Investments

The Group’s investments in the business year 2018/19 focused on maintenance and optimization projects in metallurgy, which provides the basis for its downstream activities. Moreover, the Group also implemented pioneering projects in the downstream business that will further boost voestalpine’s trailblazing role in technology as regards products for sophisticated customer segments such as the aerospace and automotive sectors as well as the oil and natural gas industry. Total investments of the voestalpine Group in the business year 2018/19 were EUR 1,011.8 million and thus 13.0% more than in the previous business year (EUR 895.2 million).

The investment expenditures of the Steel Division in the business year 2018/19 rose by 40.6% from EUR 229.5 million in the previous year to EUR 322.7 million this year. While the division’s focus in years past served primarily to secure the long-term technology and quality leadership of the Linz-based flat steel facility’s end products, recently its focus has been on the comprehensive, planned overhaul (relining) of the Group’s most important blast furnace in terms of capacity. A three-year, detailed planning period provided the basis for ensuring that this challenging maintenance project was completed in just over 100 days. The furnace was again operating at its nominal capacity just a few days later. An extensive pre-materials inventory of slabs from both in-house and external production sources had been built up during the preparation phase in order to ensure the best possible capacity utilization of the downstream rolling facilities during the relining process and thus the Group’s delivery performance to which its customers are accustomed. The complete overhaul, which cost about EUR 180 million in toto, included upgrading not just the actual core unit, but also all other plants and facilities associated with the blast furnace such as hot-blast stoves, the natural gas supply system, and dedusting systems. It also entailed integrating brand new digital measurement and control instruments. Taking advantage of the lower production of pig iron during the summer of 2018, the division also carried out the replacement of the key crane track girders in the steel plant (the need for which had become apparent over the years) largely during ongoing operations.

At EUR 241.2 million, the investment expenditure of the High Performance Metals Division in the business year 2018/19 was 6.5% higher year over year (EUR 226.4 million). The groundbreaking ceremony for the new special steel plant in Kapfenberg, Austria, took place on April 24, 2018, six months after the siting decision had been announced. Following a three-year construction period, starting in 2021 the fully digital facility will ensure the technology leadership of the Kapfenberg site in the long term. From that point onward, some 205,000 tons annually of sophisticated high-performance steels primarily for the international aerospace and automotive industry as well as the oil and natural gas sector will be delivered around the world. Specifically, the preliminary field work as well as the contract awards for the core units (electric arc furnace and converter) and the secondary metallurgical facilities of the EUR 350 million project were implemented as planned in the business year 2018/19. The work on the foundations of the steel mill hall has reached an advanced stage by now, and the construction of the production hall itself will follow as the business year 2019/20 wears on. The Kapfenberg facility also saw an investment in a high-tech fast forge press used mainly to manufacture base products for highly stress-resistant, rotating aircraft turbine components. In the future, the new, highly automated facility will also be used to produce components for the automotive industry as well as the oil and natural gas industry. A new rolling unit was started up in Mürzzuschlag, Austria, in August 2018. This investment makes voestalpine BÖHLER Bleche GmbH the only European manufacturer of extremely resistant and at the same time light titanium sheets for the aerospace industry. In the Value Added Services business segment, the Group’s Houston, Texas, USA, site invested in a processing center for the oil and natural gas sector, which was launched in July 2018.

At EUR 210.8 million, the investment volume of the Metal Engineering Division in the business year 2018/19 was about the same (EUR 207.5 million) as in the previous year. The most important investments concerned steel production at the Donawitz, Austria, facility from where the division’s downstream operations are supplied with high-purity steels. For example, interim repairs were carried out at one of the two blast furnaces, but both the time required (64 days) and the cost (EUR 14 million) do not even come close to the cost of the Steel Division’s major overhaul project. Currently, a new continuous casting facility (CC4) with an annual capacity of 950,000 tons and a total investment volume of more than EUR 100 million is being built at the downstream steel plant; it will probably be commissioned in the fall of 2019 to replace the existent CC2 unit. Moreover, the division established a Metallurgy Center research facility at its Donawitz plant in the business year 2017/18 and launched its test operations at the start of the business year 2018/19. This “mini steel plant” will serve to manufacture new steel grades in batches of four tons each concurrently with the production of steel in the major plant and thus help to accelerate the development of high-performance steel products.

In the business year 2018/19, the Metal Forming Division delivered stable performance also with respect to its investments of EUR 223.2 million (previous year: EUR 218.6 million). The division continued to pursue the international rollout of product innovations that are developed in-house for automotive components based on long-term partnerships with customers. At the end of August 2018, a new production facility was opened in Aguascalientes, Mexico, with the aim of promoting the strong expansion of automotive production in Mexico. In contrast to the already existent assembly plant, the new plant will produce complex auto body and structural components. Sophisticated tube components have been manufactured in Zacatecas, Mexico, for use in passive automotive safety components since the launch of production there in the summer of 2018. Yet another expansion phase of the facility in Cartersville, Georgia, USA, was completed in the business year 2018/19; the highly challenging ramp-up curve led to a massive increase in start-up costs (see Group’s business performance). In Tianjin, China, an assembly plant was started up as planned near Beijing and in the immediate vicinity of the production facility of a European automotive manufacturer.