The performance of individual business segments of the Metal Forming Division during the first three quarters of 2014/15 was inconsistent, but it largely reflected the trend expected at the beginning of the business year. The Automotive Body Parts business segment profited from continuing strong demand in the premium segment and from the ongoing uptrend in the European compact and sub-compact car segments. Manufacturers in the high-end segment even increased their outstanding production and sales figures of recent years still further, and exports remained at a very high level, despite the pronounced decline of demand in Russia. Furthermore, the rapidly growing local production of leading quality suppliers in the USA and China saw a positive development.
The Tubes & Sections business segment faced a downturn in demand compared to the previous year, which, however, differed widely depending on region and industry. For example, with the exception of Great Britain, the European market overall showed little momentum as far as demand is concerned. The recession in Russia, a result of sanctions, also led to a slowdown in exports from Europe. Overseas, the difficult situation in Brazil continued to worsen; in the USA, however, positive market conditions persisted. In China, activities are currently focused on developing sales channels for special sections. Of the most important customer segments, most recently, market conditions for agricultural machinery have deteriorated and sales figures in the truck sector have fallen. Demand for special tubes and sections continues to be robust due to the high production figures of the aircraft industry and ongoing strong momentum in the automobile sector.
The Precision Strip business segment has been facing increasing pressure from the competition during 2014/15 thus far. In addition to Asian competitors, who are profiting from a change in the rates of exchange, European manufacturers have also escalated price pressure. The Warehouse & Rack Solutions business segment is still robust and has a very sound order situation.
As previously reported in the Letter to Shareholders for the first half of 2014/15, this business year has seen significant streamlining of the Metal Forming Division’s portfolio. As a result of the sale of the Flamco Group, which specializes in heating and drinking water installations, and of voestalpine Polynorm Van Niftrik B.V. and voestalpine Polynorm Plastics, both manufacturers of plastic components for the automotive market, the division has increasingly focused on its core business. In addition to this streamlining of the portfolio, in the second quarter of 2014/15, individual assets that do not form a part of the division’s core business were revaluated (this is not associated with the portfolio streamlining), and there was a structural reorganization of pension obligations in the divisional companies located in the Netherlands. As a result of all these measures, there was a positive non-recurring effect on EBITDA of EUR 66.5 million and on EBIT of EUR 45.2 million.