Financial key performance indicators

The increase in revenue in the Metal Engineering Division is primarily the result of passing the increase in pre-material costs on to customers. In the Tubulars business segment, it is also due to the overall improved economic environment in the oil and gas sector. As a result, the Tubulars business segment also is the one that made the largest contribution to the division’s 11.4% increase in revenue in 2017/18, from EUR 2,684.6 million in the previous year to currently EUR 2,989.7 million. Despite increasing competition, the Rail Technology business segment succeeded in keeping delivery volumes stable year over year, while Wire Technology reported slightly lower delivery volumes. However, due to a generally positive price trend, all of the division’s business segments were able to lift their revenue in 2017/18.

As the positive and negative factors more or less balanced each other out in the past business year, the Metal Engineering Division’s earnings performance was relatively stable compared with the previous year. Thanks to the gradual upward trend in the Tubulars business segment on account of the slow yet continuous improvement in prices for seamless tubes, the division more than offset the pressure on margins in the rail sector and the higher start-up costs for the new wire rod mill in the first half of 2017/18. While the Turnout Systems business segment was able to maintain the previous year’s excellent earnings performance, the Welding Consumables business segment suffered slight losses as a result of the ongoing weakness of the traditional energy sector. Overall, the Metal Engineering Division increased its operating result (EBITDA) by 3.1% from EUR 360.8 million (margin of 13.4%) in the previous year to currently EUR 372.0 million (margin of 12.4%). The fact that the profit from operations (EBIT) of EUR 191.0 million in the business year 2017/18 was 4.9% lower than the previous year’s level of EUR 200.8 million stems from the initial depreciation of the new wire rod mill at the beginning of the business year 2017/18, for one, and from EUR 15 million in negative one-time effects due to impairment on property, plant and equipment in the ultra high-strength fine wire product segment, for another. This caused the EBIT margin to decline from 7.5% to 6.4%.

The direct quarter-to-quarter comparison shows a clear upward trend, especially in terms of earnings. The 3.1% increase in revenue from EUR 727.8 million to EUR 750.7 million between the third and fourth quarters also shows a positive trend. While the Rail Technology and Turnout Systems business segments were confronted with lower revenue due to winter-related lower investments in the railway infrastructure, the other three business segments reported significant revenue increases. The strongest driver of the improvement in earnings was the Wire Technology division, which significantly improved its performance in the final quarter thanks to the new, now fully operational, wire rod mill. Rail Technology was the only business segment whose earnings in the fourth quarter were slightly lower than in the previous quarter. The direct quarter-to-quarter comparison shows that the profit from operations (EBITDA) rose by 31.6% from EUR 83.9 million to EUR 110.4 million, boosting the margin from 11.5% to 14.7%. The percentage increase in EBIT was even clearer, soaring by 57.9% from EUR 42.5 million (margin of 5.8%) in the third quarter to EUR 67.1 million (margin of 8.9%) in the fourth quarter of 2017/18.

As of the end of the business year 2017/18, the number of employees (FTE) in the Metal Engineering Division was 13,481, or 2.5% higher than the previous year’s figure (13,157). This increase results primarily from the rising production volume in the Tubulars business segment.