Report on the Group’s business performance and the economic situation

      In the business year 2021/22, the COVID-19 pandemic was key to developments in the macro­economic environment for extended stretches of time. The fallout from the pandemic had not yet been fully overcome when, toward the end of the reporting period, Russia’s attack on Ukraine ushered in a totally new dynamic.

      An easing of conditions predominated in the first three business quarters following the hard lockdowns occasioned by the pandemic in many parts of the world. Growing immunization coverage made it possible to reopen economies step by step. The resulting strong growth momentum continued for most of the reporting period. It was curbed solely by supply chain problems in some industries that rely on global value chains.

      In the Northern fall of 2021, the Omicron mutation of the coronavirus triggered a massive increase in new COVID-19 infections. Given the vaccination coverage rates achieved as well as most people’s ability by then to handle protective measures, however, both Europe and North America opted to forego comprehensive lockdowns. China, by contrast, where the new wave did not arrive until the final business quarter, reacted yet again with large-scale lockdowns.

      Russia’s attack on Ukraine in the fourth quarter of the business year 2021/22 triggered a fundamental change in the macroeconomic environment. Sentiment was dampened worldwide. The massive increases in energy prices that had already started in the third quarter developed into an actual price shock on account of the West’s sanctions against Russia.


      The economic environment in Europe throughout the first three quarters of the reporting period was positive. Over and above governmental support measures, this was due also to high levels of consumer spending that drove domestic demand, particularly at the start of the business year. As time wore on, however, especially after the Northern summer of 2021, individual industries began to see bottlenecks in their input material supplies. This had a particularly strong impact on the automotive industry, where the lack of semiconductor chips intensified production delays starting in the second business quarter. In addition, skyrocketing new COVID-19 infection rates put a damper on economic growth starting in the third business quarter. Not only did steep increases in energy prices push inflation much higher, they also impeded exports to both Asia and North America, where energy prices were much lower.

      In the final business quarter, the ramifications of Russian troops’ invasion of Ukraine eclipsed the economic upward trend that had set in once most COVID-19-related restrictions were lifted.

      The Ukraine war has caused a marked deterioration in Europe’s economic climate. The ongoing, extreme increase in energy prices is fueling inflation and, in part, has prompted certain industries in Europe to enact production cutbacks. Declines in commerce, sharp increases in transportation costs as well as renewed disruptions of supply chains all contributed to the dampening of consumer sentiment.

      Considered against this backdrop, voestalpine’s facilities in Europe delivered solid performance in the business year 2021/22. Manufacturing companies strongly oriented toward the automotive industry, however, had to contend with slightly weaker capacity utilization. Those voestalpine entities that make products and services available to the rail technology sector maintained solid production levels. The aerospace industry, which was massively impacted by the pandemic, saw a steady rebound that even accelerated toward the end of the reporting period. Those of the company’s business units that deliver products to the oil and natural gas industry benefited over the course of the business year from the rising energy prices. The Ukraine war, which started toward the end of the fourth business quarter, had but a negligible impact on results for the reporting period on the whole. But the shock of the energy price increases still had a profound impact on the business year’s last month.

      North America

      Echoing developments in Europe, economic growth in North America at the start of the business year 2021/22 was highly dynamic but began to wane during the Northern summer of calendar year 2021. Just as in the preceding season, a flood of new COVID-19 infections palpably dampened economic activity toward the close of the third business quarter, which coincides with the Northern winter. As trends go, the Omicron wave did not last quite as long in North America as it did in Europe. Hence private consumption continued to drive economic growth, due also to high levels of savings and the associated higher levels of household wealth.

      Sharply rising inflation rates occurred in tandem with robust wage and salary increases amid historically high employment levels. North America was affected by rising energy prices as well, but the price shock was not in any way comparable to the severity of the situation in Europe. In contrast to the European Central Bank (ECB), the U.S. Federal Reserve (Fed) announced in the light of growing inflation that it will taper its expansionary monetary policy and raise interest rates in the future. The dampening effect of this policy on economic sentiment made itself felt immediately.

      Even industrial sectors in North America whose value chains are globally integrated increasingly faced difficulties. In the final business quarter, foreign trade was affected as well by the slowdown in Europe’s economic activity owing to the Ukraine war. Hence the fourth business quarter saw a surprisingly strong reduction in economic activity.

      voestalpine’s facilities in North America succeeded in exploiting the region’s positive economic environment throughout the business year 2021/22 overall and delivered satisfactory performance. Additionally, the exports of voestalpine’s European entities benefited from the ongoing rebound in the American oil and natural gas sector as well as in the aerospace industry.

      South America/Brazil

      While the economic momentum in Brazil was still very strong at the start of the business year 2021/22, it flattened out as time wore on. High inflation rates resulting from increases in the cost of raw materials and subsequently also of foodstuffs had a dampening effect on consumer spending. But the metal working industry continued along a robust trajectory in this environment regardless. In the business year’s last quarter, the war in Ukraine and the sanctions against Russia associated with it pushed raw materials prices yet higher. As one of the world’s largest exporters of commodities, Brazil should profit from this scenario because the country’s domestic economy is expected to benefit as well.

      voestalpine’s Brazilian facilities did indeed hold their ground in this environment. Over and above their alignment with robust local market segments, good developments on the export side were pivotal, too.


      The slowdown in China’s economic momentum throughout the business year 2021/22 was more pronounced than the downturn in the other major economies. While the government had enacted economic stimulus measures in the previous year to support the economy across the board, in the reporting period it steadily cut back on these programs. Following the problems with Evergrande, the situation in the company’s real estate market continued to intensify during the Northern summer of 2021, putting a damper on the investment climate. The country’s infrastructure and real estate sectors—the Chinese steel industry’s two most important customer segments—weakened.

      Subsequently and in response to pressure from government agencies in light of environmental policies, starting in the middle of the business year 2021/22 China’s production of crude steel shrank for the first time in many years.

      Energy shortages and the resulting temporary power cuts further impacted the country’s economy after the Northern summer of 2021. The economic momentum did not begin to palpably accelerate until the start of the fourth business quarter, before it got hammered yet again, this time by the spread of the Omicron variant. In keeping with their COVID-19 policy so far, Chinese government agencies imposed strict limitations on people’s mobility in many regions as well as an extensive lockdown in Shanghai. This affected both declining private consumption and the manufacturing sector. In turn, new supply chain difficulties began to pile up again. The Ukraine war, however, did not yet adversely affect China’s economic growth during the business year ended.

      voestalpine’s facilities in China delivered good economic performance despite the partly unfavorable environment. With the exception of the rail technology segment, voestalpine’s entities in China focus chiefly on consumer-oriented markets such as the automotive and the consumer goods industry.