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Steel Division

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

Market environment and business development

Demand for steel in Europe consistently developed along a positive trajectory in the first half of the 2018 calendar year. After the summer, however, weakening trends began to make themselves felt in individual customer segments, particularly the automotive industry, and demand lost some of its momentum in the consumer goods industry also. In the final analysis, this caused raw steel production in Europe throughout 2018 to stagnate at the 2017 level. The fact that the introduction of so-called “safeguard measures”— i.e. measures the EU Commission adopted to protect against imports—have been unable to prevent imports of flat steel products from rising over the already high level in 2017 is the backdrop to this development. These measures were enacted in response to the introduction of “protectionist” tariffs by the US Administration in order to prevent negative effects from the diversion of steel products to Europe as much as possible. This is because even though Chinese imports of steel products into the EU have been steadily declining since the 2015 high, they have been more than offset in recent years by imports from countries such as Turkey, India, or South Korea. Yet China’s significance to the development of the market for the raw materials that are key to (blast-furnace-based) production of steel remains high—especially as regards the relevant price trends. On the whole, prices for iron ore, coking coal, and scrap remained volatile throughout the 2018 calendar year, whereas steel prices were largely consonant with the cost of raw materials.

While both quantities and prices in the Steel Division remained at a very pleasing level until the summer of 2018, in part there were considerable declines with respect to order call-ups (especially from the automotive industry) during the fall of 2018 against the backdrop of the new WLTP emissions testing procedure. Slight weakening trends made themselves felt throughout the year in the consumer goods industry as well. Aside from the increasingly difficult market conditions as the year went on, the complete overhaul of the division’s largest blast furnace at its Linz, Austria, site was the determinant of the Steel Division’s performance in the current business year. While drawdowns from the pre-materials (slab) inventory, which had been built up for this purpose, as well as purchases of additional pre-materials helped to ensure good capacity utilization at the rolling mills during this phase, too, the delivery volumes in the first three quarters of the business year 2018/19, however, fell short of the (excellent) numbers in the previous year after all—due, in particular, to the considerable increase in the complexity of operational processes.

Capacity utilization in the Heavy Plate business segment, which was unaffected by the aforementioned dynamics, was solid in the first three quarters of the business year 2018/19 thanks to the segment’s numerous deep-sea pipeline projects. But provisions were recognized in this segment for the third quarter of the business year 2018/19 in view of potentially adverse effects from the pending investigation of the German Federal Cartel Office (Bundeskartellamt) on suspicion of anti-competitive practices under German competition law. While voestalpine Texas LLC, Portland, Texas, USA—which is specialized on the production of high-quality hot briquetted iron (HBI)—experienced a number of (in part planned) plant shutdowns through October 2018 (as already described in earlier quarterly reports), production basically remained stable during the remainder of the third business quarter.

Financial key performance indicators

Quarterly development of the Steel Division





In millions of euros








Q 1–Q 3





Q 1 2018/19


Q 2 2018/19


Q 3 2018/19



















in %








































EBITDA margin


























EBIT margin













Employees (full-time equivalent)













The development of the key performance indicators (KPIs) of the Steel Division in the first through third quarters of the current business year (as already addressed a number of times) was largely impacted by the overhaul of the division’s largest blast furnace, which had associated effects on both production and sales. While the production of crude steel in the first three quarters of the business year 2018/19 fell short year over year by about 25% as a result, the sales volume in the same period declined by about only 10% thanks to both pre-production and purchases of semi-finished goods (slabs). The fact that revenue rose regardless in the first three quarters of the business year 2018/19 by 3.3% to EUR 3,590.1 million (previous year: EUR 3,475.0 million) is due to higher prices overall—resulting in part from higher raw materials prices—as well as an improved product mix in the Heavy Plate segment. Aside from the blast furnace overhaul, the fact that provisions had to be set up in connection with a pending investigation by the Bundeskartellamt in the Heavy Plate segment is the other determinant of the significant downturn in earnings for the current business year. Planned and unplanned production stoppages at the HBI plant in Texas, USA, also impacted the development of earnings, especially in the business year’s the first six months. Taking all these factors into account, the division’s operating result (EBITDA) for the current business year to date dropped by almost one third to EUR 447.9 million (from EUR 652.2 million in the previous year). The EBITDA margin declined year over year from 18.8% to 12.5%. The profit from operations (EBIT) dropped by more than one half in the same period, from EUR 418.8 million (margin of 12.1%) to EUR 201.0 million (margin of 5.6%).

The quarter-on-quarter comparison shows that the Steel Division posted a slight increase in revenue, specifically, by 3.1% from EUR 1,139.2 million in the second quarter of the business year 2018/19 to EUR 1,174.5 million in the third quarter of the business year 2018/19. The operating result (EBITDA) was affected by the aforementioned special items in both the second and the third quarter of the business year 2018/19. This means that the blast furnace overhaul impacted both quarters, albeit the second one significantly more than the third one, and that the provisions in the Heavy Plate segment had an additional negative effect on individual earnings categories in the third business quarter. Against this backdrop, EBITDA fell by 11.0% from EUR 118.5 million (margin of 10.4%) in the second quarter of the business year 2018/19 to EUR 105.5 million (margin of 9.0%) in the subsequent quarter. EBIT for the third business quarter dropped accordingly by 47.4% to EUR 19.3 million (margin of 1.6%), down from EUR 36.7 million (margin of 3.2%) in the preceding quarter.

As of December 31, 2018, the number of employees (FTE) in the Steel Division was 10,788 or 0.8% lower year over year (10,879 as of December 31, 2017). This represents a 2.1% reduction in the number of employees relative to the number (11,020) at the end of the business year 2017/18.

About voestalpine

In its business segments, voestalpine is a globally leading technology and capital goods group with a unique combination of material and processing expertise. With its top-quality products and system solutions using steel and other metals, it is a leading partner to the automotive and consumer goods industries in Europe and to the aerospace, oil and gas industries worldwide. The voestalpine Group is also the world market leader in turnout technology, special rails, tool steel, and special sections.


50 Countries on all 5 continents
500 Group companies and locations
51,600 Employees worldwide

Earnings FY 2017/18

€ 13 Billion


€ 2 Billion


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