Metal Engineering Division

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

MARKET ENVIRONMENT AND BUSINESS DEVELOPMENT

The performance of the Metal Engineering Division varied in some of its business segments: A good economic environment prevailed in the Railway Systems business segment in the first three quarters of the business year 2023/24. The situation in the Industrial Systems business segment was somewhat more varied. While there were still signs of overheating in the tubulars product segment, which is primarily active in the oil and natural gas sector, at the beginning of the business year, the situation has now normalized. In the welding product segment the decline in demand in Europe in the first three quarters was more than compensated for by positive developments outside Europe and in the project business. By contrast, conditions in the wire technology product segment deteriorated increasingly over the course of the business year.

The Railway Systems business segment reported positive demand for the first three quarters of the business year. The high demand for rails, particularly from the “D-A-CH” region (which comprises Germany, Austria, and Switzerland), ensured full capacity utilization of the production units at the Donawitz site (Austria). The turnout systems product segment also benefited from a pleasing level of demand in the European core markets. Positive impetus was also provided by the positive sentiment in the North American transit sector. Heavy goods traffic in Brazil and Australia showed stable development. Project activities in the high-speed sector in China weakened somewhat in the reporting period. For the first time in quite a while, a recovery in demand is noticeable in South Africa.

The Industrial Systems business segment presented a varied picture in the first three quarters of the business year 2023/24. The tubulars product segment faced very high demand in the first quarter of 2023/24, while inventories in the supply chain were reduced in the second quarter. From the Northern summer of 2023, the number of rig counts in the United States decreased slightly. In global terms, however, drilling activity for oil and natural gas remained at a satisfactory level. The escalation of the Middle East conflict led to a short-term rise in the oil price, but this has since stabilized at a more moderate level.

The wire technology product segment was confronted with increasingly challenging conditions for wire deliveries; countermeasures were taken in good time in the third quarter by adjusting production capacities in line with the market. Towards the end of the calendar year 2023, demand stabilized at a low level – this applied to the construction sector as well as the mechanical engineering and consumer goods industries. Orders from the automotive supply industry were also subdued. The market environment in the commercial vehicle industry was somewhat better.

Despite the slowdown in the global economy, the welding product segment closed the first three quarters of the business year 2023/24 on a satisfactory note. Among other things, the measures to increase efficiency had an impact. From a regional perspective, demand in Europe in particular cooled over the course of the business year. North America developed according to plan and at a solid level. The energy industry in South East Asia and China was characterized by a good level of demand.

DEVELOPMENT OF THE KEY FIGURES

In the first three quarters of the business year 2023/24, the Metal Engineering Division was able to increase all key financial figures compared to the same period of the previous year, although the business units within the division developed differently.

In contrast to the other three voestalpine divisions, revenue in the Q 1 – Q 3 2023/24 increased slightly, specifically by 1.4% from EUR 3,195.2 million to EUR 3,241.0 million. Sales volumes fell slightly in all product segments. The price trend was heterogeneous: While the rails and tubulars product segments benefited from rising prices, the price level in the wire technology product segment declined. EBITDA improved by 8.2% in the first three quarters of 2023/24, from EUR 409.8 million (margin of 12.8%) to EUR 443.4 million (margin of 13.7%). This increase is primarily due to a stronger performance in the Railway Systems business segment. In the Industrial Systems business segment, the tubulars and welding product segments were stable. The wire technology product segment was confronted with a significant decline in earnings. Government compensation payments to mitigate high energy costs had a supporting effect in the third quarter of 2023/24. EBIT increased by 14.4% from EUR 270.8 million (margin of 8.5%) to EUR 309.9 million (margin of 9.6%) in the reporting period.

In a comparison of the second quarter of 2023/24 with the third quarter of 2023/24, revenue fell by 4.1% from EUR 1,070.3 million to EUR 1,026.3 million. This was due to a slight decline in sales volumes across all product segments. In the wire technology product segment, this was primarily due to economic factors. Seasonal effects were noticeable in the Railway Systems business segment. At EUR 128.1 million (margin of 12.5%), EBITDA in Q 3 2023/24 remained slightly below the level of the previous quarter (Q 2 2023/24: EUR 133.0 million with a margin of 12.4%). By contrast, the Metal Engineering Division reported a moderate increase in EBIT, which rose by 2.2% from EUR 85.0 million (margin of 7.9%) in the second quarter to EUR 86.9 million (margin of 8.5%) in the third quarter.

As of December 31, 2023, the Metal Engineering Division had 14,287 employees (FTE). Compared to December 31, 2022 (13,815 employees), this represents an increase of 3.4%.