Steel Division

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

      Market environment and business development

      Reduced imports from both Ukraine and Russia owing to the Ukraine war led at the start of the first half of the business year 2022/23 to distortions in the European steel market. Positive demand, which continued unabated, thus triggered sharp price increases in the spot market. Yet the market returned to equilibrium between supply and demand over the course of the first business quarter, with the result that spot market steel prices fell substantially yet again.

      Thanks to a balanced contract structure, both short-term and massive price movements in the spot market have but a highly muted impact on the Steel Division. Over time, however, these developments will also affect negotiations with contractual partners.

      Toward the end of the reporting period, the first signs of restraint in steel-consuming end markets made themselves felt alongside logistics problems and the extreme increases in energy costs. While the division successfully completed additional acquisitions aimed at offsetting these developments, it had to do so at prevailing spot market prices. The European steel industry noticeably reduced its production capacity in this environment. Even the Steel Division’s capacity utilization fell by some 10% at the end of the reporting period. In contrast to some of its competitors in the spot market, however, the division did not suspend entire production segments, opting instead to accelerate cost-optimized approaches to production.

      Customer demand remained largely satisfactory throughout the current business year’s first half despite the increasingly unfavorable economic sentiment. The slowing momentum in individual segments did not make itself felt until the end of the reporting period.

      While benefiting from strong orders, the automotive industry was affected throughout the first six months of the business year 2022/23 by ongoing bottlenecks in its supply chain. As a result, it was unable—at least in Europe—to fully ramp up production. Yet the Steel Division managed for the most part to delink itself from this unfavorable development, thanks to its focus on special products and the growing trend in the automotive industry to incorporate such applications. The continued expansion of its broad customer base, the boosting of its market share as well as its proactive working of the markets helped to ensure that declines in sales to the automotive industry were less pronounced than on average in the industry.

      Due to the lockdowns, the white goods and consumer goods industries saw a boom during the COVID-19 pandemic. But the momentum began to slow precipitously as life increasingly returned to normal again and purchases of household appliances reached the saturation point. Toward the end of the current business year’s first half, the changes in the interest rate environment as well as the largely pessimistic expectations regarding the development of the economy significantly dampened consumer spending.

      The mechanical engineering industry succeeded in carrying the good demand from the previous business year over into the first six months of 2022/23 not least thanks to strong orders.

      While demand from the construction industry for the Steel Division’s steel products was largely good during the reporting period, orders began to decline toward its end. Aside from the deteriorating economic sentiment overall, this was due to the tightening of the European Central Bank’s fiscal policies and the resulting increases in the prime rate.

      The energy sector—the main market of the heavy plate business segment—profited from high energy prices worldwide, which triggered very good demand throughout the current business year’s first half. Plans for both replacement and new investments to offset the lack of natural gas deliveries from Russia increasingly stimulated the division’s project environment.

      Raw material prices calmed down over the reporting period. They were declining at the start of the business year but largely stabilized as time wore on. Logistics in Europe presented a major challenge, however. Given the war in Ukraine, the Black Sea’s availability as a logistics route has been severely limited. Moreover, the Rhine-Main-Danube Canal was no longer navigable due to the drought in the Northern summer and the resulting low water levels. This led to the large-scale shifting of logistics routes to railways and, as far as maritime transports were concerned, to other ports. Aside from being time consuming and organizationally challenging, this also entailed high costs.

      To top it off, the significant increases in the cost of energy—e.g., electricity, but especially natural gas—put European steelmakers under pressure overall. These issues also posed major challenges for the Steel Division during the first half of the business year 2022/23.

      Financial key performance indicators

      Quarterly development of the Steel Division

      In millions of euros


      Q 1


      Q 2


      H 1

















      Change in %




























































      EBITDA margin






























      EBIT margin















      Employees (full-time equivalent),
      end of period































      Q 1 2021/22, Q 2 2021/22, and H1 2021/22 (excluding employees) retroactively adjusted. For further details, see Annual Report 2021/22.

      In terms of both costs and earnings, the Steel Division benefited from strong momentum throughout the first six months of the business year 2022/23. This is clearly reflected in the development of its financial key performance indicators (KPIs): The division boosted its revenue in the reporting period by 39.3% to EUR 3,437.5 million (H1 2021/22: EUR 2,468.1 million). This significant increase is due chiefly to sharply higher revenue in consequence of the dramatic increases in the cost of both raw materials and energy. But it also reflects the growth in the share of products with a deepening value chain. By contrast, delivery volumes fell slightly year over year. The Steel Division also delivered substantially higher earnings. The marked improvement in product prices made it possible not only to offset the considerable increases in input costs but also to expand the gross margin. EBITDA jumped during the first half of the business year 2022/23 by 63.1% to EUR 796.3 million with a margin of 23.2% (H1 2021/22: EUR 488.2 million, margin of 19.8%). Soaring by 86.8% to EUR 666.2 million with a margin of 19.4%, EBIT growth was even more pronounced (H1 2021/22: EUR 356.7 million, margin of 14.5%).

      Compared with Q1 2022/23, however, the Steel Division’s KPIs for Q2 follow a downward trend. Revenue weakened by 11.8% to EUR 1,611.3 million for the second quarter, down from EUR 1,826.2 million in the first. This decline stems primarily from the seasonally induced reduction in unit sales. By focusing on the contract business, the division managed to keep average prices in Q2 2022/23 largely constant at the same high level as in Q1 despite significantly weakening spot market prices. The falling gross margin mainly stems from the growing negative impact on costs. In this respect, energy is a significant expense item in the division’s income statement over and above raw materials. Quarter on quarter, EBITDA dropped in Q2 2022/23 by 48.8% overall to EUR 269.5 million with a margin of 16.7% (Q1 2022/23: EUR 526.8 million, margin of 28.8%). EBIT fell during the same period by more than one half to EUR 204.4 million with a margin of 12.7% (Q1 2022/23: EUR 461.8 million, margin of 25.3%).

      The number of employees (FTE) in the Steel Division as of September 30, 2022, was down slightly by 1.3% to 10,446. The total number of employees as of September 30, 2021, was 10,581.