The outbreak of the war in Ukraine along with the resulting sanctions against Russia brought an abrupt end to the strong momentum that the economic rebound generated once pandemic-related restrictions had been lifted, curbing economic growth in Europe yet again. In North America, too, growth already declined slightly and unexpectedly in the last quarter of the company’s business year 2021/22. China’s zero-COVID strategy is not only slowing down the country’s own economic momentum. Given the strong interdependence of global supply chains, we expect its ramifications to affect both Europe and North America also.
Market sentiment thus clouded over at the start of the company’s new business year 2022/23. The situation is further aggravated by the fact that the parameters of macroeconomic growth—first and foremost, the duration and course of the Ukraine war as well as the political reactions to it—largely are imponderable.
Volatile raw materials and energy prices as well as future developments in the COVID-19 pandemic further deepen the uncertainty. So far, China has consistently maintained its zero-COVID strategy. This might lead to temporary bottlenecks in global supply chains during the current business year.
In light of the difficult environment overall, the Group’s excellent financial footing and high order backlog at the start of its new business year give voestalpine a decisive edge. The company’s order books are filled through to the Northern summer of 2022 at least, and longer for some product and customer segments. The structure of our contracts—which comprise short, medium, and long terms—will provide additional stability.
Despite good demand for cars, the automotive industry will again have to contend with supply chain constraints in the business year 2022/23. However, some improvement in this situation should be expected in the course of the business year.
The aerospace industry is seeing an upward trend at this time, which should persist throughout most of the business year 2022/23.
High energy prices will continue to drive demand from the oil & natural gas industries.
The construction and mechanical engineering sectors as well as the white goods and consumer goods industries are currently showing solid demand.
As in the past, the railway infrastructure segment should serve as a stabilizing factor on the whole throughout the business year.
Against this backdrop, we expect the Group to post good earnings performance for the first quarter of the business year 2022/23. Portions of the second business quarter should also benefit from current order levels even though the momentum will decline, as is generally the case during the Northern summer.
However, major uncertainties cloud the forecast for the business year’s second half. Assuming that, overall, the global economy will cool off but will not suffer any additional major economic distortions due to the Ukraine war; due to new, aggressive COVID-19 waves; or due to large-scale disruptions of international supply chains, the Management Board of voestalpine AG expects the Group to generate EBITDA of between EUR 1.8 billion and EUR 2.0 billion for the business year 2022/23.
Linz, May 24, 2022
The Management Board
This report is a translation of the original German-language report, which is solely valid.