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As was the case in previous quarters, the third quarter of the business year 2013/14 was characterized by a subdued economic trend that continued in most of the world’s economic regions. In the last calendar quarter of 2013, the government shutdown in the USA had an additional dampening effect, as did increasing caution in many parts of the world with regard to new investment in the conventional energy sector and increasing disequilibrium in the rates of exchange between a number of emerging nations and the more developed markets. In the fourth quarter, these factors resulted in an economic slowdown compared to the immediately preceding quarter, which was exacerbated by the seasonal effects typical during this time of the year, and this affected the earnings trend in the Steel and Special Steel Divisions.

The beginning of 2014 was characterized by a noticeable pickup of business activity in most industrial sectors, however, this was to some extent the result of cyclical inventory effects. Nevertheless, irrespective of this development, an economic trend that is positive overall appears to be on the horizon for the first half of the calendar year; the past quarter seems to have been the turning point so that the economy will now be climbing out of the trough. It would, however, be a mistake to expect the economy to revive immediately in the next months; the broad-based and sustainable growth momentum necessary for such a recovery is not yet foreseeable.

The situation of the European construction industry differs widely from region to region, however, viewed overall, an initial slight upward trend is discernible. The automobile industry should make gains in the course of the year, driven largely by exports in the premium segment, but also by the first, slight improvements in the mass market sector. Now that the contract for the first offshore section of the South Stream pipeline was awarded in late January, the development in the oil and natural gas segments is being viewed more optimistically than in the past year. It should be possible to realize additional major projects in other regions as well. A certain revival of activity is expected in the mechanical engineering segment, while the consumer goods and white goods industries continue to be in a wait-and-see cycle. Demand in the aviation, railway infrastructure, and agricultural machinery sectors continues to be stable at a high level.

Europe should be able to continue its economic consolidation in 2014, however, a real surge in economic growth is impossible because consumer confidence is still weak and the finances of many countries remain limited. The upward trend in North America, especially the USA, should be far more dynamic. From today’s perspective, China is expected to continue to experience growth of at least 7%. A growing element of uncertainty for the global economy, however, is the fact that recently pressure to devaluate currencies in a number of important growth markets (e.g., Turkey, India) has grown heavy.

This economic backdrop is—all in all—somewhat more favorable and considering that the current negative deviation compared to the same period of the previous year diminished in the third quarter of 2013/14 as compared to the second quarter, the Group’s earnings should continue to improve in the last quarter of the business year. From the current vantage point, earnings (EBITDA, EBIT) are expected to be slightly under the previous year’s figures. This negative deviation is due entirely to the continuing, extreme weakness of the market throughout the whole year in large parts of the conventional energy sector (oil and natural gas transport, power plant construction).

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  • Share price as of December 31, 2013 (euros) 34.93    EPS – Earnings/share (euros) 2.61    Dividend/share (euros) 0.90
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