Business performance of the voestalpine Group

In this challenging economic environment, the voestalpine Group has been able to keep revenue largely constant in the business year 2012/13 thus far; operating results, however, have declined, albeit only moderately. Because profit for the period was markedly positive and free cash flow performed solidly, equity was further increased and net debt reduced. This made it possible to reduce the gearing ratio even more to under 50%.

In the first nine months of the current business year, the Group’s revenue came to EUR 8,652.5 million; in a year-to-year comparison (EUR 8,877.2 million), this is a moderate decline of 2.5%. Looking at the individual divisions, however, a differentiated picture emerges. Due to its broad business portfolio, parts of which are less sensitive to economic trends, the Metal Engineering Division was able to increase its revenue slightly by 0.5% from EUR 2,228.5 million to EUR 2,239.2 million, while the other divisions faced declines in revenue of 4% to 5%.

A downward trend that began after the summer months, i.e., in the third quarter of the business year, affected all the divisions equally and was the reason for the mostly weaker performance compared to the previous year. This trend was evident in all of the major market segments of the voestalpine Group and resulted in declining sales volumes and/or revenues.

The operating result (EBITDA) for the first three quarters of the current business year again surpassed the billion mark, however, at EUR 1,051.7 million it was 5.9% below the previous year’s figure of EUR 1,118.0 million. This resulted in an EBITDA margin of 12.2%, compared to 12.6% in the previous year.

Profit from operations (EBIT) followed a mostly analogous course with a drop of 9.1% in a year-to-year comparison to EUR 615.1 million (previous year: EUR 676.4 million). In relation to revenue, this results in a margin of 7.1% compared to 7.6% in the previous year.

While the Steel Division reported an operating result (EBITDA) that was stable compared to the same period in the previous year and the Metal Engineering Division recorded only a marginal decrease, the declines of 11.5% in the Special Steel Division and 10.8% in the Metal Forming Division were more substantial. Like the revenue decline, this trend was the result of the economic situation in the third quarter of the business year that failed to generate a noticeable recovery after the summer quarter that had been weaker due to seasonal effects.

When comparing the last quarter to the immediately preceding quarter, the progressive decline of the figures becomes evident. The Group’s revenue fell by 5.6% from EUR 2,882.2 million in the second quarter to EUR 2,719.9 million in the past quarter, with the performance of all four divisions being about equally affected. As far as profitability is concerned, the comparatively moderate decline in revenue from one quarter to the next translated into a reduction of the operating result (EBITDA) by 9.3% and a decrease in profit from operations (EBIT) by 17.0%. While the Metal Engineering Division made substantial gains compared to the immediately preceding quarter (EBITDA +9.5%, EBIT +10.9%), the Steel Division especially suffered declines of the operating result (EBITDA) by 22.2% and of profit from operations (EBIT) by 41.5% in comparison to the summer quarter. The reasons for this trend can be found in the previously mentioned weakening of the economic environment on one hand and, on the other, in an unusually strong second quarter that saw falling raw material prices, while revenues still remained at a stable level.

The Special Steel Division and the Metal Forming Division also faced declines in all reporting categories in the third quarter compared to the immediately preceding quarter. While in the Special Steel Division it was the generally more challenging macroeconomic environment that depressed sales, the Metal Forming Division primarily had to contend with the consequences of the downward trend in the European automobile industry.

Both financial and tax result remained largely stable and the profit before tax and profit for the period figures developed analogously to profit from operations, falling compared to the first three quarters of the previous year by 11.3% (profit before tax: EUR 473.7 million as of December 31, 2012) and 10.2% (profit for the period: EUR 369.5 million as of December 31, 2012).

Equity went up as of December 31, 2012 to EUR 5,041.5 million, an increase of 3.4%, compared to the previous year (EUR 4,873.9 million as of December 31, 2011) and by 4.2% compared to the beginning of the business year 2012/13 (EUR 4,836.3 million as of March 31, 2012).

At EUR 2,508.5 million as of December 31, 2012, net financial debt was lowered over the twelve-month period by 16.1% (EUR 2,989.4 million as of December 31, 2011) and by 3.0% compared to the beginning of the business year 2012/13 (EUR 2,585.7 million as of March 31, 2012).

Thus, the gearing ratio (net financial debt in percent of equity) dropped to 49.8%. This corresponds to a reduction by 3.7 percentage points compared to the beginning of the business year (53.5% as of March 31, 2012) and by 11.5 percentage points in a year-to-year comparison (61.3% as of December 31, 2011).