Economic environment and course of business

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

The ramifications of the COVID-19 pandemic had a massive impact worldwide at the macroeconomic level in the first quarter of the business year 2020/21. Media outlets have described the situation as the most severe recession since the end of World War II. The voestalpine Group was confronted with substantially weaker demand in almost all of its market segments in all regions worldwide. Trade between the continents and the major economic regions was largely brought to a standstill.

In Europe, the state-mandated lockdowns had a massive effect on the economy at the start of the first business quarter. While the overriding picture in April was that of an economic collapse, the month of May saw the onset of a slow recovery. Private consumption, in particular, rebounded sharply once the lockdowns were eased, in complete contrast to the industrial sector, where investment activity remained restrained even after the lockdowns due to the uncertainty regarding sustained damage to the economy. While intra-European demand was weak, the export sector imploded owing to both the decline in world trade and newly imposed travel restrictions. The European automotive industry completely shut down production in April and started it up again incrementally in May. By the end of the reporting period, automotive production still fell far short of the level that obtained prior to the outbreak of the pandemic.

Given that the voestalpine Group generates about two thirds of its revenue in Europe, these developments obviously brought about a dramatic dampening of the economic climate in which it operates. All of the Group’s divisions were affected especially by the standstill of the automotive industry at the start of the first business quarter, but also by the general weakness of the industrial sector. Subsequently, production capacities had to be adjusted to prevailing lower demand at many of the Group’s sites.

This drew a swift response from EU member state governments. They launched a variety of programs aimed at propping up the economy; European voestalpine companies availed themselves of this aid. The most important of these measures from the Group’s point of view was the introduction of short time work in both Austria and Germany and similar models elsewhere because they enabled voestalpine to adopt a flexible approach to personnel costs during periods of low capacity utilization.

The European Central Bank put in place additional fiscal stimulus packages. At the start of the second quarter of the current business year, the member states of the European Union agreed to a support package that is unprecedented in its scope. Among other things, it entails breaking open the existing national debt structures by enacting a policy pursuant to which the EU will raise jointly issued debt for the very first time and disburse funds as needed.

Just as in Europe, in North America, too, the COVID-19 pandemic brought about a sharp downturn at the start of the current business year. But consumer spending recovered rapidly and forcefully toward the end of the business year’s first quarter, and the labor market also signaled a more positive trend. The capital goods sector rebounded only a bit, however, and industrial production remained weak. Aside from the meltdown of global trade, there is also a lot of uncertainty as to future macroeconomic developments. In contrast to Europe, no packages aimed at directly supporting the economy were adopted in North America. Instead, the Federal Reserve (Fed) responded with a massive easing of monetary policy and put in place emergency loan programs. As a result, the increase in asset prices initially outpaced any direct economic recovery. Yet economic sentiment and momentum on the whole were better than in Europe because no blanket lockdown had been put in place. However, the automotive industry shut down production completely for several weeks, just as Europe and China had done so earlier on.

These conditions had varying impacts on the North American sites of the voestalpine Group, depending on the market segment. While the automotive plants had to adjust their production capacity to reduced demand, entities focused on consumer goods were not affected as much. The direct reduction plant in Texas, USA, succeeded in offsetting weak North American and European demand by acquiring new Asian customers and maintained production levels without enacting noticeable volume cutbacks.

The COVID-19 pandemic hit Brazil, the most important economy in South America for the voestalpine Group, a bit later on. While both the country’s economy and voestalpine’s Brazilian sites remained on a good trajectory early in the reporting period, the economic meltdown occurred here, too, in the course of the business quarter. Although no national lockdown was enacted, weaker demand along with governmental restrictions led to production curtailments anyway. The massive devaluation of the real, Brazil’s currency, reveals the level of uncertainty internationally regarding the Brazilian government’s ability to find ways to overcome the crisis.

In Asia, China was the first country to be affected by the COVID-19 pandemic already in the business year 2019/20. In contrast to democratically governed countries, rigorous measures helped to bring the pandemic under control fairly quickly—even at the price of massive restrictions on the personal liberties of its citizens. Following several weeks of complete lockdowns of vast regions, the country started a coordinated effort even before the end of the business year 2019/20 to ramp up economic activity. The voestalpine Group’s facilities in China returned in the first quarter of the current business year to the production levels prevailing prior to the pandemic’s outbreak. This enabled a rapid rebound not just with respect to the industrial value chain and capital investments. Substantially rising personal consumption during the reporting period point to the rebound in Chinese consumers’ confidence also.

The Chinese steel industry was exempted from the general lockdown in China; it did not cut back production at all or only a bit even at the height of the pandemic. Demand for iron ore in the world market thus remained high, further pushing up iron ore prices despite the sharp recession worldwide. The fear that the pandemic might lead to delivery shortfalls from iron ore producers such as Brazil further intensified this trend.

All of the above made the first quarter of the current business year very difficult for the voestalpine Group. Regionally speaking, near-normal conditions prevailed only in Asia (including China), whereas the rest of the world saw the worst recession in decades.

Yet individual segments within the voestalpine Group managed to deliver positive performance even in these exceptional conditions. As already happened during the previous year’s economic downturn, the rail technology segment of the Metal Engineering Division turned out to be extremely resilient yet again. Railway operators used the cutbacks in railway services during the lockdowns to carry out maintenance work. As a result, even the first quarter of the business year 2020/21 saw good order levels and full capacity utilization. The lockdowns delivered a massive boost to e-commerce. The Warehouse & Rack Solutions segment, which had already benefited previously from the growing trend toward e-commerce, posted record orders and achieved maximum capacity utilization.

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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