High Performance Metals Division

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

BUSINESS DEVELOPMENT

The first quarter of the new business year 2024/25 did not bring any significant change to the prevailing trends to date: While demand for tool steel remained subdued, the positive booking situation for special materials in the aerospace sector continued.

Demand in the tool steel segment was weak, particularly in Europe. In Germany in particular, there was a clear reluctance to invest in new models in the automotive industry. The mechanical engineering sector was affected by the generally low level of investment activity in industry and the consumer goods sector also remained at a low level as a result of high interest rates and low construction activity. Demand from the automotive sector in North America also remained low, as did demand for tool steel. In contrast, the fast-moving consumer goods sector remained largely stable, as in the rest of the world. In China, there was also an upturn in demand in the high-quality tool steel segment in the first quarter of 2024/25, largely driven by the good performance of the Chinese automotive and consumer goods industries.

The special materials segment was able to continue the positive trend in the aerospace sector in both Europe and North America. In the energy sector, demand from the conventional sector cooled in the reporting period following a very dynamic market phase in the previous business year. Falling oil and gas prices were reflected in lower exploration activities, particularly in North America. By contrast, the energy machinery and wind energy sectors developed positively.

Capacity utilization at the production plants in the High Performance Metals Production business segment varied in the first quarter of 2024/25. While the Buderus Edelstahl steel plant in Germany was hit harder by the European economic downturn, the recovery in demand from Asia led to improved production capacity utilization at the Swedish special steel plant in Uddeholm. The new special steel plant in Kapfenberg, Austria, is in the middle of the ramp-up phase as planned. The Brazilian special steel plant Villares Metals was faced with slightly lower capacity utilization in the reporting period than in the previous business year due to the economic slowdown in Brazil.

The Value Added Services business segment, which represents the division’s global sales network on the one hand and offers special services for tool manufacturers on the other, performed satisfactorily overall in the first quarter of the 2024/25 business year. Although the weak demand for tool steel also had an impact here, demand for services such as heat treatments, surface coatings, and texturing for finishing tools was also good worldwide in addition to the positive development of special materials from the aerospace sector. These activities were therefore further expanded in the reporting period.

DEVELOPMENT OF THE KEY FIGURES

The High Performance Metals Division’s revenue weakened by 11.7% year-on-year and amounted to EUR 825.2 million in the first quarter of the new business year (Q1 2023/24: EUR 934.4 million). In addition to lower volumes overall, decreasing revenue was also responsible for this development. The product mix also developed somewhat less favorably in comparison: volumes in the area of special materials for the energy segment declined due to the slowdown in momentum in oil and gas exploration.

The change in the product mix and the lower volumes also had an impact on the High Performance Metals Division’s earnings performance. Although raw material costs fell year-on-year, they were unable to fully compensate for the decline in revenue in terms of earnings. In addition, the operating result (EBITDA) for the first quarter of 2023/24 was impacted by negative one-off effects of EUR 28 million from the ongoing sales process for Buderus Edelstahl, Germany, which was written down in the first quarter of 2024/25 due to the binding offers that have now been received.

EBITDA decreased accordingly by 70.3% year-on-year to EUR 28.6 million (Q1 2023/24: EUR 96.4 million). The EBITDA margin fell from 10.3% in the previous year to currently 3.5%. EBIT amounted to EUR –10.6 million in the quarter under review. (Q1 2023/24: EUR 55.1 million). The margin turned from 5.9% in the previous year to currently –1.3%.

The number of employees (FTE, full-time equivalent) in the High Performance Metals Division decreased by 2.6% to 13,212 as of June 30, 2024 (previous year’s reporting date: 13,560).