Apart from a short interruption in early 2012, for more than twelve months, the global economic expectations have known only one direction—downward. This situation did not change during the past summer months, and, as we stated in the last quarterly report, there is only one sobering conclusion: “… from the current perspective the economic expectations remain under pressure across the board.” The probability of a trend reversal in the short term seems to be even less likely today than in the first half of the year, as the broad-based economic downward spiral has solidified.

The European economic situation continues to be dominated by the sovereign debt crisis in Southern Europe, whose effects are being increasingly felt by the economies in Western and Northern Europe, which had been relatively stable thus far. The expectations for 2013 with respect to China are swinging between a soft landing and—best-case scenario—a slight upturn. In the short term, no significant growth impulses can be expected from India and Brazil, and in the USA, the continued growth of sovereign debt is threatening to increasingly impair the economic recovery.

Nor can major growth impulses be expected in the next several months from the most important industries. The construction and construction supply industries are suffering from a sustained lack of incoming orders, not only in Europe, but also in countries such as China and Russia. The automobile industry’s production expectations for 2013—with the exception of the USA—have been extensively scaled back. In the energy sector, many regions are increasingly seeing delays and postponements of projects both in the conventional and the alternative energy sectors. The white goods and electrical industries have also not seen any noticeable growth momentum, and, most recently, the mechanical engineering sector has also experienced dwindling orders.

Against this backdrop, since the early part of the year, massive structural overcapacities, especially in the European flat steel sector, have been having more of an impact than in recent years. Capacity utilization in this sector is only at slightly above 70%, with the result that sustained, destructive price wars are having a devastating effect on the earnings of the individual companies. The way that the Steel Division of the voestalpine Group has consistently differentiated itself from the competition, both with regard to technology and quality, is enabling it to attain satisfactory earnings even in this environment. Due to its largely stable and full capacity utilization, this trend is not expected to change, apart from the seasonal effects in December and January.

The development of the voestalpine Group away from being a “classic” steel company to a leading European processing and technology corporation means consistently shifting the value chain to sophisticated niche sectors all the way through to our end customers; and this makes a comparatively stable and non-cyclical earnings situation possible, even in very difficult economic times. In the current business year thus far, two thirds of the Group’s business volume is attributable to the Special Steel, Metal Engineering, and Metal Forming Divisions. This is not expected to change in the course of this business year.

With EBITDA of EUR 730 million and EBIT of EUR 441 million, the voestalpine Group is precisely within the scope of the original expectations for 2012/13 in this business year thus far, namely an operating result (EBITDA) of around EUR 1.5 billion and a profit from operations (EBIT) of about EUR 900 million. Considering the dramatically growing uncertainty in recent months with regard to a further deterioration of the economic environment, the Management Board—having alerted stakeholders in this respect in the last quarterly report—feels compelled to reduce the expectations for both EBITDA and EBIT by EUR 100 million each. Thus, from a present-day perspective, an EBITDA of approximately EUR 1.4 billion and an EBIT of around EUR 800 million can be assumed.

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  • Share price as of September 30, 2012 (euros) 23.29    EPS – Earnings/share (euros) 1.98    Dividend/share (euros) 0.80
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