In the business year 2010/11, the Steel Division was able to maintain its leading position within the European steel industry, both with regard to capacity utilization and profitability.
100% of the capacity in the division’s largest sector of quality flat steel, the “classic” strip products, which generates about three quarters of its revenue, was utilized throughout the entire business year 2010/11. Besides, this segment remained largely unaffected by the European price trend for short-term transactions, which had been declining during the second half of the year.
In the meantime, because of the greater volatility on the raw materials markets, the result of the departure from the previous system of annual pricing in favor of quarterly pricing, all longer-term agreements contain appropriate “raw materials clauses.”
In the heavy plate segment, the recovery that had begun in the spring of 2010 continued throughout the business year. The positive development, especially in the energy and mechanical engineering sectors, was associated with a rising price level and increased incoming orders in the top-quality product segments. Therefore, contrary to the trend in Europe, here too capacity could again be fully utilized from the second half of the business year 2010/11 onwards.
Compared to the previous year, business performance also improved substantially in the found ries. As a result of significantly increased incoming orders, especially from the thermal energy segment, here too, during most of the year, capacity utilization was extremely stable.
The business year 2010/11 was very positive for the Steel Service Center (SSC) activities in the Steel Division, ending with new record figures for both revenue and operating result.
Similarly to the heavy plate segment, in the spring of 2010, the preprocessing activities business sector experienced an upswing that subsequently gained considerable additional momentum. A development particularly worthy of mention is the project activities in the renewable energies segment which improved significantly toward the end of the business year.
The divisional “Future” project, whose goal is not only the expansion of the division’s technology and quality leadership in the most crucial product segments, but also the attainment of cost leadership for the Steel Division, is being successfully implemented.
Based on the cost projections made in the fall of 2008, the project envisions annual cost savings of about EUR 380 million from the business year 2012/13 on. In addition to classic cost optimization, the project aims at enhancing all divisional processes and making them more consistent so that the organization is fully able to adapt and respond to continually increasing future market volatility.
This is directly associated with a complete redesign of the division’s IT architecture from the bottom up in the next three years.