Metal Engineering Division

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

Market environment and business development

Being “systemically relevant” to key global markets, the Railway Systems business segment of the Metal Engineering Division had a stabilizing effect on the division’s performance in the first quarter of the business year 2020/21. By contrast, weakening trends in the Industrial Systems business segment that had already made themselves felt in the business year 2019/20 intensified against the backdrop of the COVID-19 lockdown.

Railways Systems has remained largely unaffected by COVID-19, and its business volume in the first quarter of 2020/21 was satisfactory. Order activity in numerous European countries, as well as in China, India, and South Africa, weakened slightly in the wake of the pandemic’s spread. In North America, private freight companies curtailed their investments in the maintenance of their rail networks, given the economic downturn. In South America, demand remained stable. The turnout systems product segment, which is active throughout the world, performed well in this environment. Delivery volumes during the reporting period in the rails product segment, which is largely oriented toward Europe, held steady year over year.

Industrial Systems already faced a challenging market environment in the previous business year. The economic environment of the wire technology product segment—a supplier to the automotive supply industry—continued to deteriorate in the reporting period due to automakers’ multi-week production shutdowns. Given that this segment is positioned at the top of the value chain, so far there is no palpable indication as to when order levels might recover.

The tubulars product segment also faced a particularly unfavorable economic environment. Demand in the segment’s important U.S. market has collapsed due to the drop in crude oil prices. The development of the so-called “rig count,” an early indicator regarding active oil exploration facilities, underscores the massive decline in the activities of the oil and natural gas industry in the United States: It decreased by about two thirds in the first half of 2020.

Although COVID-19 affected demand in the welding product segment (welding technology), too, capacity utilization at the segment’s production facilities was significantly better than at tubulars and wire technology sites. In global terms, the situation in China and India has recently improved whereas the situation in Europe is becoming increasingly difficult. The Industrial Systems business segment reacted to the slowing momentum by availing itself of the short time work option and by adjusting capacities.

Development of the key figures

Quarterly development of the Metal Engineering Division

In millions of euros

 

Q 1 2019/20

 

Q 1 2020/21

 

Change

 

 

04/01–06/30/2019

 

04/01–06/30/2020

 

in %

 

 

 

 

 

 

 

Revenue

 

778.8

 

669.2

 

–14.1

EBITDA

 

90.0

 

54.6

 

–39.3

EBITDA margin

 

11.6 %

 

8.2 %

 

 

EBIT

 

44.9

 

10.3

 

–77.1

EBIT margin

 

5.8 %

 

1.5 %

 

 

Employees (full-time equivalent), end of period

 

13,371

 

13,061

 

–2.3

Thanks to the largely stable development of the Railway Systems business segment, the key figures for the Metal Engineering Division show slightly lower declines than those for the voestalpine Group’s other divisions. The division’s revenue fell by 14.1% from EUR 778.8 million in the first quarter of the business year 2019/20 to EUR 669.2 million in the first quarter of the business year 2020/21. Primarily the wire technology and tubulars product segments posted substantial declines in revenue during the reporting period as a result of massive declines in deliveries. The fact that prices also gave way owing to heightened competition made matters worse for these two segments. In earnings terms, the division’s EBITDA dropped by 39.3% from EUR 90.0 million in the first quarter of 2019/20 to EUR 54.6 million in the first quarter of 2020/21, causing the EBITDA margin in turn to fall from 11.6% to 8.2%. At EUR 10.3 million (margin of 1.5%), EBIT was down 77.1% compared with the previous year (EUR 44.9 million, margin of 5.8%). Analogous to the development of revenue, the downturn thus was rooted mainly in the weaker performance of both the wire technology and the tubulars product segments.

As of June 30, 2020, the number of employees (full-time equivalents, FTE) in the Metal Engineering Division declined year over year by 2.3% to 13,061 (June 30, 2019: 13,371). This reduction in human resources stems from necessary adjustments in the wire technology and tubulars product segments, both of which were massively impacted by the deteriorating economic environment.


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.

Facts

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

Earnings FY 2019/20

€ 12.7 Billion

Revenue

€ 1.2 Billion

EBITDA

To the Top
Close