Metal Engineering Division

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

Market environment and business development

The positive trends that emerged in the fourth quarter of the previous business year for the Metal Engineering Division continued in the first quarter of the business year 2021/22. This enabled its Railway Systems business segment to deliver stable and good performance at the start of the current business year. Following the significant downturn resulting from the COVID-19 lockdowns, the division’s Industrial Systems business segment also succeeded in returning to the previous quarter’s momentum. Rising product prices made it possible to largely offset sharp increases in the cost of raw materials.

Capacity utilization in the Railway Systems business segment at the beginning of the current business year was satisfactory. In the rails product segment, both production and delivery volumes of high-quality track grades intended primarily for the European market were solid. The global turnout systems product segment for its part profited from the attractive economic environment in its core markets. In particular, demand for heavy-haul transport equipment in the mining regions of Australia and Brazil was positive due to high raw materials prices. Conditions related to rail maintenance activities in the United States improved thanks to the general economic upturn.

Order levels in the wire technology product segment of the Industrial Systems business segment were good despite tight semiconductor supplies from original equipment manufacturers (OEMs). As regards oil and natural gas exploration, OPEC’s production rate cutbacks triggered increases— first in crude oil prices and then in investments. The tubulars product segment succeeded in exploiting this environment, continually boosting capacity utilization at its facilities in Kindberg, Austria. But the protectionist Section 232 tariffs of 25% on steel imports into its important U.S. market continued to weigh on its operating performance. The welding product segment in turn is following a slightly upward trend in Europe, demand in its core segments (South America and China) continues to develop along a positive trajectory, and its market in the United States exhibits signs of a rebound, too.

Development of the key figures

The substantial improvement in the Metal Engineering Division’s key performance indicators (KPIs) for the first quarter of the business year 2021/22 is rooted in the rebound of its Industrial Systems business segment. The Railway Systems business segment, for its part, turned out to be a stabilizing factor even during the COVID-19 lockdowns, and its steady performance continued unabated during the reporting period. On the whole, in Q1 2021/22 the division’s revenue jumped by 19.7% to EUR 800.9 million year over year (Q1 2020/21: EUR 669.2 million). The marked increase in earnings also reflects Industrial Systems’ recovery. Delivery volumes rose substantially, above all in the product segments, wire technology and tubulars. As a result, the Metal Engineering Division’s EBITDA for Q1 2021/22 soared 76.2% year over year to EUR 96.2 million with a margin of 12.0% (Q1 2020/21: EUR 54.6 million, margin of 8.2%). EBIT improved significantly during the same period, from EUR 10.3 million (margin of 1.5%) to EUR 51.9 million (margin of 6.5%).