The investments of the voestalpine Group in the business year 2009/10 came to EUR 542.5 million. Of the total investments, EUR 524.9 million were attributable to tangible fixed assets, EUR 14.7 million to intangible assets, and EUR 2.9 million to equity holdings.
The reduction of the Group’s investment volume by half compared with the previous year (EUR 1,078.9 million) and the relatively uniform reduction in each of the five divisions are the result of the swift and determined liquidity and cost management immediately after the outbreak of the crisis in the fall of 2008. In this respect, the Company had started to comprehensively redimension the originally planned investment projects already during the second half of 2008/09, focusing exclusively on strategically important investments to secure the long-term technology and quality leadership. In the business year 2009/10, this policy of restraint towards investments was applied with even greater determination. As a result, the investments both on corporate level and in all divisions fell clearly below the level of depreciations.
The only exception is the Steel Division whose investment expenses were still slightly higher than the depreciations. Essentially, this is because important projects within the framework of the investment programs “Linz 2010, second phase” and “L6”, where considerable progress had already been made, were still undergoing completion during the course of the business year 2009/10. However, the initiation of new projects was extremely restricted.
The Steel Division reported investments of EUR 240.8 million in the business year 2009/10, accounting for 44.4% of the total corporate volume of investments. Although the investment activities of the division decreased by almost half, namely 46.1%, over the previous year (EUR 446.9 million), a number of strategically important projects was nevertheless completed or successfully commissioned. In addition to the implementation of the hot-dip galvanizing plant 5 as the last pending project under the “Linz 2010, second phase” program, the investment activities concentrated on the continued implementation of the follow-up project “L6”, which also concerns the site in Linz. The focus was on the increase of the crucible capacity in the steel mill (successfully completed), the replacement of the finishing stand in the wide strip mill (implementation in progress, completion scheduled for the business year 2011/12) and the commissioning of a new block in the Company’s own power plant in April 2010 (block 7 with an output of 165 MW).
With the major investment programs “Linz 2010” (two phases), “L6” and ongoing investment activities, the voestalpine Group invested more than EUR 3 billion in the modernization and the development of the steel site in Linz.
The Special Steel Division, which accounted for 33.8% of the total corporate investments in 2009/10, reduced its expenditures by one third over the previous year, namely from EUR 275.9 million to EUR 183.3 million. Again, this reduction is attributable to a very restrictive investment policy as well as the extension of the implementation schedules of already initiated expansion and modernization projects in Kapfenberg (Austria), Hagfors (Sweden) and Wetzlar (Germany). With the capacity increase in the forging and steel mill area, the Special Steel Division will complete the last part of a multiannual expansion program in the business year 2010/11. Projects in the course of implementation concern primarily a new axial forging machine in Kapfenberg, a new forging press in Wetzlar and a corresponding machine in Hagfors. In spite of this ambitious program, the investments of the Special Steel Division in the new business year will again fall well short of the depreciations.
The investments of the Railway Systems Division amounted to EUR 71.9 million, accounting for 13.3% of the total expenses of the voestalpine Group. With a decrease of 70.3% over the previous year (EUR 242.3 million), the reduction of investments in this division exceeded that of the other divisions by a wide margin. However, it should be added that the figure for the preceding period had been exceptionally high because of the previous large-scale investment program implemented by the division during several years, mainly at the Donawitz site. During the year under review, the following major projects were implemented: in the steel production section, the installation of a new vacuum degassing unit to eliminate the bottleneck at the degasification capacity and the enclosure and dust removal system for the slag area; in the manganese foundry of the turnout technology segment, an investment concerned a fully automated series production facility for manganese frogs in France; and in rail production the commissioning of a new sawing line led to a considerable capacity increase in Donawitz.
The Profilform and Automotive Divisions only accounted for approximately 4% of the corporate investments during the business year under review. In detail, the investment volume of the Profilform Division amounted to EUR 19.3 million, representing a 58.8% decrease over the previous year (EUR 46.9 million). The Automotive Division invested EUR 22.5 million, reducing its outlay by 55.8% compared with the previous year (EUR 50.9 million). The lack of large site-specific investment programs and the considerably higher contract and project dependence of investment decisions compared to the Group’s other divisions explain the almost identical development of investments in these divisions.
