High Performance Metals Division

Market environment and business development

The market environment of the High Performance Metals Division was satisfactory overall in the first quarter of the current business year. The oil and gas industry gradually recovered from the past two years during which this sector saw a massive reduction in investment activity. Once the large inventories had been reduced, the demand for technologically sophisticated special steel products for the oil and gas sector began to revive in the past six months. The aerospace industry was an important source of momentum, too: it is one of the strategic, future-oriented segments of the High Performance Metals Division. In addition, the heavy mechanical engineering segment posted solid growth in the first quarter of 2017/18, not least due to the improved investment climate especially in Europe. The automotive industry, which is booming almost everywhere in the world, as well as the ever-growing demand from the consumer goods industry particularly in Asia boosted the need primarily for tool steel. Aside from special steel production, which is on solid ground, the ongoing global expansion of the division’s range of services also contributed substantially to its positive performance overall.

Speaking of regions, Europe experienced an upswing, whereas the United States has been unable so far to meet the economic expectations placed on it for 2017. In Brazil, after a long recession slight encouraging signals are coming particularly from the oil and gas sector as well as the automotive industry. The past year’s positive market environment in Asia—especially in China—continued at the start of the business year 2017/18. In particular, the combination of top-quality products and a broad local range of services clearly is a differentiation factor in this region. In the metal additive manufacturing segment, during the first quarter of 2017/18 the technology center in Düsseldorf delivered first products based on this cutting-edge manufacturing process. While additional technology centers are being established in Singapore, Taiwan, and Toronto, Canada, the metallic powder used in additive manufacturing processes in the sophisticated metals segment is refined and produced in Hagfors, Sweden, and Kapfenberg, Austria.

Financial key performance indicators

At EUR 739.3 million, the revenue of the High Performance Metals Division in the first quarter of the business year 2017/18 surpassed the previous year’s figure of EUR 667.1 million by 10.8%. Besides a better product mix and larger delivery volumes, the revenue increase is rooted especially in higher price levels overall as a result of both advancing base prices for tool steel due to solid demand growth and rising alloy prices. Revenue growth also caused a significant increase in the earnings figures. The operating result (EBITDA) rose by 28.4% from EUR 99.2 million to EUR 127.4 million, lifting the EBITDA margin substantially from 14.9% in the previous year to 17.2%. Compared with the same period in the previous year, profit from operations (EBIT) improved in the first quarter of 2017/18 by an even more impressive 41.3%, from EUR 63.4 million to EUR 89.6 million. This pushed the EBIT margin from 9.5% to 12.1%. Due to good capacity utilization, at 13,823 (FTE) the number of employees in the High Performance Metals Division as of June 30, 2017, exceeds the previous year’s level of 13,507 (FTE) by 2.3%.