The economic environment improved substantially in the business year 2017/18 compared with the previous year—also for the High Performance Metals Division. This positive change stabilized as the year wore on, especially with respect to investments in the onshore oil and gas sector, but offshore activities stagnated at a low level. In their capacity as major drivers of demand for tool and high-speed steel, both the automotive industry and the consumer goods industry continued to develop along a positive trajectory worldwide. While sales of special forging products for the aerospace industry were a bit more volatile this past business year than in previous years, the fundamentals remained dynamic. By contrast, the situation in “conventional” power plant and energy engineering was critical yet again throughout the entire past business year.
Regionally speaking, the High Performance Metals Division benefited first and foremost from Europe’s economic recovery. The automotive industry was the main driver of strong order levels yet again, followed by the mechanical engineering industry, which gained strength throughout the year, as well as the oil and gas sector. Developments in the NAFTA region, by contrast, were fueled by ambivalent trends. For one, order levels developed more or less positively due to advantageous market conditions in the automotive industry (especially in Mexico) and a significant upward trend in the oil and gas industry; for another, however, both the change in the US dollar to euro rate parity and increasing protectionist trends had a negative impact on economic sentiment. Most recently, the economic climate in Brazil showed slight signs of a recovery on the heels of a multi-year recession. Production figures particularly for the entire industrial sector—above all automotive construction, but the oil industry too—rose for the first time in years, which had a positive effect on the economic climate overall. Impairment losses of EUR 10 million were recognized on property, plant and equipment in the fourth quarter of 2017/18 due to the demand for protectionist tariffs on the part of the United States with respect to steel imports from Brazil and the resulting uncertainties for the Villares special steel plant in Sumaré, Brazil for which the United States are the most important export market. In Asia, particularly China but also increasingly India, the division benefited chiefly from very good developments in consumer goods and the resulting high demand for tool steel. The investments and acquisitions of the previous years in Asia in the Value Added Services segment further strengthened our global market position in these rapidly growing markets.
To push its strategy of becoming a market leader in cutting-edge technologies, the High Performance Metals Division is establishing additive manufacturing capacities (“3D printing”) for components in the challenging metals segment in Europe as well as in North America and Asia. Linking the respective local additive manufacturing centers with the powder production plants in both Kapfenberg, Austria, and Hagfors, Sweden, is aimed at ensuring in the medium term that the division achieves technology leadership across the entire process chain.
Compared with the previous year, manufacturing saw a substantial improvement in capacity utilization in almost all production facilities. Improved conditions overall in both the automotive and the oil and gas sectors were the critical drivers of volume. The sales volumes for aerospace products developed at a solid stable pace. By contrast, the open die forging products segment for the heavy mechanical and energy engineering industries remained challenging due to difficulties with respect to demand, which continued unabated.
In the Value Added Services business segment, the strategy of distinguishing the division from the competition through the broadest possible services portfolio progressed as planned during the past business year. The division’s 160 service centers worldwide are a key to its ability to distinguish itself from the competition. Ultimately, they provide the basis for positioning the division as a premium service provider in toolmaking.