Steel Division

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

Market environment and business development

To a significant degree, the start of the business year 2020/21 was characterized by the COVID-19 pandemic. It determined events especially in the first quarter, causing meltdowns in almost all customer segments. But demand recovered over the remainder of the business year’s first half once the lockdowns in many European countries ended.

Considering the circumstances, the consumer goods and white goods industries did well even during the difficult first business quarter, and they returned to stable demand levels quite soon after the end of the European lockdowns. Likewise, the construction industry, which had to contend with construction site closures during these lockdowns, rapidly returned to the position it had occupied prior to the spread of COVID-19.

The automotive industry in Europe largely shut down all production in April 2020, gradually starting it up again in May and June. The initially slow rebound gathered speed over the Northern summer. By the end of the first half of the business year 2020/21, demand in the automotive segment had returned more or less to the levels recorded before the outbreak of the COVID-19 pandemic. Aside from the general upswing, however, this surprisingly strong rebound is also due to the replenishing of the supply chain. Supply chain inventories were greatly reduced during both the lockdowns in Europe and the shutdowns during the Northern summer.

Aside from plummeting demand in Europe, the mechanical engineering industry was hammered as well by the limitations on travel to its traditional export markets, with the result that demand dropped dramatically during the current business year’s first six months. The momentum improved a little toward the end of this period.

The energy sector on the whole—a key market for the heavy plate product segment—came under extreme pressure. Aside from the weakening of demand on account of COVID-19, this was due mainly to the overproduction of both crude oil and natural gas. Moreover, commodity market contracts for future deliveries of crude oil (so-called “futures”) even pushed oil prices into negative territory. While the heavy plate product segment can escape this development only in part, it performed fairly well anyway even during this period because it focused on special applications.

Owing to the sharp decline in demand, production capacities at the plant in Linz, Austria, had to be adjusted early on in the first half of the business year 2020/21, and a small blast furnace was shut down completely. The latter was restarted in September 2020 once demand rebounded over the reporting period and was back in full operation by its end.

The prices for iron ore continued to rise during the business year’s first half and did not ease until its end despite the deep, global market distortions resulting from the COVID-19 pandemic. This is rooted in the fact that China has developed into the world’s biggest consumer of iron ore. China succeeded in containing the pandemic within a fairly short time and drove the country’s production of crude steel to new highs through state-sponsored investment projects. The prices of all other raw materials required for the production of steel—particularly coal and energy—dropped in reaction to the production curtailments outside of China, making it more or less possible to offset the iron ore price increases.

While steel prices in the European spot market declined at the start of the current business year due to shrinking demand, they stabilized after the European lockdowns ended and already began to climb again toward the end of the Northern summer. The Steel Division had to contend with price declines in its short and medium-term business also. Thanks to the contracts’ structure, however, these were not as dramatic as those in the spot markets. On the whole, the structure of the contracts leads to a situation where price increases do not take hold until after a minor delay.

Given the steel production cutbacks in both North America and Europe, the Group’s direct reduction plant in Texas, USA, was confronted with sharply lower demand from its existing customer base during most of the business year’s first half. Its success in acquiring new customers in the Far East helped to offset this weakness only in part.

Financial key performance indicators

Quarterly development of the steel division

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The financial key performance indicators (KPIs) of the Steel Division for the first half of the business year 2020/21 were marked by the economic fallout from the COVID-19 pandemic. On the whole, revenue fell substantially by 21.1% to EUR 1,830.5 million year over year, down from EUR 2,321.1 million in the same period the previous year. Fewer deliveries of flat steel products account for about two-thirds of this outcome. Additionally, these products saw a marked decline in prices during the reporting period. It goes without saying that these effects also weighed on earnings. Countervailing measures such as instruments designed to decrease costs and increase efficiency had as much of a stabilizing effect on earnings as did state aid entailing short time work programs. The direct reduction plant in Texas, USA, delivered a substantially lower operating performance during the current business year’s first half. Here, earnings were impacted by high input costs relative to fairly moderate revenue. As a result, the division’s EBITDA dropped by 38.0%, from EUR 260.5 million in the first half of the business year 2019/20 to EUR 161.6 million in the reporting period, causing the EBITDA margin in turn to decline from 11.2% to 8.8%. At EUR –168.7 million (margin of –9.2%), the division’s EBIT for the business year’s six months is in negative territory. However, this includes EUR 167.6 million in negative non-recurring effects resulting from impairment losses at the Texas direct reduction plant. The division had generated EBIT of EUR 81.0 million (margin of 3.5%) in the same period the previous year.

The quarter-on-quarter comparison (QoQ) between the business year’s first and second quarters reflects the economic meltdown at the beginning of the business year and the subsequent signs of a rebound. After slumping to a very low level of EUR 834.9 million in the first business quarter, revenue rose by 19.2% to EUR 995.6 million in the second. While prices in the short-term contract business declined slightly, the Steel Division succeeded in substantially boosting deliveries of flat steel products. This increase in quantities thus also drove the improvement in the operating result (EBITDA) by more than one third to EUR 93.4 million, up from EUR 68.2 million in the business year’s first quarter, in turn raising the EBITDA margin from 8.2% to 9.4%. By contrast, negative EBIT jumped from EUR –13.5 million (margin of –1.6%) to EUR –155.2 million (margin of –15.6%). The EBIT for the second quarter of the business year 2020/21 was adversely affected by the aforementioned impairment losses of EUR 167.6 million.

As of September 30, 2020, the Steel Division had 10,321 employees (FTE), which means that the number of employees declined by 3.4% compared with the same reporting period the previous year (10,682 employees) and by 0.9% relative to the number as of the March 31, 2020, reporting date (10,419 employees). This reduction in human resources arises from the adjustments that were made owing to the exceptionally difficult market 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.


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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