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Significant events in the course of the year

Changes in the composition of the Management Board of voestalpine AG

At its meeting on June 3, 2014, the Supervisory Board of voestalpine AG resolved to expand the Management Board from five to six members effective October 1, 2014. This will ensure the consistent and continuing strategic development of the Group and reflect the accelerated expansion of its global activities. As part of this expansion, changes were also made in the management of two of the four divisions: Dipl.-Ing. Dr. Peter Schwab, who was head of R&D at voestalpine for twelve years, advanced to become a member of the Management Board of voestalpine AG, where he took over the management of the Metal Forming Division from Dipl.-Ing. Herbert Eibensteiner, who took over the management of the Steel Division. Dr. Wolfgang Eder, who had been heading the Steel Division since 1999 in addition to his role as CEO, is now concentrating solely on the central areas of responsibility since October 2014 and can therefore devote his time increasingly to the future growth and continued internationalization of the Group. Furthermore, some of the areas of responsibility were redistributed among the individual members of the Management Board.

Efficiency and cost optimization program 2014–2016

In the spring of 2014, the Management Board resolved the implementation of a Group-wide cost optimization and efficiency improvement program aimed to save EUR 900 million over the course of the business years 2014/15, 2015/16, and 2016/17.

Due to the diverse challenges and structures of the individual divisions, from the very beginning, the program was characterized by specific focal points, ranging from hard cost-cutting, efficiency improvement, and personnel adjustment to optimization in the energy and raw materials segments, improved exploitation of Group-wide synergies and through to restructuring of sites whose performance is inadequate.

In the past business year, the targets were broken down to the individual operating units, potential was sounded out, projects were defined, and implementation was begun. After this introductory phase and a successful start of project implementation, the first concrete successes are becoming evident. For example, based on a completely new organizational structure, within the next two years the Steel Division will be able to save significant overhead costs. At the energy efficiency end of the spectrum, for instance, the already completed, successful start-up of the coal injection systems in all three blast furnaces at the Linz site will make a substantial contribution to cost optimization as soon as the current business year so that an increase in earnings can be expected.

In the Special Steel Division, the comprehensive restructuring of the Wetzlar, Germany, site was again stepped up and in Villares, Brazil, efficiency improvement programs were put in place as a reaction to the difficult market situation and they are already showing their effectiveness. The organization at both sites was also significantly streamlined. Furthermore, by implementing a division-wide efficiency improvement project, the use of energy at all major sites was reduced.

In the Metal Engineering Division, North American sites in the turnout sector were combined, resulting in significantly improved performance. At the same time, at the steel end of the Metal Engineering Division, a new burden optimization program was implemented, which will enable blast furnaces to be relined in the future without significant negative effects on the division’s sales volume.

In the Metal Forming Division, the focus of optimization measures in the past business year was on the successful sale of the Plastics operations and the Flamco Group as part of its portfolio streamlining.

According to indicative rough calculations, even in the start-up phase of the program, it was possible to achieve initial savings that were recognized in income beyond the positive effects on earnings resulting from divestment measures in the Metal Forming Division. However, it must be pointed out again that past experience with such programs shows that over time, the achieved earnings improvements are subject to an ongoing erosion process. The reason for this is ongoing cost inflation on one hand—for example in the personnel, energy, and environmental sectors—and on the other, the fact that customers expect ongoing increases in productivity that can be incorporated into price mechanisms.

Corporate Responsibility Report

The first Group-wide Corporate Responsibility Report of voestalpine AG was published in the fall of 2014. The report that complied with the requirements under “GRI G3,” provides comprehensive information about the status quo and current developments within the Group with regard to sustainability. Concurrently with the report, the Corporate Responsibility pages went live online.

Corporate Governance Report

The Corporate Governance Report for the business year 2014/15 was published on the voestalpine AG website under the heading “Investors.”

About voestalpine

The voestalpine Group is a steel-based technology and capital goods group that operates worldwide. With its top-quality products, the Group is one of the leading partners to the automotive and consumer goods industries in Europe and to the oil and gas industries worldwide.

Facts

50 Countries on all 5 continents
500 Group companies and locations
48,100 Employees worldwide

Earnings FY 2014/15

€ 11.2 Billion

Revenue

€ 1.5 Billion

EBITDA

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