Letter of the Management Board

It was a good year after all, this business year 2010/11, at the beginning of which there were grave concerns that there would be a double-dip recession, a recurrence of the crisis of 2008 and 2009. It did not happen; on the contrary, the economy gained a momentum that grew in the course of the year, becoming more and more broad-based. Not even the ominously growing national debt in a number of European countries—most notably, however, in the USA—, continuing discussions about how much the international banking system can withstand, increasing fears of new bubbles, and a political landscape whose problem-solving competence has reached its limits both in Europe and abroad were able to prevent the economic recovery. A recovery that was again driven primarily by continuing brisk demand from emerging markets in Asia and Central and South America. Both Europe and the USA belatedly gained traction on the road to an economic recovery but only through positive secondary effects, namely, the strength of their industrial exports to these growth markets; in the meantime, however, the recovery has become self-sustaining in large parts of the old continent, although not everywhere.

Two years after “Lehman,” with all its negative consequences, this gratifying economic environment has brought a return to the successful course the voestalpine Group had been on prior to the crisis: The second-highest revenue in the company’s history, the fourth-best operating result, and record steel production of 7.7 million tons make it obvious that the time of being on the defensive has come to an end and that we have every reason to look again to the future with optimism. Together with our partners, our customers, and our shareholders, and most particularly our employees, without whom a company strategy that is oriented toward ongoing innovation and continuous striving for improvement would be doomed to failure from the outset, the voestalpine Group has positioned itself in a way that differentiates it from its competition. Research and development, technology, quality, service, and customer focus characterize the Company’s fundamental policy, and predictability and reliability, flexibility in thought and action, problem-solving competence, and responsibility in dealing with all stakeholder groups characterize how we see ourselves. This has enabled us in recent years to achieve a leadership position, not only in the steel production sector but in steel processing as well. Now, it is our job to sustainably strengthen and maintain this position as defined by our claim of being “one step ahead.”

Success can be transient—especially if one rests on one’s laurels. Particularly in a time of enormous technical, social, and economic change and a massive social and socio-political paradigm shift—in Europe as well—, we see it as our duty to deal with the changes on the horizon and the perspectives and challenges that they entail for our industry. We will decide what the long-term focus of the voestalpine Group should be in order to remain sustainably successful in a global environment that will undergo major changes in the future. We are in the privileged position of being able to do this from a position of strength—and we will do this systematically and consistently.

Understanding this “world of tomorrow,” especially getting to know the changed and changing needs of our customers, the changing values of our (future) employees, and the requirements of our future environment, is a task that we will be taking on in the next two, three years. Drawing the right conclusions for our Company from this process requires a cool and level head on one hand, and demands courage, consistency and the willingness to embrace innovative thinking on the other. Under the motto of “voestalpine 2030,” we have initiated a broad internal opinion-forming and awareness-raising process that purposely goes beyond traditional planning horizons and delves into the Group’s long-term perspectives against the backdrop of new challenges. Building on existing strengths and the position that our Company inhabits today, our deliberations connected with this process will be focused on long-term growth potential created by pursuing on the one hand new products, technologies, and sales markets, and on the other the requirements resulting from global megatrends dictated by our own economic and political environment. Ultimately, the objective of this process is to continue to be the reliable, trustworthy, and innovative partner we have always been for our customers, our shareholders, and our employees in view of a global environment that will no doubt be more unstable, more changeable, and more unpredictable in the future.

Operational excellence and strategic consistency will be the cornerstones of our long-term focus.

Linz, May 26, 2011

The Management Board