case continuous gas supply cannot be secured anymore.
We have contingency plans in place, so there is no danger if cut as long as it is cut in a controlled manner, and we have at least some time to act upon that. All in all, I think we have taken the measures we can take, and we are prepared also for the worst when it comes to shortages again. Right now, we don't have them, and we don't see them for the foreseeable future. I think nobody knows how the autumn will actually develop. Hence, we're well-prepared for that as well. Looking ahead, we'll go through the numbers in greater detail.
I think what you can see here is that the production has been basically stable if you compare first half 2022 with the first half of 2021. Basically on par here. The uplift in terms of results comes solely from prices. I think that's what we have seen. We have seen sharp price increases. You've seen the graph before. Those now are reflected also in the numbers here. Sales have increased by roughly 50%, and we were able to actually capture that on the EBT side with year's first half EUR 970 compared to EUR 305.
I think that shows very nicely sort of how we have been able to really capture those prices and deliver the result that you have seen here. If we have a look at strategy, I think there's one highlight I would like to mention. On July 13th, we had the Supervisory Board meeting of Salzgitter AG, and the Supervisory Board approved an investment into SALCOS phase one, EUR 727 million. Own funds have been approved for the delivery of SALCOS, as we have talked about now for some time. Now it's really happened. It was also stated here that there is no public funding included. There's no public funding included for the time being.
We have applied for public funding, and we expect an answer from EU within this quarter, Q3 in 2022, to then have the full funds available to implement SALCOS phase I . What is important and also shows the confidence that we have when it comes to public funding is we have an early start of measures allowed by the Federal Ministry for Economic Affairs and Climate Action in Berlin. This actually allows us to maintain the ambitious schedule leading to first green steel by end of 2025. With that, and this is something you have heard before, we are able to SALCOS in 2026. Hence, SALCOS, hence green steel in the second half of this decade. Total funding for stage one is roughly EUR 1.5 billion-EUR 2 billion.
We're still in discussion with some of the suppliers, hence the number is not yet fully fixed. In the graph, you see sort of the technical concept. We have walked you through that before. The core of the SALCOS process is the direct reduction plant, which you see in the middle. It's fed by iron ore, pellets and hydrogen in the end. Knowing that we won't have sufficient hydrogen by 2025, we can start with natural gas. A combination of natural gas and hydrogen, the electric arc furnace together with scrap to get this crude steel. From there on, we move into existing facilities with the secondary metallurgy and the whole downstream activities that we have.
Unlike the blast furnace which emits carbon dioxide, the direct reduction plant emits H2O, which is then water. That's the very core of the CO2 reduction that we're gonna have with SALCOS. I talked about partnering before with a definition of green steel premium. LNG terminals that Germany is working on right now. A connection pipe we're also delivering for you. Make sure that those pipes will be delivered ahead of schedule. Staff not ready, and pipes are laid as we speak. Burkhard Becker for the financials.
Yeah, thank you. Without the steeply increased opportunity to earn an EBITDA of EUR 170 million. On the other side, you see the increased sales and the increased cost of materials, main driver for the increased EBT in that is from non-current assets. The main pension liability. We have a decrease in the pension provision in combination. In the current asset that pension liabilities, the interest rates and other changes is on the one hand for working capital financing. Our position end of December 2023, 357 expecting contribution from reduction of working capital EUR. Yeah. Fine.
After the start of the war against Ukraine, I think the improvement here, like business, mainly driven and the shortages in the market trading.
Yeah.
The major impact comes again with the order backlog in three effects coming from the sale of. We have the contribution from Aurubis. We have here the development by quarters. They are measured by KPIs like in the peak meaning Q1 first half year CapEx the big investments given meaning around EUR 300. Negotiations, it is clear. The cost at first preliminary views is around EUR 240 and EUR 1.6, and EBT EUR 1.2 billion, and this would lead to.
Thank you very much. Coming to Q&A now, please call you up one by one. Please leave your microphone on mute until you. You're still on mute, Seth.
Can you hear me? Due to the elevated inventories of high-cost coking coal, for example.
Thank you, Seth. I'll take the first one on the order intake. If I got your question on order intake in late Q2, right?
Yes. The decrease in order intake and what that means for your expected-
Q2, we have seen that also in the beginning of Q3. Outbreak of the Ukrainian War. Stocks are higher for us. I think those two effects are very, sort of very attractive to us as Burkhard. That now starts to become visible in some of the operational plans.
Order backlog. That we are for the plate business. That we have this some support for that.
Seeing nearby residential areas and potentially receiving. To maintain production at sort of normal levels. Impact would be on your ability to produce steel or.
When it comes to the question whether we can produce there are three elements why a shortage. Secondly, we won't be able to produce the pipes to connect the LNG terminals to the pipeline. That is certainly at a reduced supply of natural gas. The district heating alone, I think that was your question shortly. Yes, that's something that I think the market is observing. The question in Brussels, where, of course, the steel industry as a whole.
Two questions from my side. The first one is, I'm just wondering how bad the second half could be at the lower end of your guidance. How much caution do you-
We're still confident that we can reach that guidance to book orders in the same way that we have been.
We don't think that we go into negative.
EUR 2 billion, you just approved EUR 723 million. Expect the EU and the German authorities pick up the rest of further funding in the future for the SALCOS project.
View on SALCOS stage one is that we have now. For stage one. That's basically the way that the funding would come from the federal state of Germany, and the funds are available and that they are.
One follow-up maybe on Seth's question on the potential. Could we, if you said you get actually preferential situation.
Once, please.
Most people probably would expect realized margins in Q3 to be down.
Longer lead times and therefore in the order backlog. Definitely, we see a normal first half year. Definitely. Yeah.
Thank you.
We will have a slowdown compared to Q2, so the peak was in Q2.
SALCOS and also the financing part of that. I guess overall, you seem to be quite confident.
Hence, there will be a mechanism in place where sort of we would get.
Thank you. Lastly, materials. The guidance which you gave and the working capital release.
80 and 100 million stocks that in the next year in summer. Yeah. Stocks as a kind of hedging.
SI, I think at all. In that context, can you, I think, Walravens SALCOS in Salzgitter.
Just to understand, sort of, would you be so kind to repeat the first one?
Thinking around that one.
Yeah. Got it. Thank you. Had a recent discussion, and we will postpone. We will not start the blast furnace this quarter.
Presented a technical concept for. I assume that.
As I add on to that, probably Alain Walravens is closing the plans within, I don't know, one or two. Energy side, I think you elaborated a lot on the, you know, how you consume in Salzgitter and how you see the mitigation of this. Talk about form of surcharges, and how do you think is this, how sustainable can that be?
Burkhard, you take the other one.
Yeah. Million megawatt hours. Salzgitter.
That makes sense. In the end, I think there is still the.
Yeah. At first, we have to make things and commit to them, for example, do that and try that in the tube business. Third, because that is not allowed.
Okay.
Maybe a question on the strategic shareholder. I mean, I was wondering, I mean, can you give us an update as such? Are there views in terms of the Salzgitter existing strategy and forward?
Happy to do. There's full support on the strategy of Salzgitter AG. There's full support, and. Translated in English as well, and then we will send it out to you. I guess. All right. Maybe Mr. Groebler. That some of you pointed at. Many thanks for your. Pointed out, we're still looking at. Some of your questions. We understand ourselves as part of the solution, delivering the pipes, delivering the connections so that LNG. Ready. We're doing all we can to support here. Again, many thanks for. And