Business performance of the voestalpine Group

As a result of the negative trend of the economy overall, the voestalpine Group experienced a decline of its operating result in the first half of 2012/13 of slightly more than 10%, while the revenue remained largely stable. Despite the ongoing deterioration of the market environment, equity, net financial debt, and the gearing ratio showed a sustained positive development.

At EUR 5,932.8 million, the Group’s revenue in the first two quarters of 2012/13 was almost identical with the previous year’s revenue (EUR 5,977.7 million). While the Metal Engineering Division was even able to increase its revenue due to the excellent level of demand, especially in the railway infrastructure sector, the other three divisions reported slight revenue losses as a result of lower raw materials prices (Steel Division) and lower delivery volumes (Special Steel and Metal Forming Division). As far as the Group’s earnings are concerned, the comparison of the first half of the business year with the same period of the previous year showed a decline of the operating result (EBITDA) by 11.5% from EUR 824.2 million to EUR 729.8 million and of the profit from operations (EBIT) by 17.1% from EUR 531.4 million to EUR 440.7 million. Therefore, the EBITDA margin fell from 13.8% in the previous year to 12.3% for the first half of 2012/13, and the EBIT margin decreased from 8.9% to 7.4%. As far as the decline in earnings was concerned, all four divisions were affected approximately to the same degree.

When comparing the second quarter with the immediately preceding quarter, the picture is somewhat more differentiated. Due to the lower raw material and material input costs, revenue fell in all four divisions during the second quarter so that, at EUR 2,882.2 million, consolidated revenue was 5.5% below the figure for the first quarter of 2012/13 (EUR 3,050.6 million). As far as earnings are concerned, an operating result of EUR 354.8 million was reported for the current quarter, compared to EBITDA of EUR 375.0 million in the immediately preceding quarter, a decline of 5.4%. Thus the EBITDA margin has remained at 12.3% in both the first and second quarter. EBIT fell more significantly by 9.0% when directly comparing the second quarter with the immediately preceding quarter, going down from EUR 230.7 million to EUR 210.0 million. While the three processing divisions posted lower EBITDA and EBIT figures due to the fact that economic circumstances have become more challenging, the Steel Division’s EBIT achieved a significant increase due to full capacity utilization while retaining a relatively stable level of prices. The EBIT margin for the Group declined slightly from 7.6% in the first quarter of 2012/13 to 7.3% in the quarter under review.

Compared to the same six-month period in the previous year, both the profit before tax (EBT) (–21.5% going from EUR 443.3 million to EUR 347.8 million) and the profit for the period (net income) were somewhat weaker with the latter dropping by –14.0% from EUR 346.1 million to EUR 269.5 million.

Equity rose during the two first quarters of 2012/13 to EUR 4,885.2 million, a plus of 2.4% compared to the same period of the previous year at EUR 4,771.2 million. Compared to the figure at the beginning of the business year (EUR 4,836.3 million), the current figure corresponds to a gain of 1.0%. As a result of the positive generation of cash flow during the last four quarters, the Group’s net financial debt has been very substantially reduced. While the net financial debt was still at EUR 2,905.1 million at the end of September 2011, within one year it has been reduced by 14.2% to EUR 2,492.9 million; compared to the figure at the beginning of the business year (EUR 2,585.7 million), it has decreased by 3.6%. The gearing ratio (net financial debt in percent of equity) has dropped in the past twelve months from 60.9% to 51.0%; at the beginning of the business year, it was still at 53.5%.

As of September 30, 2012, the voestalpine Group had 46,115 employees on a full-time equivalent basis. Compared to the previous year’s figure of 45,944 employees, this is a marginal increase of 0.4%; compared to the figure of 46,473 for the beginning of the business year, this corresponds to a reduction of 0.8%.