Metal Engineering Division

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

Market environment and business development

Individual business and product segments of the Metal Engineering Division were affected differently by the ramifications of the COVID-19 pandemic in the first three quarters of the business year 2020/21. The Railway Systems business segment developed along a relatively stable trajectory throughout the reporting period thanks to solid demand, but the Industrial Systems business segment was hammered. This is why employees of segments hit by low demand were registered for short time work and yet more substantial cuts were made on the cost side. Given the positive turn in orders during the business year’s third quarter, the blast furnace that had been shut down over the Northern summer was started up again at the onset of the calendar year 2021.

Orders in the core markets of the Railway Systems business segment remained largely stable, with the result that capacity utilization levels at most of the turnout systems product segment’s plants remained very good, globally speaking. Its North American plants, however, which are largely aligned with the region’s traditionally private freight transportation sector, were an exception. Here, railway operators cut back on their maintenance activities on account of the declining freight volume triggered by the COVID-19 pandemic. Demand in the mining regions of both Brazil and Australia developed along a much more positive trajectory. Moreover, the expansion of China’s high-speed rail network continues to drive sales in the Chinese market. Delivery volumes in the rails product segment were stable, too. Satisfactory demand in the business segment’s European core markets ensured good capacity utilization at its Donawitz, Austria, plant during the business year to date.

In contrast to Railway Systems, the Industrial Systems business segment suffered massively from the economic fallout of the COVID-19 pandemic. Order call-ups from the European automotive supplier industry—the key customer of the wire technology product segment—basically ceased altogether during the first quarter of the business year 2020/21. This meltdown in demand stemmed from the automakers’ multi-week production stoppages that were followed by merely incremental production ramp-ups. Yet it is these continuous production ramp-ups among original equipment manufacturers (OEMs) that led to the slightly staggered recovery of order levels after the summer.

The tubulars product segment was also confronted with an extremely challenging environment in the current business year and, in contrast to the wire technology segment, so far has seen only a slight uptick in orders. Drilling projects were either suspended or postponed owing to the dramatic decline in demand for oil triggered by the COVID-19 pandemic. In the United States— the leading sales market—demand for seamless tubes used by the oil and natural gas industry dropped precipitously. The conditions arising from weak demand are further exacerbated by the fact that steel imports are still subject to protectionist Section 232 tariffs. Production capacities at the division’s seamless tube rolling mill in Kindberg, Austria, were reduced from three shifts to two against the backdrop of this difficult environment.

The declines in the welding product segment were lower, relatively speaking, even though the dampening of economic sentiment made itself felt here also. While momentum was strong indeed in China and developed along a somewhat satisfactory trajectory in Brazil, conditions in both Europe and North America became ever more difficult.

Financial key performance indicators

Quarterly development of the Metal Engineering Division

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Q 1 – Q 3





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Employees (full- time equivalent), end of period













The Metal Engineering Division’s key performance indicators (KPIs) for the first three quarters of the business year 2020/21 are far below those for the same period of the previous business year. The stable trajectory of the Railway Systems business segment was unable to fully offset the negative effects of the meltdown in demand affecting the Industrial Systems business segment. Revenue fell by 12.7% in the reporting period, from EUR 2,245.1 million to EUR 1,959.6 million. The wire technology and tubulars product segments of Industrial Systems—which had already faced challenging conditions in the business year 2019/20—had to contend with yet more significant declines in revenue on account of the COVID-19 pandemic. As a result, the delivery volumes of the wire technology segment dropped by about 20% in the reporting period, and those of the tubulars segment by almost one half. Prices also came under pressure, as to be expected in an environment characterized by low capacity utilization rates. By contrast, the decline in the business volume of the welding product segment was fairly small.

The substantial decline in earnings also stems from the extremely difficult economic environment of both the wire technology and the tubulars segments. Capacity reductions combined with consistent cost management, structural adjustments regarding human resources, and the use of state-sponsored short time work programs led to a significant reduction in fixed costs over the entire reporting period. Yet these two product segments were confronted with substantially lower earnings regardless. EBITDA of the Metal Engineering Division fell by almost one third in the first three quarters of the business year 2020/21, from EUR 228.8 million (margin of 10.2%) to EUR 157.5 million (margin of 8.0%). At EUR –7.8 million (margin of –0.4%), EBIT is slightly negative (Q 1 – Q 3 2019/20: EUR 72.9 million, margin of 3.2%). The reported results for both the previous and the current business year contain non-recurring effects. In the previous business year, impairment losses on assets as well as required provisions mainly at the tubulars product segment impacted EBIT by some EUR 25 million. A total of about EUR 30 million in impairment losses (most of which are also attributable to the tubulars product segment) were taken for the current business year.

However, the quarter-on-quarter comparison (QoQ) between the current business year’s second and third quarters presents a more differentiated picture. While the KPIs of the Railway Systems business segment weakened on account of seasonal effects, Industrial Systems showed a slight upward trend. In sum, the revenue of the Metal Engineering Division fell by 6.4%, from EUR 666.7 million to EUR 623.7 million. In terms of EBITDA, Industrial Systems was also unable to completely offset Railway Systems’ typically lower Q 3 business volume. Greater production and delivery volumes in Industrial Systems did lead to an improvement in capacity utilization, but the margin situation remained very tight owing to low prices in the face of simultaneous raw materials price increases. Against this backdrop, EBITDA fell by 15.3%, from EUR 55.7 million (margin of 8.3%) in the second quarter of 2020/21 to EUR 47.2 million (margin of 7.6%) in the third. At EUR 1.8 million (margin of 0.3%) in the third business quarter, EBIT turned into positive territory following the division’s negative EBIT of EUR –19.9 million (margin of –3.0%) for the preceding quarter. The fact that approximately EUR 30 million in non-recurring effects impacted the results for the business year’s second quarter (as stated in the year-over-year comparison) must be taken into account in this connection.

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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