This report is a translation of the original report in German, which is solely valid.
The economic rebound continued throughout the first three quarters of the business year 2021/22. Rising vaccination coverage rates made it possible to open up economies step by step. The resulting strong economic momentum at the start of the current business year held up over the Northern summer of 2021 but flattened out a bit as time wore on. While demand soared, some industrial sectors, particularly those with global value chains, were confronted with pre-material supply bottlenecks. Skyrocketing energy costs in the third business quarter along with prevailing conditions in the economic environment pushed inflation up substantially. At the end of the reporting period, the COVID-19 pandemic moved back to the front burner because the new Omicron variant triggered increases in infection rates to an extent never seen before. Given vaccination coverage rates as well as most people’s ability by now to handle protective measures, both Europe and North America opted to forego comprehensive lockdowns. As a result, economic momentum was not affected as much as it had been in the pandemic’s previous waves.
Europe
Domestic demand, especially private consumption, was the main driver of the overall favorable economic environment in Europe throughout the first three quarters of the business year 2021/22. The brightening labor market along with declining savings rates supported consumer demand. Governmental support programs also contributed to the highly positive momentum at the start of the current business year. While consumer demand remained strong as time wore on, pre-material supply bottlenecks started to make themselves felt in some sectors. This had a particularly strong impact on the automotive industry, where the lack of semiconductor chips intensified production curtailments starting in the second business quarter. Rapidly rising energy prices over and above accelerating COVID-19 infection rates put an additional damper on the economy in the third business quarter. The cost of energy impeded exports to Asia and North America because energy prices there are much lower.
voestalpine’s facilities in Europe delivered very solid performance in this environment. 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 affected by the COVID-19 pandemic, not only rebounded over the course of the reporting period but also saw its momentum accelerate toward the period’s end.
North America
Echoing developments in Europe, the strong upturn in North America started to follow a downward trend from the start of the business year 2021/22. While private consumption supported economic growth, the difficulties of the sectors with global value chains had an increasingly negative impact. Investments in private housing construction also declined somewhat throughout the current business year.
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 current Northern winter. 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.
voestalpine’s facilities in North America succeeded in exploiting the region’s positive economic environment overall and delivered satisfactory performance. Additionally, the exports of voestalpine’s European entities benefited from the ongoing rebound in the American oil & 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 dampened private consumption, but conditions in the metal industry remained robust.
voestalpine’s Brazilian entities succeeded in maintaining their momentum despite the general slowdown in Brazil’s domestic market. Their focus on robust market segments as well as good export opportunities that were fueled not least by the Brazilian currency’s favorable development were key to their performance.
Asia/China
The slowdown in China’s economic momentum throughout the business year 2021/22 to date was more pronounced than the downturn in the other major economies. While governmental stimulus measures that were enacted in the previous calendar year broadly supported the country’s economic development, in calendar year 2021 the state steadily reduced these measures. At the same time, issues in the Chinese real estate market intensified after Evergrande’s problems became apparent, clouding the investment climate. Since the country’s infrastructure and real estate sectors are the backbone of the Chinese steel industry, their weakening triggered a decline in the steel production volume. Energy shortages forced both production companies and the industrial sector to curtail their activities. Consumption also fell somewhat short of expectations. China’s approach to the COVID-19 pandemic— i.e., the consistent suppression of the virus by way of strict local lockdowns—has had correspondingly negative effects on private consumption. But the performance of voestalpine’s local entities remained good despite these impediments. With the exception of the robust rail technology segment, voestalpine’s entities in China focus chiefly on consumer-oriented markets such as the automotive and the consumer goods industry.