Investments

After five business years during which not just numerous large-scale projects, but also many smaller projects were carried out and investments in property, plant, and equipment as well as in intangible assets and interests regularly exceeded depreciation, an investment consolidation phase aimed at narrowing the gap between investments and depreciation was launched in the business year 2017/18. Specifically, in the business year 2017/18 the voestalpine Group invested EUR 895.2 million and thus 11.5% less than in the business year 2016/17 (EUR 1,011.4 million). For the most part, a balance was achieved in the allocation of these investments among the four divisions.

The Steel Division’s investment expenditure in the business year 2017/18 was EUR 229.5 million and thus 43.8% less than in the previous year (2016/17: EUR 408.1 million). In this connection, the focus was on the ongoing implementation of the “Linz 2020” investment program, which serves to secure the technology and quality leadership of the Linz-based flat steel facility in the long term. The successful start-up of continuous casting facility 8 in the fourth quarter of 2017/18 was yet another step forward in the expansion of the technology at the steel plant. Combined with the secondary metallurgy system 4, which was already commissioned two years ago, highly sophisticated, vacuum-treated steel accounts for about 80% of the plant’s steel production capacity overall. But activities in the Steel Division during the past business year also encompassed extensive preparations for the general overhaul of blast furnace A, which has been planned for a long time and will be carried out between early June and mid-September 2018. A pre-materials inventory of slabs was successively created during the business year 2017/18 to both offset the temporary loss of production volume at the Group’s largest blast furnace by far and ensure that customers are supplied with highest-quality steel strip in the summer of 2018.

At EUR 226.4 million, the investment expenditure of the High Performance Metals Division in the business year 2017/18 was 26.1% higher than in the same period of 2016/17 (EUR 179.5 million). The decision was made at the end of September 2017 to build a brand-new special steel plant at the traditional site of Kapfenberg, Austria, that will meet all cutting-edge requirements going forward. At a total investment of between EUR 330 million and EUR 350 million, based on the same capacity of 205,000 tons per annum this facility will replace the existing plant in 2021 after a three-year construction period. The Group’s leadership in innovation—which it owes to state-of-the-art equipment, the comprehensive digitalization of processes as well as the resulting qualitative optimization of products for the aerospace, automotive, and energy industries—creates the prerequisites for the continued expansion of the division’s dominant position worldwide in specialty steels. Current investments in new state-of-the-art production lines at two sites (also in the Kapfenberg area), which will produce pre-material for extremely stress-resilient aircraft components in the future, serve to implement additional projects important to the aerospace industry. In this connection, the construction of a high-tech fast-forging line has already progressed to such a degree that the plant will probably be commissioned before the 2018 calendar year is out, while yet another fully automated forging line will go into production about a year later. Our activities with respect to the cutting-edge, additive manufacturing technology (3D metal printing) also continued in the business year 2017/18. While investments in new facilities for manufacturing metallic powder as the base material for 3D printing at two sites (Hagfors, Sweden, and Kapfenberg, Austria) are ongoing, two additional facilities for producing highly complex metal components by 3D printing were established in Taipei, Taiwan, and Toronto, Canada, to supplement the existing development center in Düsseldorf, Germany. In the Value Added Services segment, among other things the High Performance Metals Division launched the world’s largest vacuum hardening furnace in Shanghai, China, for heat treating structural parts used in lightweight automotive construction.

In the Metal Engineering Division, the investment volume of EUR 207.5 million in 2017/18 was about the same as in the previous year (EUR 211.0 million). The Group’s most extensive investment in recent years is embodied in the world’s most advanced wire rod mill in Leoben/Donawitz, Austria, which was officially inaugurated at the end of September 2017. This fully digitalized, high-tech facility is used to manufacture steel-based wires which—in terms of purity, strength, and ductility—conform to the highest technological standard currently achievable. In the future, this facility, which was built at a cost of EUR 140 million, will produce 550,000 tons of wire rod annually for the most sophisticated applications in the automotive, energy, construction, and mechanical engineering industries. In the metallurgical area, the Group’s current activities in Leoben/Donawitz, Austria, are focused on the construction of a new continuous casting facility (“CC4”) for the production of high-purity steels used in premium rails, quality wire as well as the most sophisticated seamless tubes especially for the oil and gas sector. The foundation work for this new facility with an annual capacity of up to 950,000 tons, which will be commissioned in the second half of 2019, started in the past business year. Currently, we are also investing in a new, additional research facility (the “Metallurgy Center”) to further boost the division’s innovative power. Fully two projects aimed not just at expanding, but also at increasing the flexibility of production were completed in Kindberg, Austria, in the past business year: the expansion of the seamless tube rolling mill, for one, and the construction of an additional heat treatment line, for another.

In the Metal Forming Division, investment expenditures rose in the business year 2017/18 by 6.6% from EUR 205.1 million in the previous year to EUR 218.6 million this year. As in recent years, the division’s focus in this connection was on the Automotive Components business segment, in particular, the continued expansion of key technologies related to ultra high-strength automotive components. This resulted in the commissioning of two “phs” hot forming lines in Cartersville, Georgia, USA, during the past business year; a similar facility was launched in Shenyang, China, at the same time. One assembly plant each was built in Aguascalientes, Mexico, and Tianjin, China, in direct proximity to international automotive customers. In Nagold, Germany, the capacities for inline-bonded lamination stacks (compacore^®), which are used especially in e-mobility applications, were expanded pursuant to long-term contracts with European automotive manufacturers. Given the continually rising demand for lightweight automotive parts, our investment in two additional laser welding systems, which will be operational in the fall of 2018 and in 2019, respectively, aims to further expand the production of laser-welded blanks in Linz, Austria. The launch of the second facility in the fall of 2016 already made Linz the world’s largest “blanks production site”—a status that these investments will underscore.