Gearing ratio

Net financial debt – Equity – Gearing ratio

In millions of euros

In the business year 2017/18, the voestalpine Group succeeded in further lowering the gearing ratio (net financial debt as a percentage of equity) thanks to the significant improvement in both key performance indicators that affect the level of indebtedness. As a result, net financial debt fell from EUR 3,221.1 million as of March 31, 2017, to EUR 2,995.1 million as of March 31, 2018, despite the substantial increase in working capital. The increase in working capital stems from the substantial increase in inventories, which are partly due to higher raw materials costs (e.g. for scrap and alloys) but mostly due to the build-up of a slabyard in the Steel Division in connection with the repairs of the blast furnace, which will be carried out in the business year 2018/19. Moreover, the working capital also rose due to the general expansion of business activities resulting from the economic upturn as well as the accelerated expansion at international facilities belonging to the Automotive Components segment (Metal Forming Division). The portion of working capital that is related to the blast furnace repairs will be eliminated in the business year 2018/19.

Both the reduction in investment activities and the excellent performance during the current business year have had a positive effect on net debt, with the equity base receiving a substantial boost from the result at the same time. By contrast, the development of the currency parities, particularly the devaluation of the US dollar against the euro, had a negative effect on the equity in the annual financial statements 2017/18. On the whole, equity rose year over year from EUR 6,060.3 million as of March 31, 2017, to EUR 6,554.3 million as of March 31, 2018. Given the aforementioned factors, the gearing ratio declined significantly in the same period, specifically, from 53.2% as of March 31, 2017, to 45.7% as of March 31, 2018.

Net financial debt can be broken down as follows: