Economic environment and course of business

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

During the first nine months of the business year 2020/21, the COVID-19 pandemic determined economic growth globally. The major economies were confronted with sharp economic declines particularly in the first quarter of the company’s business year. Subsequently, a trend toward economic recovery made itself felt globally despite the significant second wave of COVID-19 infections.


The first quarter of the business year 2020/21 delivered an economic shock that affected large swaths of Europe. Almost all countries imposed state-mandated lockdowns in response to the appearance of COVID-19, restricting public life in order to contain the pandemic.

In actual fact, these measures did help to substantially lower the infection rates by the Northern summer, in turn facilitating a return to normalcy subject to certain restrictions. A strong rebound in private consumption ensued immediately, followed after a slight delay by a significant recovery of industrial production.

The Northern fall brought a new wave of infections. This second wave substantially exceeded the number of infections recorded during the Northern spring in many countries of the European Union.

Most countries reacted yet again with state-mandated restrictions on socializing as well as by shutting down large swaths of commerce and the leisure industry. In contrast to the first lockdown, however, the new restrictions did not extend to the manufacturing sector and the construction industry.

As a result, the COVID-19 pandemic hit the service sector much harder economically than it did the industrial sector. While the latter was confronted with major economic challenges during the lockdown at the start of the business year, it succeeded in benefiting from the uptrends in many customer segments as the year wore on.

Given these state-mandated restrictions that had massive economic consequences, most governments acted quickly to adopt support programs in order to forestall widespread waves of bankruptcy. The European Central Bank (ECB) responded rapidly as well, setting up a Pandemic Emergency Purchase Program (PEPP) among other things in order to give European states financial leeway despite their growing sovereign debt. The European Union’s EUR 750 billion Recovery Fund was put in place to stimulate investments.

The voestalpine Group had to contend with massive business losses in the business year’s first quarter because it generates approximately two-thirds of its revenue in Europe. The first lockdown led to cuts in many companies and, as in the European automotive industry, even to weeks-long production shutdowns. In this environment, voestalpine utilized governmental support programs; the short time work program turned out to be one of the most effective of them.

European economies rapidly consolidated at the start of the Northern summer, and practically all markets of the voestalpine Group recovered during the business year’s second quarter. While the momentum driving demand accelerated yet further in many markets during the business year’s third quarter despite renewed lockdowns, these positive developments did not touch the aerospace industry and the oil and natural gas sectors.

North America/USA

In the first quarter of the business year 2020/21, the COVID-19 pandemic also triggered an unprecedented economic recession in North America (specifically, the United States). By contrast to Europe, however, no nationwide lockdown was enacted. In turn, this kept economic sentiment and momentum a bit more afloat than in Europe.

Toward the end of the first business quarter, private consumption recovered quite quickly and gained momentum as the business year wore on. It did not weaken again ever so slightly until later in the reporting period (i.e., in November 2020).

The labor market also rebounded toward the end of the business year’s first quarter, following a steady, positive trajectory. Signs that unemployment would rise again for the first time since the onset of the economic recovery after the outbreak of the COVID-19 pandemic did not make themselves felt until December 2020, affecting chiefly the leisure, hospitality, and restaurant industries.

Over all, the service sector took a much greater economic hit from the COVID-19 pandemic than the productive sector. The construction industry’s trajectory was particularly robust.

Compared with the European crisis intervention programs, political support in the U.S. for direct economic interventions remained modest, overshadowed as it was by the presidential election campaign. Agreement on a USD 900 billion stimulus package was not achieved until the end of the reporting period. By contrast, the Federal Reserve (Fed) adopted an interventionist stance early on by enacting a massive easing of monetary policy and putting in place emergency lending programs. It also introduced the new pillars of its strategy which, besides inflation and stability targets, also puts the development of the labor market front and center for the very first time.

Depending on the market segment, this environment had different ramifications for the voestalpine Group’s North American companies.

Just as in Europe, the U.S. automotive industry shut down production completely for several weeks during the business year’s first quarter, but it rapidly found its footing again over the course of the remaining business year. Aerospace as well as the oil and natural gas industry did not display any signs of recovering during the reporting period. On the whole, voestalpine Group companies and facilities that focus on consumer goods were less affected by the economic turbulence during the business year 2020/21 to date and developed along a commensurately solid trajectory.

South America/Brazil

The COVID-19 pandemic hit Brazil, the most relevant country in South America for the voestalpine Group, a bit later than elsewhere. As a result, the country’s economic development on the whole and capacity utilization at voestalpine’s Brazilian facilities were still good at the start of the reporting period. But the downturn did hit here, too, in the course of the first business quarter, even though the Brazilian government made an effort in connection with its management of the pandemic to avoid placing far-reaching governmental restrictions on the economy. Support measures that it enacted for the benefit of the country’s population, however, helped to mitigate the recession. The economy rebounded noticeably during the business year’s second quarter. Even in response to the renewed, sharp increase in the number of COVID-19 infections toward the end of the reporting period, the Brazilian government gave preference to regional restrictions over nationwide lockdowns. Subsequently, the economic momentum remained solid even during the business year’s third quarter.

The Brazilian facilities of the voestalpine Group were differently affected by the pandemic’s ramifications and initially had to adjust their production rates to the weakened demand. Following the Northern summer, however, order levels recovered and gradually improved through the end of the reporting period.


In Asia, China was the first and only country to be affected by COVID-19 during the company’s business year 2019/20. The country’s political culture made it possible to bring the pandemic under control quite quickly using a rigorous approach, including massive restrictions on people’s individual liberties. Following a complete lockdown in vast regions that lasted a few weeks, China already began to rekindle its economy in coordinated fashion even before voestalpine’s business year 2019/20 had ended.

Moreover, the Chinese government intensified state-sponsored capital spending programs in both infrastructure and real estate construction; this succeeded soon in returning the country to a growth trajectory. China’s industry and consumers alike acted on this momentum immediately, thus making it possible for the country to hold off recessionary trends throughout the business year to date. It is likely that China will close the calendar year 2020 with positive GDP growth in spite of the COVID-19 pandemic.

Given these parameters, voestalpine’s Chinese facilities already achieved production levels in the business year’s first quarter equivalent to those prior to the outbreak of the COVID-19 pandemic and succeeded in generating further growth down the road.

The fact that the Chinese steel industry produced record levels of crude steel was a knock-on effect of the comprehensive construction and infrastructure program. Demand for iron ore in the world market thus remained high, in turn pushing the price of iron ore ever higher at the start of the business year 2020/21 despite the deep recession worldwide. While the fear that the pandemic might lead to delivery shortfalls from iron ore producers such as Brazil further intensified this trend, it did not materialize as time wore on. Accordingly, the global iron ore market first saw a slight easing during the Northern summer before tightening yet again as the momentum in both Europe’s and North America’s steel industry gathered speed during the third quarter of the business year 2020/21.

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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