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Market environment
and business development

In the first quarter of 2013/14, the performance of the Special Steel Division was more positive than in the immediately preceding quarter, however, when comparing the figures with the first quarter of the previous year, there was a slight decline. This is primarily the result of several factors: the economy in Europe is not yet recovering, economic growth in China has slowed in the course of the year, and the economic recovery in the USA continues to be sluggish.

Against this backdrop, it is only logical that many customers continue to proceed highly cautiously. Capacity utilization in the production companies was subject to considerable fluctuations during the first quarter of 2013/14 due to the very short-term order patterns on the part of customers mentioned above. Particularly the downturn in the European markets since the beginning of the year is causing an atmosphere of considerable uncertainty with regard to development in the short-term. Growth in the emerging markets, especially China and Brazil, has also slowed, resulting in noticeable adverse effects.

In the High Performance Metals business segment, the economic slump in the automobile industry had the greatest negative impact as it is this segment’s largest customer, while the mechanical engineering industry saw a largely stable market environment, albeit at a somewhat lower level than in the comparable period of the previous year. The tool and high-speed steel segments enjoyed the positive effects of customers’ low inventories. Demand for special materials, in comparison, was at a solid level, with especially satisfactory development in the consumer goods industry and oil and natural gas exploration.

Integration of the companies acquired in the fourth quarter of 2012/13 (Eifeler Group, Sturdell Industries) was implemented on schedule so that the High Performance Metals business segment’s Value-Added Services segment was able to significantly expand its range of services with regard to high-quality coatings and mechanical processing (sawing, milling, grinding). In the first quarter of 2013/14, voestalpine took over the assets of Rieckermann Steeltech Ltd. (Shanghai) and P.M. Technology Ltd. (Shenzhen) in order to enhance its position in the growth market China (regarding the details, see the “Acquisitions” section).

In the Special Forgings business segment, the aviation industry remained a strong customer segment, while the energy equipment market continued to stagnate at a low level with still no signs of a recovery. In contrast, the first signs of an economic revival in the commercial vehicle industry have been increasing.

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