This report is a translation of the original report in German, which is solely valid.
Europe
In the first nine months of the business year 2022/23, the European economy was exposed to a number of negative factors: the war in Ukraine, high energy prices and high inflation as well as logistical obstacles and unresolved supply chain problems. Economic sentiment darkened over the course of the current business year, not least due to these uncertainties and the historically unprecedented interest rate increases by the European Central Bank (ECB). In the Northern fall of 2022, economists believed that a recession was inevitable. While actual economic growth lost momentum during the third quarter of the business year 2022/23, the economy turned out to be more robust than forecast.
Notwithstanding the difficult macroeconomic environment overall, at the start of the 2022/23 business year voestalpine benefited from very good demand from most market segments. Following the customary seasonal weakening over the Northern summer of 2022, demand from both the consumer goods and the construction industry began to decline at the start of the third business quarter. The automotive industry, which continued battling supply chain problems, developed along a dampened, albeit stable trajectory. There was no change in the good demand for components related to rail traffic infrastructure.
Given high energy prices, the energy sector’s momentum continued unabated; this applied to both the conventional and the renewable segments.
USA/North America
While the start of the business year 2022/23 saw strong economic growth along with almost full employment, as the year wore on two factors, in particular, dampened economic sentiment: high inflation and the reaction of the Federal Reserve (Fed).
The Fed’s aggressive tightening of monetary policy via steep interest rate increases led to uncertainty across the board. Its resolute rhetoric, specifically, that it would continue raising interest rates irrespective of the impact on the economy until inflation returned to the target corridor, made matters worse. Historically speaking, in most cases monetary policies of this nature have triggered recessions.
The expectation that this approach would adversely affect the economy thus dampened economic sentiment – not just on the part of companies but also among private households, in turn restraining consumption.
Add to that the generally slowing growth of the global economy as well as ongoing supply chain problems that also affected U.S. companies.
voestalpine’s North American facilities delivered largely positive performance in the business year 2022/23 to date, even despite the tense economic environment. While weakening trends characterized the consumer goods segment over the course of the current business year, the railway segment continued to develop at a good level. Demand from the oil and natural gas sector remained high during the reporting period.
Brazil/South America
The Brazilian economy has faced high inflation and high interest rates for quite some time, but its development along a positive trajectory was undiminished throughout the current business year’s first three quarters. Both the domestic economy and the export sector did well.
The presidential election campaign during the Southern summer of 2022 boosted consumption yet further thanks to generous allotments of support programs and stimulus packages. The election did not cause the economy to cool off.
All of the voestalpine Group’s Brazilian facilities performed well in this environment, thanks especially to strong demand from the oil and natural gas sector as well as the solar industry.
China/Asia
Economic growth in China slowed considerably during the business year to date. This was largely due to the zero-COVID policy that the Chinese central government upheld throughout most of the reporting period. Strict lockdowns were widely imposed in order to prevent new outbreaks of the pandemic. In some cases, this brought the economy of entire regions to a standstill. These measures adversely affected not just China’s own economic development; subsequently, they also hampered global supply chains.
Ongoing problems in the real estate sector put an additional damper on economic growth, and the cooling global economy hammered exports.
China’s central government tried to counteract these developments through economic stimulus measures. A 180-degree reversal of the country’s COVID policies was not instituted until the end of the reporting period; it was accompanied by an immediate abandonment of all protective COVID measures. The country’s sudden opening triggered a massive wave of infections, in turn dramatically limiting regional economic activity.
These measures affected particularly the voestalpine Group’s tool steel production plants in China during the reporting period. Projects related to rail technology were also interrupted at one time or another. By contrast, capacity utilization in connection with the production of automotive components was good.