Metal Forming Division

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

Market environment and business development

Uneven conditions characterized demand for the Metal Forming Division in the first six months of the business year 2022/23. The Tubes & Sections business segment profited from a flourishing market environment at the start of the business year but the momentum weakened as time wore on. Demand for Automotive Components has been muted for quite a while. By contrast, the two smaller business segments—Precision Strip and Warehouse & Rack Solutions—developed along a positive trajectory during the business year’s entire first half. Although the consumption of electricity and natural gas in the Metal Forming Division is not as significant as it is in the other three divisions of the voestalpine Group, the cost basis of the division’s production facilities rose nonetheless in tandem with energy prices.

The situation surrounding semiconductor supplies in the European automotive industry remained difficult during the current business year’s first half. By contrast, bottlenecks in wire harness supplies that arose on account of the war in Ukraine eased over time. Automakers’ manufacturing activity overall in Europe remained moderate at best during the reporting period. In turn, this led to restrained component order call-ups for the voestalpine Group’s European Automotive Components facilities. The fact that short-term order adjustments triggered extremely complex capacity planning issues compounded the problems. Conditions at the non-European Automotive Components facilities were better, even though order call-ups in the United States trended downward during the current business year. In China, for its part, developments were largely positive despite the comprehensive lockdown in the city of Shenyang, which also affected one of voestalpine’s facilities at the start of the business year 2022/23.

Developments in both the major customer segments and the sales regions of the Tubes & Sections business segment present a more differentiated picture. Following very good conditions at the start of the business year, the economic environment deteriorated as the year wore on, particularly in Europe. In Continental Europe, this business segment had to contend with waning momentum on account of project postponements especially in the construction sector. Orders from the automotive supplier and construction machinery industries also fell slightly short of expectations on account of the lack of semiconductors. The storage technology segment, too, saw slight reductions in new project contract awards as well as a few project postponements. By contrast, orders from both the solar industry and the agricultural machinery sector developed along a very pleasing trajectory. Delays in construction projects contributed to the slowing economic momentum in Great Britain. Capacity utilization in the Tubes & Sections business segment in the United States was satisfactory. There, storage technology orders provided the basis for the segment’s positive performance. voestalpine’s facilities in Brazil benefited from the generally robust economic environment despite both high inflation and sharp interest rate increases thanks, in particular, to strong demand from the solar industry, the agricultural and construction machinery sector as well as the bus segment.

In the first half of the business year 2022/23, the Precision Strip business segment profited from largely brisk demand. The shortage of container and transportation capacity crimped exports, however. Bottlenecks in pre-materials supplies eased somewhat over the course of the reporting period. In the United States, high demand for wood fueled the demand for band saw steel. Developments in China’s domestic market were satisfactory overall despite the COVID-19-induced shutdowns. Yet the exorbitant increases in energy costs at the segment’s European facilities may adversely affect its competitiveness.

The highly satisfactory performance of the Warehouse & Rack Solutions business segment over the years continued in the current business year’s first six months. Ongoing work on the processing of large orders ensured high capacity utilization. High pre-materials costs were the only factor that had a slightly dampening effect on the segment’s performance. While new orders in Europe declined slightly, the strong momentum in the North American market continued unabated.

Financial key performance indicators

The positive trend that characterized the Metal Forming Division’s financial key performance indicators (KPIs) a year earlier continued in the reporting period. Year over year, the division’s revenue rose 24.3% to EUR 2,009.9 million in H1 2022/23, up from EUR 1,617.1 million in H1 2021/22. The division’s individual business segments succeeded in leveraging the sharp increases in pre-material costs into significantly higher product prices. The Metal Forming Division also managed to exceed its excellent operating performance a year earlier thanks to yet more improvements in both the Automotive Components and Precision Strip business segments. In sum, EBITDA rose 4.2% to EUR 199.2 million with a margin of 9.9% (H1 2021/22: EUR 191.1 million, margin of 11.8%). Year over year, EBIT climbed 6.9% to EUR 126.1 million with a margin of 6.3% (H1 2021/22: EUR 118.0 million, margin of 7.3%).

The quarter on quarter (QoQ) comparison shows a slight weakening in the Metal Forming Division’s performance. Aside from seasonal effects, this also resulted from a general economic downturn. Revenue fell by 6.5% from EUR 1,038.5 million in Q1 2022/23 to EUR 971.4 million in Q2 2022/23. The decline in revenue was the greatest in the Tubes & Sections business segment due to weakening momentum in the construction industry. Lower component order call-ups in the Automotive Components business segment over the Northern summer for seasonal reasons also dampened earnings in Q2 2022/23. Quarter on quarter, EBITDA fell by 25.3% from EUR 114.0 million with a margin of 11.0% in Q1 2022/23 to EUR 85.2 million with a margin of 8.8% in Q2 2022/23. EBIT dropped 38.1% to EUR 48.2 million with a margin of 5.0% in Q2 2022/23, down from EUR 77.9 million with a margin of 7.5% in Q1 2022/23.

As of September 30, 2022, the number of employees (FTE) in the Metal Forming Division (11,892) was 4.4% higher year over year (September 30, 2021: 11,386).