D.11. Impairment losses and reversal of impairment losses

In addition to other factors, the Group considers the relationship between market capitalization and carrying amount when testing for indicators of impairment. As of March 31, 2025, the Group’s market capitalization was below the carrying amount of its equity. Accordingly, all CGUs were subjected to an impairment test.

In the business year 2024/25, impairment losses totaling EUR 128.0 million were recognized for goodwill (EUR 116.5 million), for other non-current assets of the Buderus Edelstahl disposal group (EUR 6.6 million) and for property, plant and equipment as well as other intangible assets (EUR 4.9 million).

In the previous business year 2023/24, impairment losses totaling EUR 337.9 million were recognized for goodwill (EUR 225.0 million, including EUR 2.9 million related to the goodwill of the Buderus Edelstahl disposal group), for other non-current assets of the Buderus Edelstahl disposal group (EUR 86.2 million), and for property, plant and equipment, and other intangible assets (EUR 26.7 million, including EUR 24.5 million for the asset CGU Schwäbisch Gmünd).

Goodwill is allocated to the following CGUs or groups of CGUs (goodwill-allocated CGUs):

Impairment loss of CGUs to which goodwill has been allocated

Goodwill-allocated CGU HPM Production

In the business year 2024/25, an impairment of goodwill amounting to EUR 77.7 million was recognized in other operating expenses in the High Performance Metals Division for the goodwill-allocated CGU HPM Production, which produces high-quality stainless steels. Due to significant deviations in earnings in the fourth quarter of the business year and the increased uncertainties regarding the future earnings development of the CGU, planning assumptions were adjusted. These developments led to a decrease in the recoverable amount (value in use), resulting in the impairment of the goodwill allocated to HPM Production. See also B.2. Significant judgments and estimates, section entitled “Geopolitical and trade policy developments”.

Six production facilities around the world are combined in HPM Production. Its manufacturing activities cover a highly complex and highly demanding product portfolio in the areas of tool steel, high-speed steel, valve steel, high-grade engineering steel, powder-metallurgical steel, powder for additive manufacturing, special steels, and nickel-based alloys. Product manufacturing activities range from smelting and transforming (rolling and forging, hot-rolled and cold-rolled strips) to heat treatment and processing and precision processing that meet customers’ specific property and quality requirements. The processing companies produce plates, profiles, and special forged parts made of titanium alloys, nickel-based alloys as well as high, medium, and low-grade alloyed steels.

The internal forecasts and estimates of HPM Production—particularly with respect to the business that targets sophisticated metallurgical applications in the aerospace, oil and natural gas as well as automotive industries—rely on external sources of information. The economic environment in the business year 2025/26 will continue to be characterized by uncertainty. High energy prices and personnel costs, particularly in Austria, persistently high raw material prices and the associated instability in overall economic conditions, along with risks arising from geopolitical conflicts, will continue to weigh on the business development in the coming business year. Additional uncertainty is expected from ongoing trade conflicts and associated tariff policies. However, the continuation of cost-saving and growth-oriented measures (e.g., sales initiatives) in the division’s future markets will help offset these challenges and support the planned improvement in earnings.

The Automotive segment is primarily supplied with tool steel. External market growth and production forecasts for the European automotive sector—which is a key market for the division—indicate limited growth potential over the medium-term planning horizon. As a result, the earnings outlook in this segment remains challenging. In response, the division is implementing cost-saving measures and adjusting production capacities.

A stable development is expected in the aerospace segment. Among other things, this is reflected in the fact that airlines have already reached an all-time high in capacity utilization.¹ The construction rates of aerospace OEMs are rising continuously, although they have so far been delayed by supply chain disruptions. On the demand side, U.S. companies, where uncertainties related to U.S. trade policy are becoming an increasing burden, are of high relevance for HPM Production. However, supplier changes are difficult to implement in the medium term due to complex product certifications and long-term agreements (LTAs).

In the Oil and Gas, CPI & Renewables sectors, long-term stable development is expected.² The development of new and the expansion of existing oil and natural gas fields is becoming increasingly technologically demanding and requires higher-grade materials. An upturn is expected in the nuclear energy sector in Europe. Renewable energy and the CPI sector (petrochemicals) are regarded as industrial growth drivers, along with targeted increases in market share in the oil and gas segment.

The recoverable amount (value in use) of this unit amounted to EUR 1,723.3 million as of March 31, 2025. The fifth plan year was used as the basis for calculating the perpetual annuity. The perpetual annuity is determined based on a growth rate of 1.65%. The after-tax WACC is 8.54%; the pre-tax WACC is 11.04%.

Goodwill-allocated CGU Automotive Components

In the business year 2024/25, an impairment of goodwill in the amount of EUR 38.8 million was recognized in other operating expenses in the Metal Forming Division at the goodwill-allocated CGU Automotive Components, which supplies a broad product range from highly innovative structural parts to outer skin parts, high-strength hot-formed parts, laser-welded blanks, and complex assemblies with a focus on lightweight solutions made of steel and aluminum to customers in the automotive industry. In the Automotive Components segment, the management initiated a consolidation strategy in the second half of the business year 2024/25. The main reason for this is the persistent underutilization of capacity among premium customers in the German automotive supply industry. Against this backdrop, the Metal Forming Division is restructuring its automotive supplier business in Germany and has taken this into account accordingly in its planning assumptions.

The cash flow forecasts for Automotive Components are based on medium-term market growth and production forecasts for the global automotive industry, based on the forecasts from LMC Automotive³. This applies in particular to the key markets in Europe, the USMCA region, and Asia, as well as to the most important customers—Europe’s premium automotive manufacturers.  The internal assessments reflect the strategy of Automotive Components, which is now geared towards consolidation. Sustained positive effects from the restructuring initiated in the business year 2024/25 were taken into account in the planning assumptions. The external Group indicators and market dynamics were adjusted in line with the current model portfolio of Automotive Components customers. In addition, customer-specific information regarding medium-term forecasts and sales expectations served as sources for Automotive Components’ sales planning. The management’s assumption that sales levels in Europe will tend to be lower was taken into account in the planning. This leads to a rather flat sales trend and more cautious margins in the five-year, medium-term business plan.

The recoverable amount (value in use) of this unit amounted to EUR 623.4 million as of March 31, 2025. The fifth plan year was used as the basis for calculating the perpetual annuity. The perpetual annuity is determined based on a growth rate of 1.37%. The after-tax WACC is 8.85%; the pre-tax WACC is 11.13%.

The discount rate and the cash flows are the most important forward-looking assumptions. There is the risk that any change in these assumptions will necessitate a material adjustment of the carrying amounts within the next business year. Any increase in the after-tax discount rate by one percentage point or any decrease in the cash flows by 20% would result in the following additional impairment losses:

In the previous business year (business year 2023/24), impairment losses were recognized for the following goodwill-allocated CGUs:

Goodwill-allocated CGU HPM Production

In the previous business year (business year 2023/24), an indicator of impairment was identified, and an impairment test was therefore carried out in the High Performance Metals Division in mid-March 2024 due to the planned sale of two asset CGUs (Buderus Edelstahl) within the goodwill-allocated CGU HPM Production, which produces high-quality stainless steels. Due to the significant negative impact of the planned sale of Buderus Edelstahl within the goodwill-allocated CGU HPM Production goodwill was impaired by EUR 178.9 million. This was recognized in other operating expenses.

The recoverable amount (value in use) of this unit amounted to EUR 2,053.7 million within the scope of the impairment test prior to the reclassification of IFRS 5. The fifth plan year was used as a basis for determining the perpetual annuity, with the disposal group included in the impairment test with the estimated disposal result as of September 30, 2024. The perpetual annuity was determined based on a growth rate of 1.64%. The after-tax WACC was 8.63%; the pre-tax WACC was 11.23%.

In connection with the separation of the Buderus Edelstahl disposal group from the goodwill-allocated CGU HPM Production, there was a total effect of EUR –359.6 million, which is made up of the impairment of goodwill in the amount of EUR –181.8 million, the impairment of non-current assets in the amount of EUR –86.2 million, and the impairment of current assets in the amount of EUR –91.6 million. Information on the Buderus Edelstahl asset deal can be found in Note C.2. Changes in the scope of consolidation, section entitled “Disposals and other exits from the scope of consolidation”.

The headroom as of March 31, 2024, amounted to EUR 144.4 million following elimination of the disposal group from the carrying amount and the cash flows of HPM Production.

Goodwill-allocated CGU Automotive Components

In the previous business year (business year 2023/24), an impairment of goodwill in the amount of EUR 43.1 million was recognized in other operating expenses in the Metal Forming Division at the goodwill-allocated CGU Automotive Components, which supplies a broad product range from highly innovative structural parts to outer skin parts, high-strength hot-formed parts, laser-welded blanks, and complex assemblies with a focus on lightweight solutions made of steel and aluminum to customers in the automotive industry. Management made a targeted adjustment due to the structural underutilization of capacity in the automotive supply industry in Germany. Against this backdrop, the Metal Forming Division reorganized its automotive supply business in Germany and adjusted its planning assumptions accordingly. These significant reductions in planning assumptions led to lower projected cash flows and, consequently, to an impairment loss.

The recoverable amount (value in use) of this unit amounted to EUR 567.9 million as of March 31, 2024. The fifth plan year was used as a basis for calculating the perpetual annuity. The perpetual annuity was determined based on a growth rate of 1.37%. The after-tax WACC was 9.32%; the pre-tax WACC was 12.14%.

Impairment Test of non-impaired CGUs to which goodwill has been allocated

The following estimates and assumptions were used to measure the recoverable amounts of goodwill-allocated CGUs that account for a significant portion of the voestalpine Group’s total goodwill:

The Steel Division focuses on the production and processing of steel products for the automotive, white goods, electrical, processing as well as energy and engineering industries. The five-year, medium-term business plan for the Steel Division was prepared, for one, based on external economic forecasts for the eurozone, the United States, China, and Mexico (based on the World Economic Outlook of the International Monetary Fund (IMF)⁴) and, for another, taking into account expected steel consumption.⁵ The production plan reflects the sales forecasts. The CRU Index was considered in the revenue planning for the flat products. Additionally, minor positive, quality-related adjustments were made in individual customer segments. As regards procurement, the planning was based on assumptions concerning raw materials derived from global market forecasts (on the basis of Platts price assessments,⁶ among others). Based on these assumptions, a stable gross margin is expected in the medium-term business plan. The five-year, medium-term business plan was supplemented by a rough planning stage. The latter includes the investments toward greentec steel—i.e., the substitution of two of the three blast furnaces by electric arc furnaces (EAFs) to be commissioned from calendar year 2027 and 2032—and investments in CO₂ capture technologies (CCUS). In addition, expected increases in emissions allowance prices and the incremental reduction in the number of no-cost allowances pursuant to European Union measures aimed at lowering CO₂ up until the complete elimination of the no-cost allowances in calendar year 2034 as well as a price premium for greentec steel and changes to the raw material mix are taken into account.

The last plan year was used to determine the perpetual annuity based on an expected growth rate of 1.38% (2023/24: 1.34%). The after-tax WACC is 7.81% (2023/24: 8.10%); the pre-tax WACC is 9.53% (2023/24: 9.84%).

The five-year, medium-term business plan for the High Performance Metals Division and its two goodwill-allocated CGUs High Performance Metals (HPM) Production and Value Added Services was based on the general economic environment of the relevant industry segments (particularly the automotive, oil and natural gas, and aerospace industries) as well as on growth forecasts for the regional sales areas of its core markets, especially Europe, America and Asia.

The CGU Value Added Services is responsible for sales and value-adding services related to the further processing (e.g., heat treatment, coating) of materials from HPM Production – primarily tool steel – but also third-party materials. The continued expansion of services in the planning period enhances both customer loyalty and value creation. Ongoing activities will additionally focus on the consistent pursuit of tried and tested cost-savings and optimization programs as well as on new initiatives, especially with respect to digital sales (customer portals with full e-commerce functionality) and artificial intelligence (acceleration and partial automation of the quotation process with the aid of artificial intelligence), which will lead to higher revenue and a positive gross margin trend in the planning period.

The Value Added Services division is managed by Regional Management, which focuses on the major sales markets in Europe, America, and Asia. Internal forecasts and estimates regarding the development of these regions are based on external sources of information.⁷ In Europe, a slight recovery is expected towards the end of 2025 and subdued growth in the medium term. The North American market is characterized by uncertainty due to current political forces. Chinese competitors on the US market are at a disadvantage due to higher tariffs on imports. Japanese and other European competitors are subject to similar tariffs as those imposed on the High Performance Metals Division. In Asia, a steady recovery is expected in China, with the rest of Asia slowly recovering from the current weak growth. India has high growth potential.

The last plan year was used to calculate the perpetual annuity based on an expected growth rate of 1.55% (2023/24: 1.57%). The after-tax WACC is 8.67% (2023/24: 8.63%); the pre-tax WACC is 11.13% (2023/24: 11.15%).

The Group’s expertise as the leading provider of high-quality rails, high-tech turnouts, and digital monitoring systems as well as all associated services was combined in the Railway Systems business segment to further expand the Group’s global presence as a provider of complete railway infrastructure systems. The five-year, medium-term business plan for Railway Systems is based on market forecasts⁸ and project planning for railway infrastructure, taking into consideration the business segment’s strategic focus and the ongoing digital transformation of the rail segment. It also accounts for the different levels of economic development in individual regions.⁹ With regard to the development of material factor costs, general forecasts of the development of personnel expenses and internal assumptions on the development of steel prices were incorporated into the budgets. The planning assumes that the gross margin will be kept relatively stable over the planning period and that potential fluctuations in individual markets will offset one another due to the business segment’s global presence. Likewise, the investments in greentec steel are included in both the five-year, medium-term business plan and the rough planning stage for an electric arc furnace system and its expansion in the pre-production stage. In addition, the planning takes into account expected increases in emissions allowance prices and the incremental reduction in the number of no-cost allowances pursuant to European Union measures aimed at lowering CO₂ up until the complete elimination of the no-cost allowances in calendar year 2034, as well as a price premium for greentec steel and changes to the raw material mix. 

The last plan year was used to determine the perpetual annuity based on an expected growth rate of 1.50% (2023/24: 1.51%). The after-tax WACC is 8.43% (2023/24: 8.39%); the pre-tax WACC is 10.32% (2023/24: 10.23%).

The five-year, medium-term business plan for the Welding business unit, which is one of the leading manufacturers of products and implementers of complete solutions in the field of welding and joining technology, considers macroeconomic trends¹⁰ in each region as well as the specific forecasts for the relevant industry segments. The company’s market position relative to competitors and the overall market—along with its projected development—was also taken into account. The expected development of specific cost components was reflected in the cost planning for the production factors used in the value creation process.  Expected cost trends and price trends based on these were derived for raw materials, energies, and alloys, based on current market prices and available forecasts. Implementation of the strategy introduced for the full-service provider of the “Perfect Weld Seam” will be continued consistently in the planning period. Optimization programs that have been initiated and are already being implemented as well as ongoing continuous optimization programs are being driven forward. In summary, the planning, which is derived from market expectations, assumes moderate volume growth with a slight improvement in gross margin, supported by the acquisition of Italfil S.p.A. completed in the business year 2024/25.

The fifth plan year was used to calculate the perpetual annuity based on an expected growth rate of 1.44% (2023/24: 1.43%). The after-tax WACC is 8.45% (2023/24: 8.45%); the pre-tax WACC is 11.09% (2023/24: 11.05%).

Precision Strip specializes in the production of globally available, technologically complex cold-rolled strip steel products with precise dimensional accuracy, excellent surface quality, and unique edge profiles for the highest customer requirements in the process industry. The five-year, medium-term business plan for Precision Strip was prepared considering the general regional parameters in the core markets and reflects the general economic environment of the industry segments that are key to the entities. Current market conditions are characterized by lower demand, stiff competition and strong pressure on margins. The growth indicated in the planning is largely based on securing market leadership in niche markets, expanding market share, and developing new markets. External forecasts were taken into account in internal estimates and generally adjusted very slightly downward. These external forecasts are country-specific figures for expected economic growth (GDP forecasts)¹¹ that were supplemented by industry-specific experience in the relevant markets for the respective product segments. Customer-specific information regarding medium-term outlooks and sales projections also served as sources for sales planning at Precision Strip. As a result, revenue is expected to increase, and the gross margin is projected to remain stable during the planning period. 

The fifth plan year was used to calculate the perpetual annuity based on an expected growth rate of 1.36% (2023/24: 1.34%). The after-tax WACC is 8.73% (2023/24: 9.14%); the pre-tax WACC is 10.80% (2023/24: 11.40%).

Sensitivity of non-impaired material cash generating units to which goodwill has been allocated

The impairment tests performed confirmed the carrying amount of all other goodwill (except for HPM Production and Automotive Components) as of March 31, 2025.

The following table shows the sensitivity analysis for the material, non-impaired goodwill-allocated CGUs in relation to the key valuation assumptions – expected cash flows and discount rate. It illustrates the potential change in carrying amount under possible variations in these parameters (general sensitivity analysis), as well as the extent by which both major assumptions would need to change for the estimated recoverable amount to equal the carrying amount (break-even analysis):

Sensitivity regarding technological transformation in connection with decarbonization

The impairment tests of the CGUs affected by the technological transformation, particularly the goodwill-allocated CGUs Steel Division and Railway Systems, were based on a price premium in the base scenario (see explanations in the foregoing), which is not included in the basis for determining the perpetual annuity. In addition to the aforementioned general sensitivity analysis an alternative scenario that does not include an assumed price premium for greentec steel was developed for each CGU. In this scenario, too, the carrying amount of the goodwill-allocated CGUs Steel Division and Railway Systems would still substantially exceed the recoverable amount.

Impairment test ASSET CGUs and of other assets

An impairment loss of EUR 4.9 million (2023/24: EUR 2.2 million) was recognized for individual assets due to the absence of any further intended use.

In the previous business year 2023/24, an impairment loss of EUR 24.5 million on “Land, land rights, and buildings,” “Plant and equipment” and “Fixtures and fittings” was recognized in other operating expenses for the Schwäbisch Gmünd cash generating unit, , which comprises the hot forming and large assemblies product portfolio. The impairment loss resulted from the structural shortfall in capacity utilization in the automotive supply industry in Germany. The planning assumptions for some quantity-critical models were reduced based on experience in recent years. The recoverable amount (value in use) amounted to EUR 82.3 million. The discount rate applied was 8.99% after tax and 12.45% before tax.

¹ IATA, November 2024

² ExxonMobile Energy Outlook 2024

³ GlobalData

⁴ World Economic Outlook, International Monetary Fund (IMF)

⁵ The European Steel Association (EUROFER) regarding steel consumption in Europe; World Steel Association for non-European data

⁶ S&P Global Platts

⁷ World Economic Outlook, IMF – International Monetary Fund

⁸ UNIFE Annual Report

⁹ World Economic Outlook, International Monetary Fund (IMF)

¹⁰ World Economic Outlook, International Monetary Fund (IMF)

¹¹ World Economic Outlook, International Monetary Fund (IMF)