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Steel Division

This report is a translation of the original report in German, which is solely valid.

Market environment and business development

In Europe, the demand for steel continued to grow in the first nine months of the 2018 calendar year, thus largely continuing the previous year’s trend. The driving force behind the stable demand momentum has been the European construction industry in general (excepting Great Britain’s, where the economic sentiment has continued to darken owing to the Brexit vote), which is key to capacity utilization overall in the steel industry. The mechanical engineering industry also succeeded in further boosting its production capacity in the business year to date over and above the previous year’s very solid scenario, whereas the consumer goods industry has seen a slight weakening in recent months. Demand from the automotive industry also followed a highly positive trajectory up to the summer. But orders for components were cancelled on short notice and in part to a significant degree after the previously announced and in part extended summer closures. This development was triggered primarily by the new emissions testing procedure (WLTP), which has applied to all new vehicle registrations since September 2018. Against the backdrop of the continued stability of the economy on the whole, the steel producers in the European Union (EU) succeeded in slightly lifting pig iron production in the first three quarters of 2018 compared with the previous year.

The statistics on the importation of flat steel products into the EU also reflect Europe’s strong economic momentum, which continues unabated. These statistics point to a dramatic year-over-year increase especially in the third calendar quarter (which equates to voestalpine’s second business year quarter). Aside from the solid development of the European market, this trend is also rooted in trade diversion measures in response to the intensifying protectionist policies of the US Administration. Hence the European Union for its part reacted to the “protective” tariffs on steel imports into the US that took effect on July 1, 2018, by enacting so-called “Safeguard Measures” aimed at tamping down on import pressures resulting from diversion effects in the global stream of goods. Notwithstanding these non-recurring effects, both the cost of raw materials and steel prices have largely tracked a slight upward trend in the business year 2018/19 to date.

However, the Steel Division benefitted from the solid market development overall in the first half of the business year 2018/19 only to a limited extent, because the major overhaul of the Group’s largest blast furnace at its Linz, Austria, site that had been planned for a long time started in early June after 14 years of continuous operation, thus dramatically curtailing the production of pig iron for more than three and one half months. While the fact that an extensive (slab) pre-materials inventory had been put in place ahead of time and additional materials were purchased as necessary during the maintenance work ensured fairly solid capacity utilization of the downstream rolling facilities, delivery volumes for the first six months of the business year 2018/19 are about 10% lower year over year nonetheless.

Aside from the industrial sectors already discussed in the foregoing, the situation in the oil and natural gas sector (the most important customer segment of the Heavy Plate business segment) was stable at a positive level in the first half of the business year 2018/19 thanks to work on highly sophisticated specifications related especially to deep sea pipeline projects. The market environment of the direct reduction plant in Corpus Christi, Texas, USA, was very attractive during the first six months of the business year 2018/19, but both planned and unplanned production stoppages led to significantly lower than normal capacity utilization. While a three-week maintenance shutdown was carried out as planned in June, heavy rains and floods made a two-week production shutdown necessary in September.

Financial key performance indicators

Quarterly development of the Steel Division

In millions of euros


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Q 2


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EBITDA margin






























EBIT margin















Employees (full-time equivalent)















Year over year, the Steel Division succeeded in lifting its revenue by 5.1% from EUR 2,298.8 million in the first half of 2017/18 to EUR 2,415.6 million in the first half of the current business year despite the massive limitations stemming from the major overhaul of the blast furnace. This increase is mainly due to the aforementioned attractive product mix in the Heavy Plate segment, but also to the slight increase in steel strip prices resulting from the minor increase in the cost of raw materials. This made it possible to more than offset the 10% reduction in delivery volumes caused by the maintenance work on the large blast furnace.

In terms of earnings, however, the (planned) loss of the most important pig iron facility was the main reason for the substantial downturn in the first half of the business year 2018/19. Moreover, the Texas HBI plant—as described above—was confronted with (planned and unplanned) production stoppages and resulting reductions in capacity utilization over several weeks. Against this backdrop, the operating result (EBITDA) declined by 22.7% from EUR 442.7 million (margin of 19.3%) in the first half of the business year 2017/18 to EUR 342.4 million (margin of 14.2%) in the first half of the business year 2018/19. The profit from operations (EBIT) fell in the same period by 36.9% from EUR 287.9 million (margin of 12.5%) to EUR 181.7 million (margin of 7.5%).

Quarter to quarter, the key financial indicators of the Steel Division dropped sharply for seasonal reasons, but especially owing to the ramifications of the blast furnace repairs, which impacted mainly the business year’s second quarter. Revenue thus declined by 10.7% from EUR 1,276.4 million in the first quarter of the business year 2018/19 to EUR 1,139.2 million in the second quarter. The losses had an even greater impact on earnings. Quarter to quarter, EBITDA dropped by almost one half from EUR 223.9 million to EUR 118.5 million, in turn causing the EBITDA margin to drop from 17.5% to 10.4% and EBIT by 74.7% from EUR 145.0 million (margin of 11.4%) to EUR 36.7 million (margin of 3.2%).

As of September 30, 2018, the number of employees (FTE) in the Steel Division was 10,972 or 0.6% higher than the past year’s figure of 10,905. Compared with the number of employees (11,020) at the end of the business year 2017/18, this represents a marginal decrease of 0.4%.

About voestalpine

In its business segments, voestalpine is a globally leading technology and capital goods group with a unique combination of material and processing expertise. With its top-quality products and system solutions using steel and other metals, it is a leading partner to the automotive and consumer goods industries in Europe and to the aerospace, oil and gas industries worldwide. The voestalpine Group is also the world market leader in turnout technology, special rails, tool steel, and special sections.


50 Countries on all 5 continents
500 Group companies and locations
51,600 Employees worldwide

Earnings FY 2017/18

€ 13 Billion


€ 2 Billion


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