Report on the financial key performance indicators of the voestalpine Group*

Despite the fact that the economic environment has become increasingly challenging over the course of the year, the voestalpine Group was able to increase its revenue in the first nine months of the business year 2015/16 compared with the same period of the previous year by 1.5% from EUR 8,254.9 million to EUR 8,380.4 million. This development is due to a boost in sales revenue in the Steel Division and to positive effects of the first-time full consolidation of companies in the Metal Engineering Division previously consolidated at equity (voestalpine Tubulars GmbH & CO KG, Austria, and CNTT Chinese New Turnout Technology, China). Furthermore, acquisitions undertaken in this division last year in the special wire segment (Trafilerie Industriali S.p.A, Italy) and in the railway infrastructure segment (Bathurst Rail Fabrication Centre (BRFC), Australia) also contributed to the increase in revenue. In a year-to-year comparison, the Special Steel Division suffered a slight decline in revenue. This was due to the falling demand from the energy segment (oil and natural gas exploration), the negative effects of which were not entirely compensated by developments in other industries, some of which were outstanding, for example in the aviation industry. The Metal Forming Division also saw a decrease in revenue year over year, which, however, was the result of non-recurring effects following the divestment of companies involved in non-core business activities (Flamco Group and plastics companies—all headquartered in the Netherlands—and Rotec AB, Sweden), which had contributed to revenue in the comparable period of the previous year.

The change in the method of consolidation for two companies in the Metal Engineering Division, which is described at the beginning of this section, affected the earnings trend due to the required fair value measurement and the depreciation of the disclosed hidden reserves. For the first three quarters, this effect had a positive impact Group-wide with an EBITDA gain of EUR 137.6 million and an EBIT gain of EUR 119.0 million.

In order to undertake a comparison of the earnings from operations only, the figures published in accordance with IFRS must be adjusted by these effects, just as the previous year’s figures must be adjusted by the non-recurring earnings contribution resulting from the divestment of the companies in the Metal Forming Division, which came to EUR 66.5 million in EBITDA and EUR 45.2 million in EBIT in the business year 2014/15.

Based on the reported figures (i.e., including the non-recurring effects), EBITDA rose by 11.1%, going from EUR 1,086.9 million in the previous year to EUR 1,207.3 million in the period under review. This corresponds to a current EBITDA margin of 14.4% (previous year: 13.2%)

Excluding the non-recurring effects both in the period under review and in the same period in the previous year, i.e., from a purely operational perspective, EBITDA increased by 4.8%, going from EUR 1,020.4 million in the previous year to EUR 1,069.7 million in the period under review; this corresponds to an adjusted EBITDA margin of 12.8% (previous year: 12.4%).

Compared with the previous year, EBIT reported in accordance with IFRS rose in the first nine months of 2015/16 from EUR 627.1 million to EUR 727.0 million, equaling an increase of 15.9% (EBIT margin of 8.7% compared with 7.6% in the previous year).

From a purely operational perspective, i.e., adjusted by the non-recurring effects, EBIT in the period under review is EUR 608.0 million, an increase of 4.5% over the previous year’s figure of EUR 581.9 million. The EBIT margin is 7.3% in the period under review compared with 7.0% in the previous year.

This gratifying earnings trend was driven primarily by the Steel and Metal Forming Divisions, which boosted their results in a period-to-period comparison considerably, thus more than compensating for the decrease in business activity in the oil and natural gas segments, which affected the Special Steel and Metal Engineering Divisions most strongly.

Profit before tax and profit for the period also saw this very satisfactory trend. Profit before tax rose by 18.8%, going from EUR 528.9 million to EUR 628.5 million. Adjusted by the non-recurring effects, the increase is 5.3% from EUR 483.7 million in the previous year to EUR 509.5 million in the period under review.

In a year-to-year comparison, profit for the period (unadjusted) gained 17.6%, going to EUR 508.5 million (previous year: EUR 432.5 million). Adjusted by the non-recurring effects, it decreased by 1.6% from EUR 389.1 million in the previous year to EUR 382.8 million in the period under review, due to the unusually low tax rate in the previous year’s period.

Equity increased by 11.5% in a year-to-year comparison to EUR 5,605.6 million (previous year: EUR 5,025.6 million). In addition to the gratifying earnings trend in the first nine months of the current business year, the first-time consolidation of the companies mentioned earlier also contributed to this rise. Furthermore, the expansion of the employee participation program through a capital increase amounting to 1.45% of the share capital raised equity by another EUR 85.3 million. Compared with the reporting date of March 31, 2015, equity rose by 9.9% from EUR 5,115.0 million to EUR 5,605.6 million.

Net financial debt went up by 3.5% in a year-to-year comparison, going from EUR 3,086.6 million to EUR 3,194.8 million. Compared with the figure at the end of the business year 2014/15 (EUR 2,978.1 million), the increase was 7.3%. The reasons for this rise are the high level of investment and the payment of dividends in the second quarter of the business year 2015/16.

As, however, net financial debt rose considerably less than equity, the gearing ratio (net financial debt in percent of equity) was lowered both in a year-to-year comparison (from 61.4% to 57.0%) and compared with the reporting date of March 31, 2015 (58.2%).

As of the reporting date of December 31, 2015, the voestalpine Group had 47,900 employees (full-time equivalent, FTE). This corresponds to a gain of 3.1% in the last twelve months (previous year: 46,461 FTE). Compared with the figure on the reporting date at the end of the previous business year (47,418 FTE), this is an increase of 1.0%. This boost in headcount is due to acquisitions and to the previously mentioned change in consolidation.