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While stability and a positive sentiment still were the dominant characteristics of the economic climate in the first half of the business year 2018/19, a dampening of the macroeconomic environment set in at the start of the business year’s second half, particularly in Europe. For one, the negative dynamic was driven by rising raw materials and energy prices. For another and for the very first time, it was also fueled by considerable negative effects resulting from the global trade wars that put increasing pressure on China’s economy as the year wore on. No later than at the start of the past business year’s third quarter, moreover, the multi-year upswing in a number of sectors took a major hit. This affected chiefly the automotive industry, which was not only at the tail end of an extended upturn but also suffering under the pressure of a new EU emissions testing procedure; the consumer goods and electrical industry; and the oil and natural gas equipment sector, which was buffeted by sporadic dips in crude oil prices. While a number of segments of the mechanical engineering industry also lost steam toward the end of the business year, the construction industry as well as the aerospace and railway systems infrastructure segment remained stable at a solid level. Regionally, the economies of the EU and especially China have been under much more pressure since the end of 2018 than they were 12 months ago, whereas the USMCA region remained stable at a high level and Brazil started along a cautious growth trajectory.

Not much has changed with respect to this picture in the first few months of the business year 2019/20. However, the OECD has lowered its growth forecasts for most of the world’s regions yet again, even though it does not foresee recessionary scenarios—at least not across the board. Trade barriers that continue to go up between the major economic blocks as well as tit-for-tat sanctions between a number of countries and thus protectionist tendencies that continue unabated in global economic relationships do not necessarily provide a promising basis for a rapid economic turnaround. Following an extended boom, the European economy is experiencing a cyclical trend reversal, which is being accelerated by the ongoing Brexit debates and country-specific economic weaknesses, especially in the continent’s southern and eastern areas. After decades of massive, continuous growth, the Chinese economy is confronted with rising saturation in individual sectors for the very first time. This, in turn, leads to the continual intensification of global expansionary pressures which, in its turn, triggers increasingly critical effects in other economies. So far, the United States, but also North America (i.e. the USMCA region on the whole), have benefited from the strong protectionist beliefs of the US Administration and the tax cuts initiated by President Trump. Increasingly, however, this momentum seems to be losing steam.

Notwithstanding such geopolitical and regional considerations, the performance of the industrial sectors that are key to economic development continues to display uneven and restrained trends overall. For example, the ongoing stable development of the construction industry is contrasted particularly, but not only, by the automotive industry that is under considerable pressure in Europe. The oil and natural gas industry as well as the mechanical engineering sector, whose segments follow highly divergent trends (just like the consumer goods industry), are located somewhere between these antipodes.

What intensifies the lack of economic transparency are in part erratic, i.e. unforeseeable, developments regarding raw materials such as iron ore (where prices were recently jumping by up to ten percent every month) in tandem with (at least in Europe) CO2 costs that more than doubled year over year. The fact that steel producers have announced against this backdrop that they will cut their capacities by several million tons should not come as a surprise and should be seen as a clear sign of the seriousness of the situation in individual industries.

The Management Board of voestalpine AG is working hard to put the operating result (EBITDA) in the 2019/20 business year on a stable footing—compared with the previous year—despite growing economic uncertainties that continue unabated. The biggest internal challenge in this connection is the work to fix operational issues at the Group’s US plants so that the ambitious volume targets can be met.

What is key to macroeconomic developments, however, is

  • the extent to which trade policies will continue to artificially affect the global trade flows in the next 12 months;
  • the extent to which the performance of the global raw materials sector will continue to be affected less by supply and demand and more by other criteria that are difficult to comprehend;
  • the extent to which the new emissions tests and the political debates about new visions for the future of automotive technology will affect consumers’ spending patterns in Europe and beyond; and,
  • last but not least, the direction the European economy will take in connection with the question whether the Brexit will follow an orderly or disorderly process.

voestalpine cannot influence or decide any of these factors, meaning that any guidance issued for the business year 2019/20 above and beyond the general direction expressed above would not have any basis in fact.

Linz, May 28, 2019

The Management Board

Wolfgang Eder

Herbert Eibensteiner

Franz Kainersdorfer

Robert Ottel

Franz Rotter

Peter Schwab

This report is a translation of the original German-language report, which is solely valid.

About voestalpine

In its business segments, voestalpine is a globally leading technology group with a unique combination of materials and processing expertise. With its top-quality products and system solutions using steel and other metals, it is a leading partner of the automotive and consumer goods industries as well as of the aerospace and oil & gas industries. voestalpine is also the world market leader in complete railway systems as well as in tool steel and special sections.


50 Countries on all 5 continents
500 Group companies and locations
52,000 Employees worldwide

Earnings FY 2018/19

€ 13.6 Billion


€ 1.6 Billion


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