Financial key performance indicators

Year over year, the Steel Division’s revenue fell by 6.5%, from EUR 4,887.3 million in the business year 2018/19 to EUR 4,570.5 million in the business year 2019/20. Delivery volumes were stable despite the economic downturn. Note that the corresponding figure for the previous year already was some 10% below that for the business year 2017/18 owing to the overhaul of the division’s largest blast furnace. The decline in revenue thus stems from falling prices. While prices gradually lost ground throughout the business year ended, the cost of pre-materials—i.e., the price of the division’s most important raw material, iron ore—rose sharply from time to time. This means that the Steel Division was confronted with an extremely challenging environment in the reporting period. The declines in the individual earnings categories significantly exceeded those on the revenue side against this backdrop. EBITDA fell by 24.4%, from EUR 653.2 million (margin of 13.4%) in the business year 2018/19 to EUR 494.0 million (margin of 10.8%) in the business year 2019/20. Aside from the overhaul of the blast furnace, the previous year’s earnings were also affected by provisions related to an investigation by the German Federal Cartel Office (Bundeskartellamt) in the heavy plate product segment.

At EUR –100.6 million, the Steel Division’s EBIT for the reporting period was negative, down from EBIT of EUR 319.0 million in the previous business year. Negative non-recurring effects of EUR 240 million for the business year 2019/20 must also be taken into account in this connection; they comprise impairment losses at the direct reduction plant in Texas, USA, and at the Foundry Group. This caused the EBIT margin to decline from 6.5% in the previous year to –2.2% in the reporting period.

The quarter-on-quarter comparison (QoQ) between the business year’s third and fourth quarters shows a considerable uptrend in the Steel Division’s performance despite the initial negative fallout from the COVID-19 pandemic. Following the value chain inventory reductions in the third business quarter, customers’ order call-ups improved after the X-Mas break. Specifically, revenue rose by 4.9%, from EUR 1,098.0 million to EUR 1,151.4 million, due to the increase in the QoQ sales volume. In earnings terms, lower raw material costs offset falling product prices. EBITDA jumped by 41.7% in consequence, from EUR 96.6 million (margin of 8.8%) in the third quarter of the business year 2019/20 to EUR 136.9 million (margin of 11.9%) in the fourth quarter.

Impairment losses of EUR 200 million in the third quarter and of EUR 40 million in the fourth quarter at the Texas plant as well as the Foundry Group impacted EBIT. It is against this backdrop that the division’s EBIT improved quarter on quarter from EUR –193.1 million (margin of –17.6%) to EUR 11.5 million (margin of 1.0%).

As of March 31, 2020, the Steel Division had 10,419 employees (FTE), a decrease of 4.2% compared with the figure (10,877 employees) as of the previous year’s reporting date. This reduction is due to the adjustments in personnel that were made on account of the difficult market environment.