Report on the financial key performance indicators of the voestalpine Group

The largely positive macroeconomic environment translated into a substantial increase in both revenue and earnings for the voestalpine Group. As a result, revenue in the first half of 2017/18 rose from EUR 5,407.8 million in the previous year by 16.5% to EUR 6,302.3 million. Aside from higher product prices, both larger volumes and an improved product mix contributed to this positive development, which was borne along by all four divisions.

The Steel Division, whose performance in the first six months of 2017/18 was very strong, achieved the highest increase in both revenue and earnings, albeit compared to a rather more below-average performance in the first half of 2016/17. While the first two quarters of the previous year were defined not just by a restrained market environment but also by negative non-recurring effects such as the poor technical performance of a blast furnace and start-up losses related to the new HBI plant in Texas, the first half of 2017/18 was characterized by a good volume market and rising prices. Aside from the fact that, in the second quarter of 2017/18, the new HBI plant in Texas had to close for a while due to the environmental fallout of hurricane Harvey even though the facility itself did not suffer any major damage, current earnings are not affected by negative non-recurring effects.

Besides improvements in the market environment, the gains of the High Performance Metals Division in both revenue and earnings also resulted from the successful implementation of the growth strategy in the Value Added Services business segment where, in addition to the pure marketing of high-performance metals, customers are increasingly being offered comprehensive service packages that are aimed, for example, at boosting the performance of finished tools. On the market side, a comparison over time shows that the largest changes occurred in the oil and gas segment which, economically speaking, was at its lowest point 12 months ago and has recovered haltingly but consistently since then.

The trends toward a recovery in this industrial segment also led to an improvement in both revenue and earnings for the Metal Engineering Division. The trend in the railway infrastructure market, however, was to develop in the opposite direction: it has lost considerable momentum in the past few quarters, especially in Europe. In sum, the division succeeded nonetheless in boosting its revenue as well as its earnings at the operating level. EBIT in this division declined due to non-recurring effects of EUR 15 million in impairment losses on property, plant and equipment in the ultra high-strength fine wires product segment—which resulted from the continued challenging market conditions in this niche area.

The Metal Forming Division succeeded in both pursuing its internationalization strategy in the period just ended and boosting revenue as well as earnings—not least thanks to forced accelerations at new production facilities.

The operating result (EBITDA) of the voestalpine Group rose from EUR 704.9 million in the first half of the business year 2016/17 to currently EUR 968.9 million, which corresponds to an increase of 37.5%. In the same period, the profit from operations (EBIT) shot up by 58.4% from EUR 368.9 million in the previous year to EUR 584.2 million in the first half of 2017/18 despite the aforementioned non-recurring impairment losses (EUR –15 million) in the Metal Engineering Division.

Profit before tax improved by 64.9% from EUR 311.4 million in the first six months of the previous year to EUR 513.6 million in the current business year.

Profit after tax climbed simultaneously by 66.4% to EUR 388.9 million (previous year: EUR 233.7 million).

Equity rose to EUR 6,183.8 million as of September 30, 2017, which corresponds to an increase of 10.2% in the year-on-year comparison and an increase of 2.0% compared with the reporting date (March 31, 2017) of the business year 2016/17.

While the net financial debt of EUR 3,310.3 million as of September 30, 2017, decreased slightly over 12 months (–1.8%), compared with the figure (EUR 3,221.1 million) as of the previous business year’s reporting date there has been a slight increase due especially to the dividend distributions of just over EUR 200 million in the second business quarter.

At 53.5%, the gearing ratio (net financial debt in percent of equity) remained stable relative to the end of the business year 2016/17 when it was 53.2%, whereas a substantial improvement was achieved year on year (gearing ratio in the first half of 2016/17: 60.1%).

At a level of EUR 337.9 million, investment expenditures in the first half of 2017/18 fell short of the depreciation threshold for the first time in many years. In a year-over-year comparison, this represents a decline of 28.2% (investment volume, first half of 2016/17: EUR 470.8 million). This decrease does not, however, constitute a turning away from the strategy of value-added growth. Particularly the internationalization strategy with the key markets China and North America as well as ongoing investments in cutting-edge technologies (e.g. the new special steel plant in Kapfenberg, Austria) will be consistently implemented in the future, too. In fact, when considered over a longer period, the successful conclusion of individual, very large investment projects in the recent past—such as the direct reduction plant in Texas, USA, or the new wire rod mill in Donawitz, Austria—necessarily leads to (temporarily) declining investment volumes.

The number of employees in the voestalpine Group continued to rise as well due to the consistent implementation of its growth strategy. As of September 30, 2017, the Group had 50,638 employees (FTE), which corresponds to an increase of 3.8% over the figure for the same period of the previous year (48,786 employees, FTE). Compared with the end of the previous business year (49,703 employees, FTE), this translates into an increase of 1.9%.

Net financial debt can be broken down as follows: