Important events in the course of the year

Streamlining of the Group’s structure

In keeping with the Group’s long-term growth strategy, in December 2011, the Supervisory Board of voestalpine AG unanimously set the course for a more efficient Group structure as well as another generational change in the Group’s Management Board. The core of the decision is the merger of the previously independent Automotive and Profilform Divisions to create the new Metal Forming Division. (Regarding the changes in the Management Board of voestalpine AG associated with this step, we refer to the “Corporate Governance” chapter.)

Merging the two divisions enables us to attain significant synergy effects. There already was a close collaboration between the two divisions in the research and development sector, which will be even more efficient in the future. The new division’s position in the market will gain competitive advantage from the merger as it enables more unified and coordinated care of important customer segments—particularly the automobile industry and the energy sector. Due to its stronger joint global presence, it is projected that the new division will rapidly expand its market position.

Closure of TSTG Schienen Technik

On March 13, 2012, the Management Board of voestalpine AG decided to close down rail production at the TSTG Schienen Technik GmbH & Co KG (“TSTG”) site in Duisburg. The reason for the closure is the lacking cost-effectiveness of the site, due on one hand to its inability to provide its own pre-materials and, on the other, to massive overcapacity in the standard rail sector in Europe, which has resulted in permanent pressure on prices. Against this backdrop, TSTG fought a losing battle against declining capacity utilization in the past years and, most recently, had posted substantial losses. The closure will take place at the earliest at the end of 2012. All existing customer orders will be carried out as contractually agreed. The management of TSTG has begun negotiations with employee representatives regarding a social compensation plan. Possibilities to employ staff in other Group companies are also being examined.

BÖHLER-UDDEHOLM squeeze-out – Review of the cash settlement

In the proceeding to review the cash settlement for the minority shareholders of BÖHLER-UDDEHOLM Aktiengesellschaft, of which a majority stake was acquired in 2007, a settlement was reached on November 24, 2011. In this settlement, voestalpine AG undertakes to make a subsequent payment of EUR 6.50 per share plus interest in the amount of 5.19% from June 24, 2008 on (date of the squeeze-out resolution in the Annual General Shareholders’ Meeting of BÖHLER-UDDEHOLM Aktiengesellschaft) to the shareholders affected by the squeeze-out. Furthermore, voestalpine AG undertook to pay the cost of the proceeding and the attorneys’ fees of the petitioners. The settlement required the approval of the appropriate court in order to become effective. This approval was given in early May 2012 und immediately following this approval, the subsequent payment plus interest was made to the former minority shareholders of BÖHLER-UDDEHOLM Aktiengesellschaft.

Provisions for the total cost of the cash settlement were already recognized in full in the first half of the business year 2011/12. In the present annual financial statements, the base amount was offset directly against equity; the interest costs associated with the settlement are recognized in the income statement under finance costs.

Antitrust proceedings relative to railway superstructure material

Due to agreements violating antitrust laws regarding the sale of rails and other railway superstructure materials in Germany, the Group submitted a self-report to the German Federal Cartel Office (Bundeskartellamt) in the spring of 2011 on behalf of the affected Group companies that are doing business in this sector. The German Federal Cartel Office then initiated proceedings and in May 2011, conducted searches of the premises of both Group companies and external companies. The comprehensive official investigative proceedings are currently still ongoing.

On March 13, 2012, the Management Board of voestalpine AG decided to form provisions for these antitrust proceedings as well as for the closure of TSTG Schienen Technik GmbH & Co KG. From today’s perspective, this provision in the amount of EUR 205 million covers all financial risks associated both with these antitrust proceedings and the closure of rail production in Duisburg.

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