Metal Engineering Division

MARKET ENVIRONMENT AND BUSINESS DEVELOPMENT

The Metal Engineering Division performed satisfactorily in the first half of 2024/25. Thanks to its position as a leading global provider of system solutions for railway infrastructure, the Railway Systems business segment was able to continue its positive trend. By contrast, the Industrial Systems business segment performed differently: While the reduced demand in the oil and gas industry led to a weakening of the tubulars product segment and the general economic weakness was reflected in the wire product segment, the welding product segment remained stable at a good level, primarily due to its global business activities.

The good market environment in the Railway Systems business segment continued to be driven by high levels of investment in the rail network in the European core market and international markets. As in the past business year 2023/24, rail production capacity at the Donawitz site in Austria was fully utilized. In the Turnout Systems product segment, the markets in Central Europe and the UK developed very positively. In North America, the heavy-haul segment (Class 1) showed a slight downward trend, but a satisfactory order situation ensured good sales figures in passenger transport (transit). The positive demand from freight railroads also continued on the South American market in the reporting period. South Africa continued to develop solidly, and deliveries to the railroads from the new plant in Egypt began after the first orders were received. Demand in Australia remained strong, while business in India was also stable. Fewer new projects characterized the high-speed segment in China, where business in the first half of 2024/25 increasingly shifted to maintenance investments in the rail network. This led to an overall stable development of the Chinese sites of voestalpine Turnout Systems. The rail welding plants and the logistics service area were very well utilized in the reporting period, while the Signaling product segment developed solidly. The product segment comprising drive and locking systems for turnouts, as well as diagnostic systems and hazard detection systems, which was merged for synergy reasons, commenced operations in the second quarter of 2024/25.

In the Industrial Systems business segment, the Welding product segment performed stably at a good level and was able to compensate for individual regional market weaknesses thanks to its global positioning. While Europe and North America cooled slightly, there was very good demand in the special shipbuilding and energy sectors, particularly in China. The acquisition and integration of the Italian premium welding wire manufacturer Italfil S.p.A. successfully finalized the strategy of becoming a full-range supplier. The Wire Technology product segment continued to face a challenging environment in the automotive, construction, and mechanical engineering sectors in the first half of 2024/25, while niche segments such as shaped wire for the oil and gas sector recorded very good bookings. In the tubulars product segment, the previously very strong demand for OCTG tubes increasingly weakened due to declining oil and gas exploration activities, particularly in North America. The industrial pipes segment showed stable development.

Project implementation for CO₂-reduced steel production went according to plan in the first half of 2024/25. In the past business year 2023/24, preparatory work was carried out and the contract for the construction of the electric arc furnace was awarded. In the current reporting period, the construction site for the energy supply was handed over to APG (Austrian Power Grid) and the foundation work for the core aggregate areas was continued in full.

FINANCIAL KEY PERFORMANCE INDICATORS

The Metal Engineering Division recorded a relatively stable development in sales in a half-year comparison. These fell only slightly by 1.5% from EUR 2,214.7 million in the previous year to EUR 2,181.4 million in the reporting period. A slightly lower price and volume level for wire and seamless tube products was offset by an increase in business volume for railway infrastructure products. Following record figures in the previous year, earnings figures were somewhat more moderate again in the first half of 2024/25. EBITDA in the Metal Engineering Division amounted to EUR 252.6 million and a margin of 11.6%. This represents a decrease of 19.9% compared to the previous year’s figure of EUR 315.3 million (margin of 14.2%). The decline is attributable to a more moderate earnings level in the Tubulars product segment (seamless tubes). EBIT amounted to EUR 160.6 million (margin of 7.4%) in the first half of 2024/25, a decrease of 28.0% compared to the first half of 2023/24 (EUR 223.0 million, margin of 10.1%).

In a direct quarter-on-quarter comparison between Q1 and Q2 2024/25, the Metal Engineering Division increased its sales revenue by 0.8% from EUR 1,086.4 million to EUR 1,095.0 million. This was due to the good sales level for rails and switch systems. At EUR 120.6 million (margin of 11.0%), EBITDA in the second quarter was 8.6% below the figure for the first quarter (EUR 132.0 million, margin of 12.1%). The Industrial Systems business segment recorded a decline in EBITDA as a result of seasonally lower delivery volumes for seamless tubes. The Metal Engineering Division recorded a 14.3% decrease in EBIT from EUR 86.5 million in the first quarter to EUR 74.1 million in the second quarter of 2024/25. The EBIT margin weakened accordingly from 8.0% to 6.8%.

As of September 30, 2024, the number of employees (FTE) in the Metal Engineering Division was 14,977, up 5.1% on the previous year’s figure of 14,247.