Steel Division

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

BUSINESS DEVELOPMENT

The first quarter of the 2024/25 business year was very satisfactory for the Steel Division in a generally difficult European steel market environment.

The weak volume demand for steel and steel products continued in Europe at the start of the new business year 2024/25. The main steel-consuming market sectors of construction, mechanical engineering, and consumer goods showed no signs of recovery despite the European Central Bank’s first interest rate cut in June 2024. Steel prices on the European spot market fell accordingly.

With its focus on high-quality sheet steel in the technologically most demanding segment, the Steel Division was largely able to escape this generally difficult environment in the first quarter of 2024/25 and saw a satisfactory volume trend overall. Long-term customer partnerships with a corresponding contract structure and a focus on niche products in top segments also helped to counteract the pressure from the spot markets on the price side.

In detail, the market segments of the Steel Division were as follows in the first quarter of the 2024/25 business year:

The automotive industry continued its largely stable demand trend in the current reporting period. Although the absolute level of European automotive production cannot match pre-pandemic levels, the Steel Division was able to ensure very satisfactory volume utilization in its most important market segment thanks to excellent delivery performance and active market cultivation. The long-term trend towards e-mobility continues, although a slight slowdown is discernible. This slight slowdown was compensated for in the electrical industry segment.

The consumer goods and household appliance industries have not provided any significant stimulus to demand since the end of the last business year. This market segment has now remained at a low level for over a year.

The mechanical engineering sector is suffering from the low level of investment activity in European industry and showed no upward trend in the current reporting period.

The construction industry has cooled down considerably since the start of the European Central Bank’s interest rate hike cycle. The first interest rate cut in June 2024 was not yet able to initiate a turnaround. Accordingly, demand from this sector remained at a low level, but stable overall.

The energy sector is an important market for the Heavy Plate business unit. Technologically demanding pipeline projects led to a very satisfactory development in the current reporting period.

Raw materials relevant to steel production, such as iron ore and metallurgical coal, essentially showed a stable trend in the first quarter of 2024/25.

DEVELOPMENT OF THE KEY FIGURES

In the first quarter of 2024/25, the Steel Division generated revenue of EUR 1,566.1 million, which corresponds to a slight year-on-year decline (–4.7%) (Q1 2023/24: EUR 1,643.6 million). In addition to a lower average revenue level, this is primarily due to the decreasing volume in the current reporting quarter.

Despite the slight decline in revenues, the Steel Division was able to significantly increase its earnings. On the one hand, lower steel prices were offset by lower raw material costs, which enabled the margin to be maintained at an attractive level overall. On the other hand, the product mix improved year-on-year, which is attributable in particular to technologically sophisticated projects in the energy sector.

The division was thus able to increase EBITDA by 31.9% to EUR 229.7 million (Q1 2023/24: EUR 174.2 million). This means a current EBITDA margin of 14.7% (previous year: 10.6%). EBIT improved by 49.3% to EUR 164.2 million (Q1 2023/24: EUR 110.0 million) with an EBIT margin of 10.5% (Q1 2023/24: 6.7%).

The Steel Division recorded a slight increase of 1.5% in the number of employees (FTE, full-time equivalent) to 10,816 as of June 30, 2024 (previous year’s reporting date: 10,657).