Financial key performance indicators

Revenue and earnings in the Metal Engineering Division were lower in the business year just ended than in the previous year. This is primarily due to the massive economic downturn in the oil and gas sector as well as falling volumes of rail deliveries over the course of the year, themselves the consequence of reduced infrastructure activities particularly in the European railway systems customer segment. During the fourth quarter of 2016/17 the division was able to trigger a reversal of this trend after stabilizing the key figures in the first three quarters of the past business year, although at a level significantly lower than in the previous year. This was supported both by the upswing in the oil and gas sector, as well as the restructuring measures undertaken in the Welding Consumables business segment which have had a noticeably positive impact. In a year-over-year comparison, the division’s revenue decreased by 5.8%, from EUR 2,850.4 million in 2015/16 to EUR 2,684.6 million in the business year just ended. Earnings performance during the past business year was positively influenced by non-recurring effects amounting to EUR 126.5 million recorded in EBITDA and EUR 63.4 million recorded in EBIT due to the acquisition of the controlling interest in the companies voestalpine Tubulars GmbH & Co KG, voestalpine Tubulars GmbH (both belonging to the Seamless Tubes business segment), as well as CNTT Chinese New Turnout Technologies Co., Ltd. (Turnout Systems business segment) which were fully consolidated for the first time. As a result of reassessments based on fair value less depreciation of hidden reserves which are also included in the non-recurring effects of the previous year, EBIT declined by a total of EUR 16.6 million in the business year 2016/17. Against this backdrop, in a year-to-year comparison the earnings figures published in accordance with International Financial Reporting Standards (IFRS) declined by around a third, with EBITDA falling from EUR 510.9 million to EUR 360.8 million, and EBIT from EUR 314.9 million to EUR 200.8 million. Disregarding these non-recurring effects, the adjusted operating result (EBITDA) for the division only declined by 6.1%, from EUR 384.4 million in the previous year, to EUR 360.8 million in 2016/17. Adjusted for non-recurring effects, during the same period profit from operations (EBIT) declined by 13.6%, from EUR 251.5 million to EUR 217.4 million. As a result of lower revenue, in a twelve-month comparison the adjusted EBITDA margin remained stable at 13.4% (previous year 13.5%), while the adjusted EBIT margin dropped from 8.8% in the previous year to its current level of 8.1%.

A comparison of the fourth quarter of 2016/17 with the quarter immediately preceding highlights the positive trend visible toward the end of the business year. This rise is mainly contributable to the Wire Technology, Seamless Tubes, and Welding Consumables business segments which are the segments particularly active in the energy sector. Against this backdrop, compared to the quarter immediately preceding, revenue in the division rose by 4.1%, from EUR 662.4 million to EUR 689.7 million. The improvement in the earnings figures was far more significant. EBITDA rose by 28.6%, from EUR 82.6 million in the third quarter to EUR 106.2 million in the fourth quarter. EBIT increased by 36.6%, from EUR 44.5 million to EUR 60.8 million, and EBIT adjusted for non-recurring effects gained 38.3%, rising from EUR 48.0 million to EUR 66.4 million. As a result of this positive development, the adjusted EBITDA margin rose from 12.5% in the third quarter to 15.4% in the fourth quarter, while the EBIT margin adjusted for non-recurring effects grew from 7.2% to 9.6%.

As of March 31, 2017, the Metal Engineering Division had 13,157 employees (FTE), an increase of 3.8% compared to the same reporting date in the past business year (12,675). This primary reason for this rise since the start of the business year is the improved level of orders from the oil and gas industry; personnel capacities in the Seamless Tubes business segment have been adjusted to reflect this improved market environment.