Business performance of the voestalpine Group

While the current macroeconomic key indicators make an economic recovery seem probable in the coming months, and positive momentum is noticeable in individual market segments, the earnings performance of the voestalpine Group in the first three quarters of the business year 2013/14 still showed a downward trend. However, the turning point seems to have been reached in the third quarter of the business year 2013/14.

In a year-to-year comparison, the Metal Forming Division and the Metal Engineering Division, which are closer to the end product stage of the supply chain, maintained a largely stable level of revenue and were even able to post higher operating results, while the two divisions that are more materials-oriented, Special Steel and particularly Steel, recorded losses in both revenue and operating results. This development again emphasizes the wisdom of the strategy of the voestalpine Group of investing in order to extend the value chain and, under the “Strategy 2020” policy, to steer the company toward becoming a technology and capital goods group without abandoning its own steel-based roots to ensure high standards of quality and technology.

Although it maintained a stable level of profitability (EBITDA and EBIT margin), the Special Steel Division was significantly impacted by continuing weakness in core market segments in Europe with particularly the energy engineering (construction of power plants) and heavy mechanical engineering sectors suffering from weak demand.

Despite an excellent level of incoming orders in the strip segment, the Steel Division experienced losses both with regard to revenue and profitability, which was due largely to the continuing critical market situation in the energy sector (pipeline construction). In general, the award of projects in this segment has been declining and decisions in the global competitive arena are being made primarily based on the rates of exchange, with the continued strengthening of the euro putting European players at an almost unrecoverable disadvantage in 2013.

The voestalpine Group’s revenue in the first nine months of the business year 2013/14 decreased compared to the same period of the previous year by 3.1% from EUR 8,652.5 million to EUR 8,384.1 million.

With a stable EBITDA margin of 12.0% (previous year: 12.1%), the operating result (EBITDA) developed largely analogue to the fall in revenue: it amounted to EUR 1,006.8 million, after EUR 1,043.8 million for the same period in the previous year.

The development of profit from operations (EBIT) was similar, declining by 5.6% from EUR 607.2 million in the previous year to currently EUR 573.0 million, with the margin likewise remaining almost the same (6.8% in comparison to 7.0% in the previous year).

At EUR 456.5 million, profit before tax also dipped only slightly by 3.6% compared to the previous year (EUR 473.7 million). Profit for the period is at EUR 351.6 million, 4.8% below last year’s figure (EUR 369.5 million).

In a year-to-year comparison, equity rose by 1.5% to EUR 5,117.4 million as of December 31, 2013 (December 31, 2012: EUR 5,041.5 million). This is equivalent to a gain of just over 1% in comparison to the reporting date of March 31, 2013 (EUR 5,075.3 million).

Net financial debt rose by 2.5% in a year-to-year comparison, from EUR 2,508.5 million to EUR 2,570.3 million; the rise was somewhat greater in comparison to the reporting date of March 31, 2013 (EUR 2,259.2 million), caused mainly by the (temporary) build-up of working capital.

At 50.2%, the gearing ratio (net financial debt in percent of equity) remained almost constant in a year-to-year comparison (49.8% as of December 31, 2012); it is expected that the increase since the beginning of the business year (44.5% as of March 31, 2013) will be reduced to a large extent during the remainder of the business year.