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Letter of the Management Board

Ladies and Gentlemen:

Following the record business year 2017/18, which produced all-time highs with respect to just about every key performance indicator of the voestalpine Group, the business year 2018/19 just ended was buffeted by growing political and economic challenges. While the Group succeeded nonetheless in boosting its revenue yet again, its earnings performance fell considerably short of the previous year’s results due to both external and internal negative factors.

The geopolitical environment has become ever more complex in the past 12 months. The trade wars that the United States triggered with a number of economic regions in the spring of 2018—China above all, but Europe too—evolved over the year into an accelerating cycle of tit-for-tat measures. At the political level, the resulting, ever-widening movement against the free exchange of goods and for protectionist policies—not least under the guise of the need to protect national interests—is simultaneously supporting the growth of populist movements, even in Europe.

It goes without saying that the intensifying interventions by a number of governments in trade and economic policies affected global economic trends also. In turn, the flow of goods was no longer just left to the “classical” market mechanisms, so to speak, but instead was subjected in part to artificial interventions that put open markets such as the European Union under growing pressure. Independently of political countermeasures, this leads in any case to widespread economic uncertainty among consumers and producers alike. This is precisely what happened in Europe over the course of the past business year in a number of sectors, for example, the automotive and the consumer goods industry.

On the whole, many of the current developments in trade policies seem downright contemptuous of calls for more consistency in global economic standards and criteria. Instead of at least trying to bring everyone closer to a “global, level playing field,” the positions of more and more regions and countries seem to be drifting further and further apart. This applies to topics such as climate protection and energy efficiency—the Paris Agreement, for one—as much as to state subsidies, in regards to which many countries pay political lip service to transparency but don’t do much about it.

There is nothing objectionable in Europe’s endeavors to position itself as a positive example and as a beacon of a new worldview despite the headwind blowing from other regions. Yet this will work only as long as we don’t undermine our own future.

The past business year delivered good and bad tidings for the voestalpine Group. Its current mega investment projects remained on track. For example, the construction of the new special steel plant in Kapfenberg, Austria, is proceeding apace in terms of both time and money. This means that the route for its scheduled launch in about two years should be clear. While the complete overhaul of the Steel Division’s largest blast furnace during the summer of 2018 was a challenge, in the end everything went according to plan. For another 15 years or so, the plant will thus serve as the state-of-the-art backbone of steel production in Linz, Austria, and thus of a growing number of high-tech products made of steel. By contrast, the ramp-up curve of the massively expanded automotive component plant in Cartersville, Georgia, USA, turned out to be much more difficult than expected. The plant’s design was ambitious from the get-go, yet massive support from the Group was needed to get the complex facility going, so to speak, with corresponding effects on earnings—as already communicated a number of times. Provisions for pending cartel proceedings in the Steel Division’s Heavy Plate segment were another negative, non-recurring effect in the Consolidated Financial Statements 2018/19.

This, in conjunction with a number of smaller adverse earnings effects and, in particular, the considerable cooling of the economy in the business year’s second half, led year over year to considerably weaker earnings performance in the business year 2018/19.

But both the financial position of the voestalpine Group and its capital structure are as healthy as ever. Against the backdrop of the impending intensification of difficulties in the economic environment and the technological challenges to come over the next decade, however, the Group will focus more than before on working capital and CapEx management and thus on optimizing cash flow.

As the business year 2017/18 delivered outstanding results and a commensurate dividend of EUR 1.40 per share, the Management Board took the good performance of the business year 2016/17, for which a dividend of EUR 1.10 per share was paid to our shareholders, as the basis for its current dividend proposal. The dividend for the business year 2018/19 equates to a return of 3.1% on the average share price during the year and a distribution ratio of 48.1%.

voestalpine remains on its growth track, even though both the economic and the political environment of the past 12 months became ever more complex and thus an ever-increasing challenge at the entrepreneurial level. The fundamental change from a steel group to a technology group that voestalpine has pursued simultaneously and consistently now is a fact and irreversible. It provides the basis for a successful long-term trajectory, especially in an increasingly competitive global economic environment—in the interest of our customers, our shareholders, and our employees.

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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