Proactive risk management, as it has been understood by and practiced in the voestalpine Group for many years, serves both to ensure the existence of the Group as a going concern in the long term and to boost its value and thus is key to the success of the Group over all. Material risks are systematically recorded, analyzed, assessed, and subjected to permanent monitoring early on as part of the systematic risk management process, which is undertaken Group-wide in uniform fashion several times a year, and as part of internal control systems (ICS), which are also integral elements of the Group’s structural and workflow organization; appropriate measures to minimize risks are taken as necessary.
The global COVID-19 crisis and the resulting state of emergency continued to dominate the first half of the business year 2020/21. As part of Group-wide crisis management, crisis teams were established on three decision-making levels (Group, divisions, companies) at the onset of the pandemic; they are tasked with ensuring rapid and coordinated approaches at all of the Group’s sites even during these difficult times. Rapidly instituted measures—such as hygienic and protective measures to ensure employees’ safety; short time work; reduction of time credits; safeguarding liquidity; early annual plant/office closings; adjustment and limitation of production activities in keeping with existent supply chains as well as regular exchanges of information with our key customers and suppliers—helped us during the first half of the current business year to maintain operations as best as possible and ensure the organization’s stability. All of this enabled the voestalpine Group to adapt well to the completely new environment. Emergency and crisis plans as well as the measures that have been put into practice are evaluated at regular intervals and are adjusted as necessary in the light of new information. Further developments in the pandemic and the actions that individual countries take to fight the disease and stimulate their economies will continue to have a massive impact on the economic development of the world’s different regions.
The operating risk environment of the voestalpine Group in the first six months of the current business year as well as compared with previous years has remained largely unchanged. Material fields of risk—such as the availability of raw materials and energy supplies; the loss of critical production facilities; the loss of critical IT systems; the CO2 issue; knowledge management; or financial risks—and the respective precautionary measures thus have remained largely the same. The material fields of risk and the respective measures to minimize risk, which were presented and described in detail in the Annual Report 2019/20 of the voestalpine Group (Annual Report 2019/20, “Report on the Company’s Risk Exposure”) thus remain valid for this interim management report.
It must be noted with respect to the Austrian energy tax rebate that the Austrian Federal Finance Court (Bundesfinanzgericht) directed a request for a preliminary ruling to the European Court of Justice (ECJ) (BFG 10/31/2014, RE/5100001/2014). The amendment of the Austrian Energy Tax Rebate Act (Energieabgabenvergütungsgesetz) by means of the 2011 Austrian Budget Accompanying Act (Budgetbegleitgesetz, BBG 2011), which applies to periods after December 31, 2010, limited the energy tax rebate to manufacturing companies. Subsequently, the question of whether this restriction, which may be deemed state aid, violated EU law was submitted to the ECJ for a preliminary ruling; the Court responded in the affirmative (ECJ 7/21/2016, docket no. C-493/14, Dilly’s Wellnesshotel GmbH). As a result, the restrictions pursued by the BBG 2011 did not enter into force with legal effect. Service providers, in particular, thus can retroactively claim the energy tax rebate for periods after February 1, 2011. In its subsequent ruling, the Austrian Federal Finance Court declared that the restriction to manufacturing companies did not take effect. The Appeals Division of the Tax Office appealed this decision to the Austrian Higher Administrative Court, which in September 2017 (decision dated 9/14/2017, EU 2017/0005 and 0006-1) again sought recourse with the ECJ. The decision of the ECJ dated November 14, 2019 (ECJ 11/14/2019, docket no. C-585/17, Dilly’s Wellnesshotel II) confirms that the limitation to manufacturing companies imposed by the BBG 2011 was put in place in ways consonant with European Union law. In its subsequent ruling dated December 18, 2019 (docket no. Ro 2016/15/0041), the Higher Administrative Court followed the ECJ’s holding. No adverse effects are anticipated for the voestalpine Group from the Higher Administrative Court’s ruling, which concludes the case.
The pandemic may cause individual jurisdictions to take a variety of statutory steps that will affect production parameters and the respective Group companies’ ability to act in economic terms.
Based on the insights gained from economic and financial crises in the recent past and their effects on the voestalpine Group, additional steps—primarily of a corporate nature—were taken in recent years to minimize the Group’s risk exposure; these measures are also described in detail in the Annual Report 2019/20, and they have been and are being consistently pursued further in the current business year. Consequences arising from (punitive) tariffs and global trade wars are subject to continuous monitoring as well in this challenging economic environment.
Specific measures to hedge the risks previously identified within the voestalpine Group have been developed and implemented. These steps are aimed at reducing potential losses and/or minimizing the likelihood of losses occurring. It must be stated that, as of the present interim reporting date, the operating risks facing the voestalpine Group above and beyond global crises and their ramifications are limited and manageable. As regards the COVID-19 crisis and its associated global ramifications, which cannot be predicted in their entirety from today’s vantage point, going forward the voestalpine Group will continue to do everything in its power to overcome this situation—which is very difficult for each and every individual and for the company on the whole— to the best of its ability.
Share page