Financial key performance indicators

While the Steel Division did see a slight year-over-year increase in revenue in the business year 2018/19, it had to contend with significant losses in earnings. At EUR 4,887.3 million, the division generated revenue growth of 2.4% compared with the previous year’s figure of EUR 4,772.7 million. Hence it succeeded in offsetting the negative effects of the complete overhaul (relining) of its most important blast furnace with the help of the very good product mix of the Heavy Plate business segment. While the division’s production of crude steel fell by about 20% year over year due to the blast furnace repairs, the delivery volumes declined by less than 10% thanks to both pre-production and purchases of semi-finished goods (slabs).

But the overhaul of the blast furnace had a greater impact on earnings. Together with the provisions related to the pending investigation by the German Bundeskartellamt of the Heavy Plate business segment, the repairs are the main cause of the division’s lower profitability year over year. In the second half of the business year 2018/19, moreover, the division was confronted with declining momentum in individual customer segments, as described in the section on the Group’s business performance. As already explained above too, the HBI plant in Texas, USA, was unable to live up to its earnings potential, especially in the business year’s first half, due to non-recurring effects. Against this backdrop, the operating result (EBITDA) of the Steel Division in the business year 2018/19 fell by 28.1% to EUR 653.2 million (margin of 13.4%), down from the excellent level of EUR 908.2 million in the previous year (margin of 19.0%). The profit from operations (EBIT) dropped by 46.2% in the same period, from EUR 592.9 million (margin of 12.4%) to EUR 319.0 million (margin of 6.5%).

The quarter-on-quarter (QoQ) comparison between the fourth and the third quarter of 2018/19 shows that the Steel Division delivered not just a surge in income, but also an increase in revenue. In the business year’s fourth quarter, the division succeeded in boosting its revenue by 10.4% compared to the preceding quarter, from 1,174.5 million to EUR 1,297.2 million. This was due above all to the seasonal expansion of the delivery volumes whereas short-term price levels were slightly weaker.

As the individual earnings categories were significantly affected in the business year’s third quarter by the provisions for the antitrust investigation of the Heavy Plate segment, the Steel Division’s EBITDA soared from EUR 105.5 million to EUR 205.3 million quarter on quarter, causing the EBITDA margin to jump from 9.0% to 15.8%. The EBIT multiplied several times over during the same period, from EUR 19.3 million to EUR 118.0 million, boosting the EBIT margin from 1.6% to 9.1%.

As of March 31, 2019, the Steel Division had 10,877 employees (FTE), a decrease of 1.3% compared with the figure (11,020 employees) as of the previous year’s reporting date.