Metal Engineering Division

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

Market environment and business development

The Metal Engineering Division posted positive results for the first three quarters of the business year 2022/23. In addition to the customary solid performance of the division’s Railway Systems business segment, year over year the performance of the Industrial Systems business unit improved substantially thanks to very good demand from the oil and natural gas sector.

The Railway Systems business unit benefited in the reporting period from robust delivery volumes of high quality track grades. Over time, its rails product segment managed to offset the sharp increases in energy costs by raising its prices. The so-called “D-A-CH” region (comprising Germany, Austria, and Switzerland) along with Central and Eastern European countries provided the basis for satisfactory demand during the current business year. But Northern European countries also generated positive momentum. In particular, the fact that a broad range of grooved rails was supplied to the mass transit sector reflected a pleasing trend in key market segments. The satisfactory trend shaping the turnout systems product segment in previous business quarters also continued unabated during the business year to date, thanks particularly to the positive development of business in both Europe and North America. This product segment also registered good, stable demand in Brazil and Australia – important mining regions both – where the unit serves primarily the heavy-haul transport sector.

Throughout the first three quarters of the business year 2022/23, the Industrial Systems business unit benefited from an overall positive market environment, even though its individual product segments had to contend with widely differing economic parameters. Component order call-ups for wire products from the automotive industry in the wire technology segment were solid at the start of the current business year, but weakened steadily over time due chiefly to inventory reductions in the downstream value chain. The tubulars product segment, by contrast, followed the opposite trend: Thanks to its comprehensive project activities in the all-important oil and natural gas sector, this segment’s pronounced upward trajectory from the previous business year continued unabated. The welding product segment (welding technology) also benefited from the energy sector’s strong momentum during the current business year’s first three quarters. By contrast, incoming orders from the mechanical engineering industry began to flatten slightly after the Northern summer of 2022. Regionally speaking, demand in Europe, Asia, and South America followed a solid trajectory, whereas developments in the United States fell somewhat short of the volume expected at the start of the business year.

Financial key performance indicators

Year over year, the Metal Engineering Division’s key performance indicators (KPIs) paint an exceedingly positive picture. The increase in revenue by 29.2% to EUR 3,195.2 million for the first three quarters of the business year 2022/23 was pronounced (Q1–Q3 2021/22: EUR 2,473.3 million). While delivery volumes rose but slightly year over year, revenue grew substantially because the division raised its prices significantly across all product categories. These price increases are primarily a reflection of the marked increase in the cost of both raw materials and energy. As far as earnings are concerned, the Metal Engineering Division performed very well, not just year over year, but also across business quarters throughout the reporting period. On the whole, the division’s EBITDA for the first three quarters of the business year 2022/23 jumped year over year by 43.0% to EUR 409.8 million (Q1–Q3 2021/22: EUR 286.6 million). The EBITDA margin rose accordingly from 11.6% to 12.8%. In addition to the Railway Systems business unit’s stable operating result, the Industrial Systems business unit delivered a significant boost in earnings. The improvement in the tubulars product segment (seamless tubes), which focuses on the energy sector, was particularly pronounced. Moreover, the tubulars segment’s deliveries of seamless tubes to the United States benefited from the easing of the protective tariffs. The Metal Engineering Division even succeeded in boosting EBIT for the reporting period by 76.1% to EUR 270.8 million with a margin of 8.5% (Q1–Q3 2021/22: EUR 153.8 million, margin of 6.2%).

The quarter-on-quarter comparison (QoQ) of the current business year’s second and third quarter confirms the division’s positive trend. At EUR 1,076.9 million (Q2 2022/23: EUR 1,076.1 million), revenue in Q3 largely remained stable. As regards EBITDA, by contrast, the division’s earnings for the third quarter jumped by almost one third to EUR 168.0 million with a margin of 15.6% (Q2 2022/23: EUR 120.6 million, margin of 11.2%). Given the seasonal decline in the Railway Systems business segment, the increase in the operating result was achieved thanks to the strong performance of the tubulars product segment (Industrial Systems business unit). The Metal Engineering Division sharply boosted EBIT for Q3 2022/23 by 53.3% to EUR 117.3 million with a margin of 10.9% (Q2 2022/23: EUR 76.5 million, margin of 7.1%).

As of December 31, 2022, the Metal Engineering Division had 13,815 employees (FTE). This represents a year-over-year increase (from 13,146 employees) of 5.1%.