Market environment

The first nine months of the business year 2012/13 were characterized by an overall economic situation that was challenging both in Europe and in overseas markets, and the situation became even more dire in some industrial segments in the fall of 2012. Especially in the European automobile industry, the situation was affected by lower sales figures toward the end of the calendar year. Viewed globally, the energy sector emerged as increasingly inconsistent. While energy exploration demonstrated continuing high momentum, both pipeline construction and the energy engineering industry (power plant construction) were increasingly characterized by weak demand.

The mechanical engineering sector was at a solid level throughout the first three quarters of 2012/13, while the construction industry continued to suffer from a weak market and prospects for an improvement in the short term are bleak.

With the exception of the automobile industry, developments in Europe in those customer industries that are less dependent on the investment cycles of industry and/or the public sector but depend rather on the buying behavior of end consumers were more positive and comparatively stable. This applies particularly to the white goods and consumer goods segments, which recently even showed indications of a revival. Industries that depend on these sectors indirectly, such as storage technology, were also able to profit from the buying behavior of private households.

After trending down significantly in the course of the year, the European automobile industry began to stabilize toward the end of the calendar year 2012 at a low level.

The aerospace market continued to show satisfactory growth as did the railway infrastructure market, especially overseas.

Viewed regionally, Europe is still clearly the most important market for the voestalpine Group, although the future development of the Group that is focused on overseas growth markets will gradually reduce this dependence. As far as economic policy is concerned, the most important event for Europe in the business year 2012/13 thus far was the clear statement made by ECB head Mario Draghi regarding the European common currency; in two short sentences, he declared the “euro crisis” to be over. Since then, the media are “only” concerned with the sovereign debt crisis; the euro itself is no longer being viewed as in danger of collapse. The capital markets reacted very positively to this statement, although the spark has not yet ignited the real economy. Southern Europe is still not showing any signs of recovery and the economy there has remained at a weak level. After a brief period of recovery in early 2012, Western, Northern, and Central Europe was also affected by a downward economic trend. In particular Germany, previously the economic engine, slowed significantly in some areas of the economy.

In North America, the US economy is facing similar challenges as Europe with the difference that the intervals between the temporary fixes to avoid the “fiscal cliff” are becoming shorter and shorter without ever getting closer to a permanent solution. Across broad stretches of the business year 2012/13, the real economy in the USA demonstrated positive momentum and it was only the impending debt ceiling toward the end of the calendar year that brought renewed uncertainty into the markets.

In 2012, South America fell short of the momentum exhibited in previous years. Brazil, the most important economic region in South America for the voestalpine Group, was plagued by economic uncertainties and falling demand in most customer industries.

In China, the most important emerging market, the last quarter of 2012 brought a long-planned, orderly transfer of power; in the run-up to the changeover, the country was dominated by a latent uncertainty and economic restraint, especially in business investments. In the meantime, the Chinese economy has once again returned to a positive trend. Overall, however, in a global comparison, the economies in Asia remained at a satisfactory level in the fall of 2012.

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