High Performance Metals Division

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

Market environment and business development

The first half of the business year 2020/21 was defined by the COVID-19 pandemic. Its ramifications sharply curtailed demand for tool steel and special materials across all regions and industries. In addition to plummeting orders, intracompany measures to protect employees’ health as well as state-mandated lockdowns affected capacity utilization at the production sites of the High Performance Metals Division during the first business quarter. Nonetheless, customer orders were fulfilled in timely fashion despite the difficult environment. The second business quarter also saw typical seasonal effects above and beyond the continued challenging market environment. Intensifying competitive pressures exacerbated price pressures at the same time.

The tool steel product segment was affected by the ongoing loss of momentum in the automotive industry that accelerated in the current business year. Demand declined because customers delayed new projects and models. The second business quarter saw a slight rebound, especially in China, compared with the preceding quarter. Demand from the Asian consumer goods industry, a source of heavy order activity, also recovered during this quarter.

Developments regarding special materials were different, however. The massive cutbacks in the aerospace industry had significant consequences for the production rates of leading international aircraft manufacturers. Sharp declines in both the number of passengers and air travel dramatically affected the carriers’ financial position as well as the need for new aircraft. In turn, this led to inventory reductions within the supply chains and thus to meltdowns in short-term orders as well as to postponements of long-term orders. Demand in this sector is expected to pick up only in the medium term.

The High Performance Metals Division was confronted with highly challenging conditions in the oil and natural gas sector also. While new exploration projects, especially in the U.S. fracking market, were hammered by the decline, complex, ongoing projects in Brazil, for example, continued. On the whole and thanks to its focus on high quality materials such as nickel-based alloys, the division succeeded in maintaining its competitive position internationally even in this difficult environment.

Activities in the segment comprising components and parts based on additive manufacturing processes (3D printing) expanded despite unfavorable market conditions. By now, the division encompasses a global network of 3D printing facilities as well as two fully equipped powder atomization centers in Austria and Sweden.

At the regional level, the division’s performance in the first half of the business year 2020/21 was uneven. In Europe, the plant shutdowns across the automotive industry triggered a dramatic downturn in demand for tool steel. The second quarter saw only slight signs of a rebound, and the loss of momentum in the region’s aerospace industry was even more pronounced.

In North America, the High Performance Metals Division was hit particularly hard by the negative economic effects of the COVID-19 pandemic because its product mix is focused on the aerospace as well as the oil and natural gas industries. The barriers to trade in the United States (protectionist Section 232 tariffs) as well as the anti-dumping sanctions the country levies on imports of steel products made matters worse. In South America, too, the division was confronted with the spread of COVID-19 and its ramifications.

Relatively speaking, order levels in China were positive during the first six months of the business year 2020/21. While demand in other Asian countries was substantially lower year over year, the situation in China improved rapidly. The rebound in the business year’s second quarter was particularly pronounced.

The division’s most important production sites in the country managed to maintain operations throughout the reporting period, albeit in part at substantially reduced levels of capacity utilization. Companies whose production is strongly aligned with the needs of the aerospace as well as the oil and natural gas industries suffered the most serious setbacks. Comprehensive cost reductions to stabilize earnings were implemented at these sites, and investment projects were delayed to shore up their financial position.

While shrinking demand substantially affected the Value Added Services business segment in Europe (especially Germany), sales in China continued to recover. Besides lowering costs, this segment reacted to the unfavorable business climate by reducing inventories also. Virtual meetings allowed this segment to maintain its focus on proactive customer service despite the limitations on travel during the first six months of the business year 2020/21.

Financial key performance indicators

Quarterly development of the high performance metals division

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At EUR 1,061.7 million, the revenue of the High Performance Metals Division in the first half of the business year 2020/21 was 29.3% lower than the previous year’s figure of EUR 1,500.9 million. This was due primarily to the year-over-year decrease in deliveries by more than 20%. Moreover, the decline in revenue was also due to slightly lower prices and a less favorable product mix. As a result, the economic downturn triggered by the COVID-19 pandemic disproportionately affected higher-priced special materials and forged products for the aerospace industry as well as for the oil and natural gas sector. The sharp drop in both production and delivery volumes in conjunction with the negative trends in both prices and product mix also shaped developments on the earnings side. Fundamental cuts on the cost side helped to limit the decline in the operating result (EBITDA). This includes structural adjustments in personnel capacities at those sites that are and will be affected in the long term by plummeting demand. Nevertheless, at EUR 76.8 million EBITDA for the first half of the business year 2020/21 falls short of the figure for the same period the previous year (EUR 177.4 million) by 56.7%. The EBITDA margin fell accordingly from 11.8% to 7.2%. At EUR –6.2 million (margin of –0.6%), the profit from operations (EBIT) for the reporting period is negative, compared with EUR 92.4 million for the first half of the business year 2019/20 (margin of 6.2%).

Revenue stabilized as per the quarter-on-quarter (QoQ) comparison between the first and second quarters of the business year 2020/21. While the revenue for the first business quarter was EUR 527.3 million, that for the subsequent quarter rose a little to EUR 534.4 million. A slightly rising trend in deliveries offset slightly lower prices. However, the expenses for the traditionally more extensive maintenance work on the equipment during the Northern summer caused EBITDA to decline by 9.9% to EUR 36.4 million in the second quarter of the current business year (Q1 2020/21: EUR 40.4 million). The EBITDA margin decreased accordingly from 7.7% to 6.8%. During the same period, the division’s EBIT fell from EUR –1.5 million (margin of –0.3%) to EUR –4.7 million (margin of –0.9%).

As of September 30, 2020, the number of employees (FTE) in the High Performance Metals Division was 12,381. This represents a significant reduction by 10.5% compared with the figure (13,837 employees) as of the same period the previous business year and a reduction by 7.6% relative to the March 31, 2020, reporting date (13,404 employees). The decline in the number of employees is rooted in the need to adjust the number of employees due to the changes in the structural parameters of key customer segments.

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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