High Performance Metals Division

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

Market environment and business development

Diverging trends for the main product segments characterized the performance of the High Performance Metals Division in the first quarter of 2023/24: While demand for tool steel for the automotive and consumer goods industries was subdued, the special materials segment benefited from high momentum in the oil and natural gas and aerospace industries.

The tool steel segment was confronted with decreasing demand in Europe, particularly in Germany. Orders also fell in France and Eastern Europe. In North America, the order intake declined slightly. Demand for tool steel in South America was relatively stable. In Asia, where the consumer goods and automotive industries are the main drivers of demand for tool steel, the economic environment was generally subdued. In China in particular, the stagnating real estate market also led to a reluctance to buy household appliances.

In the special materials segment, the clearly positive trend in the aerospace sector continued at the beginning of the business year 2023/24. In some cases, the supplier industry had difficulties meeting the strong increase in demand from aerospace manufacturers. In the oil and natural gas industry, the high momentum of the previous business year also continued unchanged. High energy prices and the development of infrastructure for LNG terminals supported the demand for special materials for the oil and natural gas sector. The transformation in the energy sector is leading to full order books in the wind turbine sector. Demand from the commercial vehicle industry was also at a good level.

The production plants in the High Performance Metals Production business segment were well utilized for the most part in the first quarter of 2023/24. The new special steel plant in Kapfenberg, Austria, started the ramp-up phase in the first quarter of 2023/24. The division’s special steel production plants continued to face large differences in energy costs. The sites in Austria and Germany were burdened with significantly higher electricity and natural gas costs compared to the sites in Sweden and Brazil.

The Value Added Services business segment experienced a decline in sales volumes in the first quarter of 2023/24. In Western Europe in particular, demand for tool steel and for services such as heat treatment and coating was quite subdued. In North America and Asia, however, the business segment showed a stable trend. The implementation of the defined growth projects took place according to plan.

Development of the key figures

In contrast to the Steel Division, the High Performance Metals Division was able to sell at higher prices in the market in the first quarter of 2023/24 compared to the same period of the previous year. The main driver was the increased cost base for raw materials and continued high energy prices. In addition, an improved product mix due to the very good development of special materials for the energy and aerospace industries had positive effect. With a disproportionate share of high-quality alloys, these products’ price level is higher in general. However, declining sales volumes in the first quarter led to a year-on-year decline in revenue of 2.5% to EUR 934.4 million (Q1 2022/23: EUR 958.8 million). As a result, the EBITDA of the High Performance Metals Division decreased by about one third year-on-year to EUR 96.4 million with a margin of 10.3% (Q1 2022/23: EUR 146.0 million; margin of 15.2%). Profit from operations (EBIT) almost halved in the same period from EUR 107.7 million to EUR 55.1 million. The EBIT margin thus decreased from 11.2% in the comparable quarter of the previous year to 5.9% in the first quarter of 2023/24.

The number of employees (FTE, full time equivalent) in the High Performance Metals Division increased by 1.6% year-on-year to 13,560 as of June 30, 2023 (Q1 2022/23: 13,344).