Report on the Group’s business performance and the economic situation

The weakening of economic momentum shaped the business year 2019/20 from the outset. Some of its causes such as trade wars and the Brexit had already been apparent in the business year 2018/19. What had been a very challenging environment over extended stretches of time did not ease until the reporting period’s final quarter. The COVID-19 pandemic brought the clearly accelerating momentum at the turn of the year to an abrupt end. Economic developments in the final weeks of the business year 2019/20 are not comparable to past downturns. The fact that the economy came to a sudden standstill was not the result of economic forces but instead served to protect people’s health. Worldwide, and even within Europe, measures aimed at mitigating the coronavirus were handled differently at the regional level but the consequences were the same everywhere: Massive restrictions on consumption, followed by sharp curtailments on production and, in some areas, complete production stoppages.

This turn of events also affected the voestalpine Group in all its regions. The numbers for the business year 2019/20, however, reflect only a fraction of the impact on operating income still to be expected from the COVID-19 crisis.


Throughout the first three quarters of the business year ended and thus prior to the outbreak of the pandemic, there was a dichotomy in Europe’s economic development. While both consumption and the service sector benefited from good employment levels, rising household incomes, and low interest rates that drove the positive momentum, the manufacturing sector was weak. Besides the slowdown in the global economy, Europe’s traditionally export-led industry suffered especially from the international trade wars that dampened investments in Europe. Add to that the reductions in automotive production, which affected Germany’s economic performance above all. This development intensified yet further toward the close of calendar year 2019 because many sectors were reducing their inventories. Sentiment did not palpably improve until the turn of the year, which coincides with the start of the business year’s fourth quarter, only to be brought to a screeching stop by the onset of the COVID-19 pandemic in Europe toward the end of the quarter.

The weakness of Europe’s manufacturing industries even prior to the COVID-19 outbreak posed considerable challenges for voestalpine, which generates about two thirds of its revenue in Europe. Especially the slowdown in the automotive sector was a drag on earnings. By contrast, the Group benefited from positive developments in the rail technology and aerospace sectors up to the fourth quarter of the reporting period.

The outbreak of COVID-19 led to restrictions on public life that were imposed at different rates and intensities throughout Europe, with far-reaching consequences for both consumption and production. The voestalpine Group already reacted to diminished demand toward the close of the business year 2019/20 by curtailing production in its core facilities. Moreover, large sections of its labor force were registered for the different short time work models that apply in European countries.

North America / USA

The growth trend in the United States continued unabated over most of the business year 2019/20. Particularly the service sector and private consumption benefited from people’s growing purchasing power thanks to the flourishing labor market, rising household income, and low interest rates. After delivering satisfactory performance at the start of the business year, the production sector increasingly suffered under the escalating trade war with China and the weakening global economy. There was a palpable decline in investments. The Phase 1 Trade Deal with China finally lent some momentum to the country’s economic development toward the end of the third quarter, which continued into the start of the fourth quarter. The COVID-19 pandemic reached North America also toward the close of the business year 2019/20. Due to the U.S. administration’s hesitant response, the virus quickly spread to a degree that made it imperative to impose extensive shutdowns on public life, especially in New York—just as the world’s other regions had done.

The COVID-19 pandemic thus interrupted the longest economic growth trend in the history of the United States, producing the sharpest contraction since World War II.

In sum, the voestalpine Group benefited throughout most of the reporting period from the economic momentum that prevailed in North America. The aerospace industry, in particular, saw strong demand up to the third quarter. While the railway sector did slow down in the course of the business year ended, it remained attractive overall nonetheless. The oil and natural gas industry presented a different picture, however, posing a challenge for voestalpine throughout the reporting period mainly due to both the downturn in exploration activity and the Section 232 protectionist tariffs. Add to that the pronounced worsening of conditions toward the close of the business year 2019/20 independently of the outbreak of the COVID-19 pandemic. The voestalpine Group reacted swiftly in North America, too, taking comprehensive measures to adjust production to lower demand and imposing strict cost management.

South America / Brazil

The weakness of macroeconomic momentum in Brazil, voestalpine’s most important market on the South American continent, continued unabated in the business year 2019/20.

In addition to anemic investment throughout the country, this was chiefly due to weaker iron ore exports, which still account for a significant portion of the country’s gross domestic product (GDP). Following a fatal dam break in a Brazilian mine at the start of calendar year 2019, the authorities closed down several mining operations for safety reasons, allowing them to reopen but gradually over the course of the business year.

While economic growth virtually came to a standstill during the reporting period’s second quarter, growing consumption as well as rising investments fed an upswing that started in its third quarter. The devaluation of the real, Brazil’s currency, in the fourth quarter intensified this trend because it boosted exports.

Although Brazil, too, was hit by the global COVID-19 pandemic toward the close of the business year ended, the government’s reaction was rather lackadaisical. As a result, the pandemic’s economic effects in the reporting period are visible only to a limited extent at this time. It is to be expected, however, that the country’s inadequate response to the crisis will lead to follow-on effects along with even stronger distortions in the coming months.

On the whole, the voestalpine Group’s Brazilian entities delivered very solid performance in this challenging environment.


In the business year 2019/20, China’s economic growth suffered increasingly from the trade war, especially with the United States. Aside from the decline in exports, a direct consequence, domestic consumption also slumped. The country’s automotive market experienced a meltdown, prompting the central government to enact state-sponsored economic stimulus programs that had a positive effect particularly in the construction and infrastructure industries. This drove China’s production of pig iron and thus demand for iron ore on the global market to new highs, in turn triggering iron ore price increases worldwide, given China’s dominant position as the world’s largest steel producer.

The voestalpine Group benefited from this environment into the third quarter of the business year 2019/20, especially its rail technology segment. The tool segment, by contrast, suffered from the weakness of both the consumer goods industry and the automotive industry.

To keep the spread of the COVID-19 pandemic under control, China reduced public life to a bare minimum. At the start of the fourth quarter of the business year 2019/20, therefore, all work stopped at voestalpine’s production sites in China, too. While this lockdown triggered a dramatic downturn in the prevailing growth trend, China already launched a coordinated program in early March to restart its economy. Even the voestalpine Group’s sites in the country had returned almost to normal operations by the business year’s end.

All told, the economic environment in the business year 2019/20 turned out to be one of the most challenging in recent years.

About voestalpine

In its business segments, voestalpine is a globally leading steel and technology group with a unique combination of materials and processing expertise. voestalpine, which operates globally, has around 500 Group companies and locations in more than 50 countries on all five continents. It has been listed on the Vienna Stock Exchange since 1995. With its top-quality products and system solutions, it is a leading partner to the automotive and consumer goods industries as well as the aerospace and oil & gas industries, and is also the world market leader in railway systems, tool steel, and special sections. voestalpine is fully committed to the global climate goals and is working intensively to develop technologies which will allow it to decarbonize and reduce its CO2 emissions over the long term. In the business year 2019/20, the Group generated revenue of EUR 12.7 billion, with an operating result (EBITDA) of EUR 1.2 billion; it had about 49,000 employees worldwide.


50 Countries on all 5 continents
500 Group companies and locations
49,000 Employees worldwide

Earnings FY 2019/20

€ 12.7 Billion


€ 1.2 Billion


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