Market environment and business development

      The business climate shaping the Metal Forming Division’s performance in the business year 2020/21 was defined by challenging conditions in the beginning followed by continual improvements. This trend was driven primarily by the economic fallout from the COVID-19 pandemic, which affected the division’s individual business segments in different ways. For example, the activities of the Automotive Components business segment were brought almost to a standstill in the first business quarter due to automakers’ widespread production shutdowns. By contrast, the Warehouse & Rack Solutions business segment benefited handsomely from the growing trend toward online commerce as the pandemic wore on.

      Automotive Components started the business year 2020/21 in an environment fraught with difficulties across the board. The meltdown in sales brought on by COVID-19 caused original equipment manufacturers (OEMs) in both Europe and North America to completely shut down their auto­motive plants for several weeks. As a result, voestalpine’s automotive component plants in Europe and North America (excepting those that focus on the spare parts business) also shut down for about one and a half months. Affected employees were registered for short time work and/or similar options. When the auto manufacturers in Europe gradually restarted their factories at the end of April 2020, capacity utilization at the European Automotive Components facilities gradually recovered as well. The OEMs in the ­United States and Mexico followed suit shortly after that, the only difference being that their ramp-up curves were much steeper than those of their European counterparts. The breakdown in demand had already affected the Chinese facilities of the Automotive Components business segment in the fourth quarter of the business year 2019/20 because COVID-19 had broken out in China a few weeks earlier. Order levels in China rebounded as early as in the first quarter of the business year 2020/21. The expanding recovery of automotive sales worldwide had a posi­tive effect on the production output of the OEMs in subsequent quarters. While capacity utilization at voestalpine’s Automotive Component plants continually improved up to the end of calendar year 2020, order call-ups on the part of the OEMs once again became volatile in the business year’s fourth quarter. Bottlenecks in semiconductor supplies, which affected the automakers to different degrees, led to fluctuations in production. Over and above the challenges arising from COVID-19, recent years also saw structural changes, particu­larly in the export-oriented premium segment. Increasingly, these manufacturers set up production plants in their growth markets, in turn triggering a consolidation in Germany’s auto manufacturing industry. Add to that the growth in the OEMs’ insourcing strategies. Automotive Com­ponents responded to these developments by resizing some of its plants.

      Tubes & Sections saw a strong upward trend in the business year 2020/21. Conditions here at the start of the reporting period were not quite as challenging as those confronting the Auto­motive Components segment. While the business climate in both the commercial vehicle and auto­motive industry remained difficult at the beginning, solid orders for tubes and sections resulting from the boom in online commerce eased conditions somewhat. As the business year wore on, other material customer segments of Tubes & Sections rebounded, too. For example, the construction industry saw its business environment steadily improve after some projects had been postponed in the first business quarter owing to COVID-19. The positive developments in this sector also accelerated the upward trend in the commercial vehicle industry. The rebound curve for deliveries of security-related tube components used in the automotive industry was a bit flatter compared with that for Automotive Components. This is mainly due to the fact that these products are shipped to the global automotive supplier industry and that this sector’s recovery was delayed somewhat due to existing inventory levels. The increase in orders from the solar industry over the course of the business year 2020/21 also provided a positive impetus to Tubes & Sections. As far as regional developments are concerned, voestalpine’s facilities on the European continent benefited from the quarter-on-quarter (QoQ) improvement in order levels. Developments in Great Britain, where the effects of the Brexit had a nega­tive impact on the economic environment, were much more constrained. In the United States, the online commerce boom offset plummeting de­liveries to the aerospace industry. While the health crisis in Brazil (South America’s largest market) resulting from COVID-19 intensified, the country’s economic environment presented a much more positive picture. In China, the business climate in the reporting period developed in ways largely unaffected by COVID-19 because the country had taken rigorous measures to contain the pandemic.

      Even though the fallout from the pandemic clearly made itself felt here, too, the trajectory of Precision Strip at the start of the business year 2020/21 was satisfactory, relatively speaking. Among other things, this was due to some custom­ers accelerating their orders because they feared that the lockdowns might trigger problems in the supply chain. In many cases, however, component orders in major sectors such as the automotive supplier industry, the sawmill industry, or the paper and printing industry were lower than they normally would have been. A noticeable rebound in orders did not set in until the Northern fall of calendar year 2020. The improved environment in the U.S. sawmill industry stood out, especially because demand for band saw steel had plunged in this region at the start of the reporting period. There was an unmistakable easing of conditions in this area after the Northern summer. By the fourth business quarter, orders actually ex­ceeded pre-crisis levels. In both Europe and China, the Precision Strip business segment benefited from the intensifying rebound in the sales markets over the course of the business year 2020/21.

      The momentum toward online commerce accelerated yet further owing to the COVID-19 pandemic. Warehouse & Rack Solutions benefited immensely from the associated demand for auto­mated storage systems. Order levels in this business segment hit record highs at the time the ­European lockdowns peaked in the Northern spring of 2020. But there were slight delays in the processing of ongoing projects during the first quarter of the business year 2020/21 because logistics had been restricted to contain the pandemic. The momentum rapidly gathered speed yet again as the business year wore on and as pandemic-related restrictions were gradually lifted. While Europe is its main market, Warehouse & Rack Solutions has increasingly expanded into the North American market also. High order ­levels as of the end of March 2021 already ensure excellent capacity utilization at the respective facilities for the entire business year 2021/22.