If you use this site, you agree to our use of cookies. More information I accept cookies

Economic environment and course of business

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

Uncertainty continued to characterize the overall economic environment in the first half of the business year 2019/20. Current triggers such as the global trade wars and the Brexit (along with its ramifications, especially in Europe) had a growing impact on the real economy. As a range of precursor indicators already show, in actual fact the willingness to make investments has declined worldwide. While service sectors with a predominantly regional orientation as well as consumers’ spending patterns have largely remained robust so far, the first signs of negative collateral effects are making themselves felt on these sectors too.


The economy in Europe on the whole still managed to generate slight growth toward the end of the reporting period. Yet the gap between the manufacturing sector and the service sector (which continues to run smoothly) has grown substantially since the start of the business year. Both the good employment situation and consumers’ strong purchasing power have helped to fuel the expansion of the service sector, although the momentum recently slowed a bit in this area also.

Europe’s export-oriented industrial sector, by contrast, is increasingly suffering under the global trade barriers as well as the general decline in investments. This sector has had to contend with negative growth rates since the start of the current business year. These developments affect Germany, in particular, also on account of the weakening of its automotive industry.

The European Central Bank (ECB) has responded through fiscal measures aimed at stimulating investments: It has continued to lower interest rates and has restarted its large-scale asset purchases, also known as “quantitative easing” (QE). It is only natural that these developments would negatively affect the performance of voestalpine, which generates a good two-thirds of its revenue in Europe. Shrinking demand from the auto industry, reduced investments, and the downturn in the manufacturing sector on the whole have broad implications for voestalpine’s divisions. Two positive developments stand out, however: the railway infrastructure segment as well as the aerospace industry. Both of them succeeded in avoiding the negative dynamic during the first half of the business year 2019/20. The steel industry, by contrast, was buffeted in the reporting period not only by slowing demand from individual market segments, but also by large volume steel imports to Europe as well as the high cost of raw materials.

North America / USA

In North America, economic growth remained on track in the first two quarters of the business year 2019/20, even though here, too, the growth rates have recently begun to slacken somewhat. While consumption continued to boost growth, toward the end of the first half of the current business year investment activity as well as housing construction declined for the first time in years. Aside from the slackening of the economy worldwide, growing uncertainties and falling corporate profits have put a break on investments here as well.

Just as in Europe, demand from the railway infrastructure sector as well as the aerospace industry for the products of the voestalpine Group continues unabated. By contrast, the Group’s production levels had to be adjusted in response to declining demand from the oil and natural gas sector. Given the Section 232 restrictions on imports, on the whole the U.S. market has become a difficult economic proposition for voestalpine.

South America / Brazil

While the Brazilian economy managed to expand a bit at the start of the business year 2019/20, the momentum flattened out yet again over the summer. Investment activity, which had received a boost through fiscal measures, slowed as much as did manufacturing activity. Exports expanded a bit across the board, but remained at a low level on the whole not least due to developments in Argentina. Production of Brazil’s most important export commodity—iron ore—was ramped up to normal levels for the first time since the fatal dam break in early 2019.

Overall, the voestalpine Group’s Brazilian sites delivered solid performance in this moderate economic environment.

Asia / China

The trade war with the United States has put a substantial brake on China’s economic development. It has triggered not only the downturn in exports, but has also affected domestic consumption. As in the past, China’s central government reacted to these developments with a number of measures aimed at stimulating growth. So far, however, the positive expectations tied to these interventions have not yet borne fruit over the course of the current business year. As a result, consumption in China has remained weak, and the country has not yet succeeded in offsetting the substantial downturn in its automotive industry. Over time, the state-controlled infrastructure and real estate projects have led to a considerable expansion of steel production in China—the world’s largest steel producer by far. In turn, this triggered a substantial increase in the cost of raw materials, above all iron ore.

The Chinese branches of the voestalpine Group have profited from the government’s stimulus programs in the railway infrastructure segment. Low demand from both the consumer goods industry and the automotive industry have affected particularly the tool segment.

In sum, therefore, the voestalpine Group was confronted with a substantial dampening of economic sentiment. Europe, which accounts for the largest portion of voestalpine’s regional portfolio, also had the weakest momentum. European steel production during the reporting period was characterized by an extraordinary situation: Falling demand and strong import pressures in tandem with sharp increases in raw materials prices have impacted financial results.

It is precisely in this highly uneven economic environment that voestalpine’s strategy displayed its strengths. These include the Group’s focus on technologically sophisticated markets as well as its investments in recent years to extend the value chain. The railway infrastructure segment, the aerospace industry, storage systems as well as welding technology—all of which delivered good performance in the first six months of the business year 2019/20—provide solid evidence thereof.

About voestalpine

In its business segments, voestalpine is a globally leading technology group with a unique combination of materials and processing expertise. With its top-quality products and system solutions using steel and other metals, it is a leading partner of the automotive and consumer goods industries as well as of the aerospace and oil & gas industries. voestalpine is also the world market leader in complete railway systems as well as in tool steel and special sections.


50 Countries on all 5 continents
500 Group companies and locations
52,000 Employees worldwide

Earnings FY 2018/19

€ 13.6 Billion


€ 1.6 Billion


To the Top