Business performance of the voestalpine Group

The volatile macroeconomic development since early 2013, especially the slowdown of the upward trend during the summer quarter, impacted the business performance of the voestalpine Group. As a result, while the first quarter of the current business year maintained the level of the preceding quarters, the second quarter was marked by weaker revenues and profits in the individual business segments that had not been foreseen at the beginning of the summer. This led to an overall diminished business performance in the first half of the business year 2013/14 in comparison to the first six months of 2012/13.

While in the first six months of the previous year, the Steel Division enjoyed positive effects from raw materials prices that were trending downward and concurrent higher sales prices, in the first half of the current year, the situation was exactly the opposite. Sales prices remained practically the same, while burgeoning optimism in China over the course of the summer resulted in unexpectedly high raw materials prices with commensurate effects on margins, including in the European steel industry. Additionally, the Steel Division’s operating result in the last quarter was impacted by non-recurring expenditures totaling EUR 10 million, which, however, will be recouped in the next two years.

In the Special Steel Division, the first quarter of 2013/14 was solid, but the following quarter was characterized by definite reticence on the part of its customers. The customary seasonal effects were further impacted by inhibited demand, primarily in the European core markets, and at the same time, by falling scrap and alloy prices resulting in additional purchasing restraint on the part of customers.

In the Metal Engineering and Metal Forming Divisions, sales in a year-to-year comparison were only slightly below those in the first half of the previous year. As both divisions were able to increase their results, this assisted significantly in the stabilization of the Group’s consolidated result. In addition to positive developments of market trends, the consistently implemented cost-cutting and efficiency improvement measures contributed substantially to the positive result.

Overall, the voestalpine Group’s revenue in the first half of 2013/14 decreased compared to the same period of the previous year by 3.5% from EUR 5,932.8 million to EUR 5,723.6 million. The operating result (EBITDA) fell from EUR 724.5 million in the first half of 2012/13 to EUR 686.9 million in the first six months of 2013/14 (–5.2%). Profit from operations (EBIT) declined by 8.0% to EUR 400.5 million (previous year: EUR 435.4 million).

The financial result that improved slightly in a year-to-year comparison maintained the decline in profit before tax at a reasonable level of 7.9% down to EUR 320.4 million (previous year: EUR 347.8 million). The profit for the period (net income) for the first six months of the current business year came to EUR 240.0 million, a minus of 10.9% compared to last year’s figure of EUR 269.5 million.

As of September 30, 2013, equity increased in a year-to-year comparison by 3.6% to EUR 5,062.3 million, so that this figure remained practically unchanged compared to the reporting date of March 31, 2013 (EUR 5,075.3 million) despite payment of a dividend in July 2013. This also resulted in a slight increase in net financial debt compared to the beginning of the business year, which went from EUR 2,259.2 million to currently EUR 2,365.0 million, with free cash flow positive for the period. Compared year-to-year, the net financial debt was reduced by 5.1%.

Against this backdrop, the gearing ratio (net financial debt in percent of equity) has been on a slightly rising trajectory since the beginning of the current business year; however, in a year-to-year comparison it has declined considerably, going from 51% as of September 30, 2012 to 46.7% as of September 30, 2013.