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“Looking back at the past business year 2014/15, it must be stated that the expectations at the beginning of the year, namely, a transition of the global economic trend from its crisis mode, which has now lasted for five years, to a broad-based upwards trend have once again not been fulfilled. Apart from the USA and Mexico, a few countries in Southeast Asia, and individual European countries, reality ultimately fell far short of the original hopeful predictions, just as it had in previous years.”

One would be hard put to find a better description for the past business year if this were not already the description of the previous year in the Annual Report, as one can see from the year mentioned—2014/15. Once again, it is all too clear how far removed not just the European economy, but the entire global economy is from what used to be seen as “normal” economic development—even seven years after Lehman.

The economic conditions at the beginning of the business year 2016/17 make an improvement of the global economic situation in the short term unlikely. This is also reflected in the most recent economic forecasts by a number of economic institutions, such as the International Monetary Fund and the OECD. Apart from the economic factors, a sustainable economic recovery would require a deescalation of the political troublespots throughout the world, particularly those in the Middle East and Africa. However, there are very few indications that this will indeed occur. The fact that those regions that drove the growth of the global economy in recent years have lost some of their momentum has more direct economic effects. This applies particularly to China, but also to the USA, whose weaker growth cannot realistically be compensated by increasing economic momentum in India and a certain recovery in parts of Europe. No economic growth can be expected in the course of this year from Brazil and Russia, which are both in economic crisis.

Despite this overall difficult environment, since the beginning of 2016, there have been indications that the economic situation will ease up somewhat in the course of the year. This includes a certain stabilization of raw materials prices, primarily the oil price, as well as a significantly more stable global foreign exchange system and continued strong development of the automotive industry. In the second half of the year, the first positive effects of the new Chinese five-year plan and the corresponding economic stimulus measures by the Chinese central bank could take effect. In Europe, the measures initiated by the EU Commission to stimulate the economy and the measures to promote growth by the European Central Bank are already making themselves felt more strongly in 2016 than had been the case in the previous year.

What kind of trend to expect as far as demand is concerned in the course of the business year is very different for the individual industrial segments. In the automotive industry, the most important revenue segment of the voestalpine Group by far, a stable trend with regard to demand is expected to continue at a high level worldwide. The situation in the railway infrastructure sector is more highly differentiated, although it is fundamentally positive as it is driven by satisfactory demand in Europe and China. However, there are regional segments with weaker demand, for example, the heavy-haul railways in the raw materials sector. The aerospace industry continues to demonstrate a strong, positive trend. While it is the smallest sector in the Group with regard to revenue and sales volume, it is also the sector showing the greatest level of growth in the mobility sector whose customer portfolio generates almost 50% of the Group’s revenue.

The energy sector, which accounts for about 15% of voestalpine’s revenue, is far more challenging. The direction this sector will take as the business year continues is very difficult to foresee. Conventional energy generation (construction of power plants and energy engineering) in Europe finds itself in a permanent restructuring process as a result of the severe drop in demand associated with the so-called energy transition; rising demand is limited to emerging markets, particularly China and India, which have now become largely autonomous as far as plant engineering is concerned. The oil and natural gas market, which had come apart at the seams in 2015 as a result of a massive global glut, has most recently showed some cautious consolidation tendencies with regard to prices. If and to what extent there will be an actual revival of facility and equipment investment during the new business year is still up in the air.

Economic development in the consumer goods, white goods, and electrical industries is stable at a solid level overall, albeit not particularly spectacular, while demand in the mechanical engineering sector is significantly more volatile, although a positive trend—not only in Europe—has been noticeable most recently. The performance of the construction industry, which is important for the overall development of the economy but is only marginally relevant for the voestalpine Group, differed widely not only from a global perspective but also when viewed from a narrower European viewpoint. Currently, attempts are being made especially in Europe, but most recently in China as well, to undertake government stimulus measures to step up growth momentum in this sector.

Since the summer of 2015, the specific problems of the steel industry resulting from a general weakness in the economy and massive overcapacity in the industry itself are being dramatically exacerbated—not only in Europe but in other regions as well—by sharply increased exports at dumping prices from a number of countries, notably China. The voestalpine Group has remained comparatively unscathed by this development due to its high-tech/high-quality strategy, which it has practiced for more than 15 years and its downstream strategy that builds on that, which it has also implemented over the same period. This special position, which comes into play especially in challenging times, is the result of the fact that today, around 70% of voestalpine’s revenue comes from the advanced capital goods sector, such as complete turnout systems for high-speed railway lines, complex automotive components, and sophisticated aerospace parts. But the remaining 30% of revenue is also generated by high-quality steel products, which differ dramatically from the commodities sold on the spot market and which are sold exclusively through direct and long-term contractual relationships with end customers. The Group’s positioning, which is markedly differentiated from the competition, is clearly focused on the technology and capital goods sectors and is supported by ongoing efficiency improvement and cost optimization programs; for instance, in 2016/17 the most recent program, which had a duration of three years and included improvements totaling EUR 1 billion, will be entering its final phase.

Against the backdrop of this very specific global positioning, the voestalpine Group should be able to achieve an (adjusted) operating result (EBITDA) and (adjusted) profit from operations (EBIT) in the business year 2016/17 that will at least come close to the (adjusted) figures in the past business year even if the economic environment remains challenging. Due to the extreme political and economic uncertainties in the current environment, making any additional forecast would contradict the requirements of responsible corporate and capital market communication.

Linz, May 25, 2016

The Management Board


Wolfgang Eder

Herbert Eibensteiner

Franz Kainersdorfer

Robert Ottel

Franz Rotter

Peter Schwab




This report is a translation of the original report in German, which is solely valid.

About voestalpine

The voestalpine Group is a steel-based technology and capital goods group that operates worldwide. With its top-quality products, the Group is one of the leading partners to the automotive and consumer goods industries in Europe and to the oil and gas industries worldwide.


50 Countries on all 5 continents
500 Group companies and locations
48,500 Employees worldwide

Earnings FY 2015/16

€ 11.1 Billion


€ 1.6 Billion


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