This report is a translation of the original report in German, which is solely valid.
While strong catch-up effects associated with the recovery from the COVID-19 pandemic still predominated at the start of the first half of the business year 2021/22, the macroeconomic climate stabilized at a high level over the remainder of the reporting period. Despite good economic growth that continued unabated, the regional differences in vaccination rates as well as the appearance during the Northern summer of ever new variants and mutations of the novel coronavirus triggered yet more uncertainty. Supply chain distortions, which continue to impact particularly the European automotive industry, have delayed deliveries of new cars. To top it off, energy prices rose worldwide toward the end of the business year’s first half.
Two sectors, in particular—personal consumption and the service industry—benefited from the easing of COVID-19 restrictions in numerous European Union member states at the start of the current business year. The momentum in industrial sectors continued unabated although the shortages of pre-material, especially of semiconductors for electronic components, substantially undermined the performance of the automotive industry. The anticipated improvement in conditions during the Northern summer failed to materialize, with the result that conditions toward the end of the reporting period were as critical as before. Hence the European automotive industry was unable to fully satisfy the strong demand for automobiles.
In this environment, the voestalpine Group succeeded in continuing the upward trajectory that had already begun in the previous business year. Moreover, orders from the aerospace industry started to come in again for the first time since the outbreak of the COVID-19 pandemic. The automotive industry was the only one whose performance remained subdued on account of the component supply chain difficulties.
In North America, the strong upturn at the end of the previous business year continued unabated in the first half of the business year 2021/22. But the strong momentum at the start of the business year began to wane over the Northern summer. The appearance of new variants of the novel coronavirus dampened economic activity in some areas of the service sector. On the whole, however, developments in manufacturing, personal consumption, and the labor market remained positive. In contrast to the European Central Bank (ECB), the Federal Reserve (Fed) has indicated in the light of rising inflation that it will slow down (“taper”) its expansive monetary policy (“quantitative easing”) and begin to raise interest rates.
The voestalpine Group benefited in many areas from the positive market momentum in North America. This was helped along by the fact that, up to the end of the business year’s second quarter, voestalpine’s North American facilities were affected to a significantly lesser degree by the lack of semiconductors than their European counterparts. Rising energy prices fueled the demand from the oil & natural gas industry for both materials and equipment. In turn, this also benefited the company’s European production plants even though high protectionist Section 232 tariffs continue to impact the market.
South America / Brazil
Brazil, the most important economic region for voestalpine on the South American continent, succeeded in maintaining its economic momentum overall throughout the first half of the business year 2021/22. Besides good domestic demand, changes in the country’s currency exchange rate also support the country’s economy.
The Brazilian facilities of the voestalpine Group continued to deliver positive performance in this environment.
Asia / China
China already overcame the first wave of the COVID-19 pandemic to a significant degree in calendar year 2020. The Chinese authorities imposed strict lockdowns in response to new, yet locally limited outbreaks during the current business year. These measures constrained consumer spending, especially in the leisure and service sectors. The fact that China started, in the first half of the business year 2020/21, to cut back the economic stimulus measures that it had put in place during the first COVID-19 wave also had a pronounced effect on its economic momentum.
Problems in the Chinese real estate industry came to the fore in the reporting period’s second half. They affected not just the construction industry, but also sectors such as the Chinese steel industry associated with it. Steel production in the country reached new highs despite announcements of production curbs for environmental reasons. Subsequently, however, the authorities did begin to enforce such curtailments. Toward the end of the reporting period, Chinese statistics showed declining crude steel production rates for the first time in a long while. This should support the global steel market in the medium term. It is to be expected that these developments will have a greater impact on the performance of voestalpine’s European steel facilities than on its processing plants in China itself.
Energy shortages as well as the resulting temporary and locally limited power cuts had an impact on China’s economy toward the end of the reporting period. In turn, this temporarily affected customers as well as some of voestalpine’s automotive and welding facilities.
Yet China recorded positive economic growth even for the first half of the business year 2021/22 despite the slowing economic momentum. In turn, this enabled the voestalpine Group’s Chinese facilities to deliver satisfactory performance as well.