The outbreak of the COVID-19 pandemic did not affect the voestalpine Group’s operating result until the final quarter of the business year 2019/20 and only to a relatively modest degree at that.
The steps taken to mitigate the pandemic that are generally known as a “lockdown” are still in force in parts of Europe as well as in North and South America, and even in parts of Asia. While the resulting economic consequences cannot be definitively assessed at this time, it is already becoming apparent that a dramatic economic downturn across the board will define the first quarter of the business year 2020/21.
Absent any knowledge as to the full extent of the economic meltdown, we can only provide very rough estimates of the current business year’s subsequent trajectory. From today’s vantage point, a scenario that posits an improvement in the economy on the whole after the summer of 2020 is likely. However, this assessment is made in an extremely volatile economic environment and thus is fraught with considerable uncertainty.
Hence voestalpine’s focus in the business year 2020/21 will be on measures aimed at stabilizing earnings, such as consistent cost and working capital management as well as cash flow generation. Accordingly, the plans for investments in the current business year call for an expenditure of about EUR 600 million, which is substantially less than the investment volume in recent years and falls short of depreciation.
The diversification of the voestalpine Group at the level of both product and market is a stabilizing element that displays its effectiveness even in an economic state of emergency such as this one. voestalpine’s facilities in China now are almost back to producing at the capacity prevailing prior to the outbreak of the COVID-19 pandemic. Demand in the railway infrastructure sector, which in many regions is deemed systemically relevant, is good in most of the world. Driven as it is by online commerce, the high-bay warehouse system segment got an additional boost from the lockdown, and current segment order levels are very good.
Nonetheless, the uncertainties confronting the entire voestalpine Group in the next few months are very high, which is why an assessment of future earnings can only be a rough estimate. Given the continued volatility of the economic environment, we expect the voestalpine Group to generate EBITDA of between EUR 600 million and EUR one billion in the business year 2020/21.
Linz, May 26, 2020
The Management Board
This report is a translation of the original German-language report, which is solely valid.