Market environment
and business development*

In the first three quarters of 2015/16, the Metal Forming Division’s market environment was dominated by the continuing stable development of its most important customer segment, the automobile industry. With the exception of the Storage Technology business segment, which maintained its high level of recent years, the other business segments remained subdued, although there were considerable differences from region to region.

As the European automobile manufacturers have been reporting outstanding production and sales figures, the Automotive Body Parts business segment saw a solid performance overall in the first three quarters of 2015/16, although it had to deal with the start-up of operations in a large number of plants. Concerns emerged in the spring of 2015 that sales in China, a very important market for German premium manufacturers, could stagnate or even contract, but these concerns proved to be unwarranted. European manufacturers are continuing to establish production facilities in the USA and China, and this business segment is being successfully integrated so that its global presence is being continuously expanded. As a result of the positive economic trend in Europe, the number of new compact and sub-compact cars being registered since early 2015 has increased significantly.

Momentum in the Tubes & Sections business segment during the business year 2015/16 thus far has been average across all the important sales regions and industrial segments. Demand from Great Britain and the USA has remained positive. In the European core markets, however, demand has been more or less subdued, although sentiment in individual sectors, such as the construction, commercial vehicle, and solar industries, has improved somewhat in several regions. Production facilities in Brazil reacted to the market’s drastic decline with rigorous cost-cutting measures and a greater focus on exports. While generally the agricultural sector is stagnant due to low food prices, demand from international customers in the automobile industry in the area of passive safety components has been extremely satisfactory. The Precision Strip business segment has been able to assert itself extraordinarily well in the current business year despite a market environment that has been subject to strong competitive pressure for quite some time. Due to its strong international position, it recently acquired new customers in Europe as well. In North America, the business segment recently expanded its market presence by acquiring the US company Wickeder Steel Company (50 employees, domiciled in Pleasant Prairie, Wisconsin). This acquisition enables it to enhance its product portfolio, particularly in the segment of hardened special steel strip for high-quality applications, for example, the food sector.

In the first three quarters of 2015/16, the Warehouse & Rack Solutions business segment saw a healthy level of incoming orders, driven primarily by continuing robust demand for state-of-the-art storage technologies from online retailers. Product innovations have enabled this business segment to not only profit from the current positive market situation but to undertake important strategic steps to leverage long-term competitive advantages with sophisticated new solutions for racking systems.

Investment activity by the Metal Forming Division in the first nine months of 2015/16 was focused on implementing its internationalization strategy in the Automotive Body Parts business segment. During the current business year, one of two new manufacturing plants outside of Europe for indirect hot forming of press-hardened steel (“phs”) has already been successfully put into operation in Cartersville, GA, USA; the second plant in Shenyang, China, is in the start-up phase. Now a total of seven state-of-the-art plants are in operation. The pilot plant for direct hot forming of press-hardened steel based on the “phs” technology is already under construction in Schwäbisch-Gmünd, Germany. voestalpine is now well on its way to becoming a one-stop provider for the hot forming of galvanized steel. A second plant for the production of blanks right next to the existing plant in Linz, Austria, is on track both with regard to cost and construction progress. In the first nine months of 2015/16, the Metal Forming Division has spent EUR 120.2 million (previous year: EUR 126.9 million) on investments.