Economic environment and course of business

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


      Numerous factors adversely affected the economic environment in Europe during the first six months of the company’s business year 2022/23. In particular, this included the war in Ukraine, high energy prices and high inflation, logistics issues, and the supply chain problems that have still not been resolved. New waves of COVID-19 infections led to rising numbers of absences from work due to illness and, in some industries, to temporary labor shortages. Yet widespread lockdowns were no longer imposed.

      The European Central Bank (ECB) began to raise the prime rate over the Northern summer in the light of high inflation and the dramatic depreciation of the euro vis-à-vis the U.S. dollar. While many voices have been demanding as much for quite some time, in Europe’s current situation it is hitting a softening economy. The resulting stagflation risk depressed economic sentiment toward the end of the reporting period.

      In this potentially negative environment, voestalpine benefited from very good demand at the start of the current business year’s first half. While the Northern summer saw the usual seasonal weakening, declines in the cyclical segments made themselves felt toward the reporting period’s end. Among others, this includes the consumer goods, construction, and mechanical engineering industries. By contrast, demand for rail technology infrastructure components remained good. In the automotive industry, which is still battling supply chain problems, demand growth overall remained weak yet stable at this level. Demand from the energy sector is undiminished thanks to high energy prices. This applies equally to the production of energy from conventional sources and renewables.

      USA/North America

      While both the economy and employment were strong at the start of the first half of the business year 2022/23, negative indicators began to have an effect as time wore on.

      First and foremost, the sharp interest rate increases by the U.S. Federal Reserve (Fed) triggered uncertainty as to the economic developments going forward. The Fed’s chairman made clear that the fight against inflation has the highest priority and that he would even accept a recession to achieve this goal.

      This led to a significant dampening of sentiment among companies and consumers alike, already muting consumption toward the end of the reporting period.

      The slowdown in the growth of the global economy is being exacerbated by ongoing global supply chain problems, which also affect U.S. companies.

      Regardless of this environment, however, the business of voestalpine’s North American facilities developed along a largely positive trajectory. While weakening trends began to make themselves felt in consumer goods toward the end of the business year’s first six months, the railways segment maintained its good performance. High demand from the oil and natural gas sector also continued unabated throughout the reporting period. This market is also served by European facilities of the voestalpine Group. Moreover, the expiration of the Section 232 tariffs and the introduction of a quota system as of January 1, 2022, greatly facilitated steel exports to the United States.

      Brazil/South America

      The Brazilian economy has contended with high inflation and high interest rates for quite some time but succeeded nonetheless in maintaining its positive momentum over the reporting period. Both the domestic economy and exports were strong. Generous support and economic stimulus packages that were adopted as part of the presidential election campaign during the Northern summer boosted private consumption yet further. Not until the end of the reporting period did the leading economic indicators anticipate the withdrawal of the support measures, cooling down a bit as a result.

      The voestalpine Group’s Brazilian facilities delivered highly satisfactory performance against this backdrop. Demand was strong, particularly from the oil and natural gas sector as well as the solar industry.


      Economic growth in China slowed substantially over the first six months of the business year 2022/23, due largely to the central government’s zero-COVID policy. Comprehensive lockdowns were repeatedly imposed on important economic regions during the reporting period. These restrictions have affected not just China’s own economic development, but consequently worldwide supply chains as well.

      Continued problems in the real estate sector are hampering economic growth too. Diminishing consumer confidence due to potential risks facing real estate developers will likely weigh on the market for some time to come. Last but not least, the cooling of the global economy is also slowing exports. China’s central government is working to counteract these developments through economic stimulus measures.

      Of the voestalpine Group’s facilities in China, mainly those producing tool steel were affected by the lockdowns during the reporting period. Rail technology projects in locked-down regions were interrupted from time to time also. The production of automotive components, by contrast, continued at a very pleasing level.

      In sum, the momentum of voestalpine’s business in China during the first half of the business year 2022/23 was positive despite significant dampening effects.