In 2010, the global economic landscape was characterized by a stable upward trend, primarily in the major Asian economies and in parts of South America. During the course of the year, most of the European countries and North America began to experience an economic recovery that accelerated increasingly and whose momentum is continuing in the first half of 2011.

Industry worldwide has recovered surprisingly quickly from the effects of the 2008 and 2009 crisis and is in the process of reestablishing a continuity between the present and the solid economic performance prior to the crisis. Nevertheless, there are considerable risks and uncertainties associated with the current economic environment that represent a potential threat to a truly sustainable economic recovery—from the problem of public-sector debt in various European countries, but particularly in the USA, to persisting weakness in the financial markets and in the banking sector and possible overheating in individual sectors (raw materials, real estate) or regions. All in all, however, from the perspective of industry in the late spring of 2011, the positive aspects outweigh the risks emanating from the economic environment. All the more so as the euro—despite critical voices—has proven itself as the common European currency, particularly in the challenging periods of the most recent past, and inflation risk appears set to remain manageable for the time being.

Against this backdrop, a continuation of the favorable trend in the most important economic regions across the world seems likely in the second half of 2011, although Japan will be laboring under the consequences of the dramatic events of March 11 of this year for some time to come. Similarly to Brazil and individual countries in South and Central America, China, India, and the entire East Asian region should be able to continue their above-average growth.

The future economic situation in North America will largely depend on how quickly the USA can get its huge national debt and its unemployment rate, which continues to be stubbornly high, under control.

For Europe, one can assume that the solid growth of demand in core Europe and Scandinavia will not change in the course of the year and that in Central and Eastern Europe (including Russia) the recently noticeable upward trend will continue. In contrast, it can be expected that the south and westernmost part of the continent will not experience a significant economic upswing in 2011 due to the persistent problem of public-sector debt in the countries of these regions.

Looking at the individual industries, the overall scenario for 2011 is quite optimistic. In particular, the automotive and commercial vehicle industries, the mechanical engineering sector, the consumer goods industry, as well as the entire energy sector (both conventional and alternative) give reason to expect that demand will be at a high level. Most recently, demand in the aviation industry has been trending upward as well. Some segments of the construction and construction supply industries still have considerable pent-up demand.

This overall satisfactory economic background leads us to expect that all divisions of voestalpine AG will be utilizing their capacity fully at a price level that will be stable or better for the greater part of the new business year. Additionally, the continuing implementation of the efficiency improvement and cost optimization programs that were initiated in 2009 will contribute to an improvement in the Group’s earnings. Despite some planning uncertainties due to short-term fluctuations of raw materials prices, another significant improvement of the voestalpine results should be possible in 2011/12.

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