The current business year 2014/15 began with a quite optimistic economic climate for the mature economies and mixed expectations for the emerging markets. However, in the course of the first six months of the business year, it became increasingly clear that—with the exception of North America and China—the global economic trend does not have sufficient momentum for a broad upswing.
While of the European countries, Great Britain and Poland demonstrated considerable economic strength, as the year continued, the eurozone was characterized by an increasingly difficult economic environment. The satisfactory growth trend in the early part of the year lost much of its impetus over the summer months. Especially the unexpected downturn of the German economy, primarily the perceptible decline of the construction industry, put increasing pressure on the eurozone, especially considering the recessive developments in Italy and France. While these two countries continue to suffer from a low level of business investment and weak exports, due particularly to the marginal progress in implementing structural reforms, the mood in the European economic regions, which have been more robust thus far, has soured, not least as a result of increasing geopolitical crises that have been unfolding.
Only Spain, which has stayed on its course of reform consistently, has been able to avoid the negative trend and accelerate its growth, although starting from an extremely modest level. Viewed overall, the long-term recovery in Europe continues to be inconsistent, slow, and fragile.
In North America, however, the first half of the current business year saw a continuation of robust and broad-based growth, with both private consumption and industrial investments and exports continuing to demonstrate an upward trend with concomitant welcome developments on the labor market and in the market sentiment indicators. At this time, there are no signs that this positive trend is reversing; North America has clearly undertaken the role of global economic locomotive.
Brazil, the most important economic region in South America for the voestalpine Group, on the other hand, slipped into a recession in the spring of 2014; at this time, the prospects for a return to the growth rates of an emerging economy are slim.
The situation in Russia is also increasingly difficult; a resolution of the disputes with the Ukraine is a prerequisite for a return to satisfactory growth.
In Asia, China’s economic development got underway slowly in the early part of the year, however, during the spring, it was able to continue the previous year’s trend, due mainly to significantly increasing exports. However, the efforts of the central government to entrench private consumption as a stable pillar of sustainable economic growth have not yet produced the desired result. Nevertheless, China is expected to experience economic growth of more than 7% in 2014.
In this very inconsistent macroeconomic environment, during the first half of the business year 2014/15, operational business performance of the voestalpine Group’s four divisions was largely stable.
The Steel Division, which is active mainly on the European market, profited from continuing high demand from the automotive sector and a recovery in the sector of oil and natural gas transport (pipeline projects). Demand maintained a mostly stable trajectory in the early part of the year, but it waned somewhat over the course of the summer months.
The Special Steel Division profited from the prospering markets in the USA and Asia, while the European market was generally subdued over the course of the first six months of the current business year.
The Metal Engineering Division continued its positive development. Due to its broad-based positioning and a continuing satisfactory level of demand in practically all business units in the first half of the 2014/15 year, its performance is stable at a high level.
In the Automotive Parts business segment, the Metal Forming Division continued its very good performance, however, since the early part of the business year, it has faced a subdued market in Europe for tubes and sections.
Overall, the performance of the voestalpine Group in the first half of the business year 2014/15 has been at a satisfactory level despite an increasingly challenging economic environment in Europe.