After a year and a half of negative economic impacts—interrupted only by a brief alleviation of the situation in early 2012—an increasing number of experts are voicing the opinion that an economic trend reversal is on the horizon. While the fourth quarter of 2012 was still dominated by cautious anticipation, most recently, there have been optimistic comments, particularly from the political arena and economic think tanks, regarding China’s economic recovery and progress in overcoming the European debt crisis. It remains a fact, however, that the sustainability of both the uptrend in China and the beginning of an easing of the European debt dilemma can only be assessed in the further course of the year. Furthermore, it should not be overlooked that substantial growth impulses cannot be expected from other important economic regions, such as India and South America, and—even more importantly—the “fiscal cliff” problem in the USA has still not been permanently solved.

Against this backdrop, a real step in the direction of a global improvement of the economic situation seems to be quite improbable prior to the second half of 2013. In the short term, however, individual industry segments could see an uptick in demand as a result of inventory cycle effects.

In the most important customer industries, a largely cautious development of demand is being expected for the next several months, although from a regional perspective, considerable differences can occur. The construction and construction supply industries in Europe and in the USA will continue to suffer from the effects of budget restrictions that have been confronting the public sector, while state funding programs initiated by the new Chinese government can be expected to fuel an economic upswing. The situation of the automobile industry is similar, where expectations for Europe have been scaled back substantially; China and the USA should, however, continue to remain cyclically robust in this sector in 2013. In the energy sector, a revival of project activity in the oil and gas sectors worldwide appears to be forthcoming in the course of the year, although other conventional energy segments will probably perform only at an unexceptional level. The same applies to the alternative energy sector that is still languishing due to the reduction of subsidies in a number of countries. In the consumer and white goods industries, as well as in the electrical industry, there should be a pick-up in the course of 2013. The relatively solid performance in the mechanical engineering and aerospace segments is expected to continue. The same applies to the railway infrastructure sector, which is important for the voestalpine Group, where weaknesses in Europe are being compensated by the continuing good performance in all other parts of the world.

In light of this uneven performance and differing expectations in the individual industries and regions, it seems to still be too early to speak of a beginning recovery of the global economy. However, there are numerous indications that the broad-based economic downtrend that we experienced in the last quarters has come to a stop as of the turn of the year 2012/13.

For the voestalpine Group, expectations for the last quarter of the business year are similar to what we saw in the immediately preceding quarter, whereby both quarters are traditionally affected by significant seasonal effects. The situation in the individual four divisions is as follows:

  • Metal Engineering Division: Continuing very good performance and a solid level of demand, full capacity utilization, and a largely stable price level in all business segments
  • Metal Forming Division: Since the summer of 2012, demand and prices have been under increasing pressure; nevertheless, good capacity utilization in both the Tubes and Sections and Automotive Body Parts business segments
  • Special Steel Division: A somewhat weaker level of demand, especially from the EU countries, however a largely stable price level in both the Tool Steel and Special Forgings business segments
  • Steel Division: Full capacity utilization in the crude steel and strip products segments; at the same time, rising raw materials prices and continuing price pressure in Europe

The current performance of the voestalpine Group compared to the competition confirms very clearly yet again how right our fundamental strategic policy of the past ten years has been. With the strategy of guiding the Group away from being a “classic” steel company to becoming a specialized technology and industrial goods group with a long value chain and sophisticated niche products differentiates the Group—particularly in difficult economic times—from the competition by its relatively stable profitability that continues to be at a attractive level.

Despite the fact that the economic environment continues to be challenging, from today’s perspective, the Management Board is still anticipating the results for the business year 2012/13 that were predicted in the letter to shareholders for the second quarter, i.e., an operating result (EBITDA) in the range of EUR 1.4 billion and profit from operations (EBIT) of around EUR 800 million, although the conditions for achieving these target figures have become significantly more adverse in recent months.

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  • Share price as of December 31, 2012 (euros) 27.66    EPS – Earnings/share (euros) 1.98    Dividend/share (euros) 0.80
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