Outlook*

While the beginning of the business year 2015/16 was still characterized by a relatively stable trend at a level that was satisfactory all in all, the market environment in the energy sector, particularly oil and natural gas, weakened over the summer months of 2015. At about the same time, a dramatic decline of steel prices on the spot markets began, first in Europe and subsequently worldwide. This was driven primarily by enormous overcapacity and concurrently increasingly weak markets not only in a number of emerging economies but in mature economies as well. The situation in Europe was—and still is—exacerbated by structural overcapacity that has existed since the financial and economic crisis at the end of the previous decade.

Around the end of the 2015 calendar year, the worldwide deterioration of prices for both oil and steel commodities reached new heights. Currently, the situation is is being aggravated by increasing uncertainty about the economic development in China.

voestalpine cannot hold out against these trends, however, their negative impact is relatively moderate due to voestalpine’s longstanding consistent focus on premium products, both in the oil/natural gas and steel sectors, so that it is not dependent on the spot markets. In view of its strong position in the automotive, railway infrastructure, and aviation sectors, which continue to do very well and which make up around 50% of the Group’s industrial portfolio, as well as the largely stable development in the mechanical engineering and consumer goods sectors, the somewhat weaker overall economic situation since the last quarterly report does not change the outlook for the business year 2015/16. As already stated in the report for the first half of the current business year, a somewhat weaker second half is expected to follow an overall satisfactory first half of 2015/16. As previously stated, both the operating result (EBITDA) and profit from operations (EBIT)—including non-recurring effects (changes in consolidation)—will remain higher than the previous year’s adjusted figures; the adjusted earnings in the business year 2015/16 will, however, be lower than last year’s adjusted figures.

As far as performance in the business year 2016/17, which begins on April 1^st, is concerned, this will depend largely on how the global oil and natural gas markets develop and on how overcapacity in the raw materials sector and especially in the steel sector is handled. Notwithstanding how these issues are resolved, the overarching question of China’s economic future—including the subject of its market economy status—remains the central criterion for the future development of the markets. From today’s perspective, it is difficult to imagine a sustainable economic recovery without a real deescalation in these problem areas that are highly relevant not only in an economic respect, but also politically.