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Market environment
and business development*

In the first three quarters of 2015/16, the performance of the Metal Engineering Division was characterized by the development of those industrial sectors that are the determining factor for the Group’s earning potential—railway infrastructure, the automobile industry, and the energy industry (oil and natural gas). While demand from the railway infrastructure sector and the automobile industry remained stable at a very good level, investment by oilfield equipment suppliers fell drastically due to the dramatic deterioration of the price of oil. Despite this development, the division was able to maintain full capacity utilization at its steel base in Donawitz, Austria.

In the Rail Technology business segment, strong performance in Europe was reflected in the high demand for special rails, especially heat-treated rails. This development was driven primarily by numerous projects focused on replacement of legacy equipment. Additionally, a good many projects were concluded with overseas railway operators. In order to achieve the high production figures necessary to fulfill all orders, production was expanded from a three-shift to a four-shift operation already at the beginning of the business year.

In the Turnout Systems business segment, the market environment in Europe was similarly positive. Attractive projects in the high-speed sector in China and cross-country routes and mass transit in the Middle East also contributed to the business segment’s very satisfactory performance. In the first nine months of 2015/16, demand in the USA continued at a very good level, although most recently, there was a decline in investment in the freight transport segment due to a slowdown in metal production and processing and fewer shipments of wheat, oil, and coal. Raw materials suppliers Brazil and Australia were very restrained in their investments in railway infrastructure as raw materials prices are under enormous pressure.

During the course of the business year thus far, the Wire Technology business segment was able to fully utilize the capacity of its rolling mill in Donawitz, Austria, as business with automobile manufacturers has continued to boom. As far as the start-up of the wire rolling mill, which is set to begin in the first quarter of the business year 2016/17, is concerned, an additional shift will be added to the existing team, as the old and the new wire rolling mills will be operated in tandem until the end of the 2016 calendar year, in order to meet customer demand despite the transition. Compared with the previous year, the Wire Technology business segment most recently saw diminishing demand in the processing of drawn wire and special drawn wire.

As production in the Seamless Tubes business segment is geared to a large extent to the oil and natural gas industries, it has been adversely impacted throughout the entire business year 2015/16 thus far by the dramatic decline of the oil price. After completing orders from the previous year in the first months of the current business year, which had been concluded at more or less attractive prices, performance of this business segment during the last quarter has softened.

In the first three quarters of 2015/16, the Welding Technology business segment also suffered considerably from weak demand from the energy industry, which is its most important customer segment. While recent years already saw very few impulses from the energy engineering sector, in the current business year, demand from the oil and natural gas industries has collapsed completely. As a market recovery is not expected in the short term, a comprehensive restructuring program and a reduction of staff has been initiated.

The most important investment projects in the Metal Engineering Division are currently either in their final implementation phase or were already completed in the current business year. In early January 2016, a new walking beam furnace for rail production was put into operation; it will enable even better quality and will optimize throughput. As far as size and importance are concerned, the most significant project at the moment is the new wire rolling mill in Donawitz, Austria, which is scheduled to be put into operation in the first quarter of the next business year. Once it has been commissioned, this forward-looking plant with state-of-the-art technology will be available to provide the most sophisticated range of grades in the wire sector. Most recently, investments were also made in the Seamless Tubes business segment to expand its product portfolio. In the first three quarters of 2015/16, the Metal Engineering Division’s investments amounted to EUR 148.5 million and were 10.1% below last year’s figure of EUR 165.1 million.

* 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
48,100 Employees worldwide

Earnings FY 2014/15

€ 11.2 Billion


€ 1.5 Billion


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