High Performance Metals Division

MARKET ENVIRONMENT AND BUSINESS DEVELOPMENT

The first nine months of the current business year were consistently challenging in the tool steel product segment of the High Performance Metals Division. The aerospace industry was able to continue its existing upward trend in terms of special materials.

The tool steel product segment was faced with weak demand overall, with the European market in particular continuing to lose momentum from a regional perspective. In this extremely difficult economic environment, industry investment activity remained subdued. The absence of an upward trend in the German automotive industry resulted in a sustained decline in demand and led to the postponement of new models and facelifts. Competition for the reduced demand for tool steel also intensified due to a sharp increase in imports from China. In North America, the market developed largely satisfactorily at the beginning of the business year. However, as the presidential election campaign progressed, customers’ willingness to invest steadily declined and remained in a wait-and-see mode at the end of the reporting period. As in Europe, market conditions in South America, particularly in Brazil, were increasingly negatively affected by Chinese imports. By contrast, demand for tool steel developed positively in the Asian market, especially in China. The Chinese automotive industry and consumer goods industry in particular showed rising demand for high-quality tool steels from the High Performance Metals Division during the reporting period.

The special materials product segment has continued to perform satisfactorily in the course of the business year to date, with the aerospace sector in particular continuing its global growth trend. In the energy machinery area, power plant turbines showed positive demand momentum over the course of the reporting period. Demand from the oil and gas industry cooled in Europe and North America over the course of the first nine months as a result of the lower oil price.

Capacity utilization at the division’s production plants, High Performance Metals Production, has varied during the business year to date. The Swedish special steel plant in Uddeholm benefited from good demand from Asia and reported good capacity utilization overall.

The Austrian special steel plant in Kapfenberg completed its ramp-up phase on schedule during the reporting period and will commence regular operations by the end of the business year. Weak European demand for tool steel and the slowdown in demand for special materials from the oil and gas industry led to lower-than-planned capacity utilization. Capacity utilization at the Brazilian special steel plant Villares Metals declined over the course of the business year due to the economic slowdown in Brazil.

The acquisition of the German subsidiary Buderus Edelstahl to Mutares SE & Co. KGaA has been completed after the end of the third quarter with the closing on January 31, 2025.

The global sales and service network Value Added Services was also affected by the weak demand for tool steel in Europe during the first nine months of the business year. In addition to subdued demand for tool steel, the division’s North American locations also faced declining volumes of special materials for the oil and gas industry. By contrast, the Asian Value Added Services branches benefited from strong demand in China.

There were opposing trends in the various service products for tools and tool components. While the weakness of the European automotive industry also affected demand in the texturing segment, the coating of tools and tool components remained largely stable. By contrast, heat treatment activities for tool components grew in all markets.

DEVELOPMENT OF THE KEY FIGURES

Revenue in the High Performance Metals Division fell by 8.8% year-on-year, from EUR 2,614.8 million in Q 1 – Q 3 2023/24 to EUR 2,385.2 million in Q 1 – Q 3 2024/25. This development was driven by a slightly lower price level and declining shipment volumes. The fact that the operating result (EBITDA) fell sharply by 71.1% year-on-year from EUR 199.4 million (margin 7.6%) to EUR 57.6 million (margin 2.4%) was also due to negative one-off effects in the current reporting period. Against the backdrop of the Buderus Edelstahl sales process, impairment losses of EUR 81 million had to be recognized on current assets in the first two quarters of the current business year on the basis of binding offers. As a result of the impairment requirement, the High Performance Metals Division reported an operating result (EBIT) of EUR –62.5 million (margin –2.6%) in Q 1 – Q 3 2024/25. In the same period of the previous year, EBIT amounted to EUR 72.6 million (margin 2.8%).

In a direct quarter-on-quarter comparison, revenue in the High Performance Metals Division fell by 3.7% from EUR 794.5 million in Q 2 2024/25 to EUR 765.5 million in Q 3 2024/25. This was triggered by lower sales volumes. After the division reported a negative operating result of EUR –12.8 million (margin –1.6%) for EBITDA in the second quarter as a result of the one-off effects of EUR –53 million from the sales process of Buderus Edelstahl, it achieved EBITDA of EUR 41.8 million (margin 5.5%) in the third quarter. In terms of EBIT, the division broke even in the current reporting quarter (EUR 0.0 million). In the immediately preceding quarter, EBIT was negative at EUR –51.9 million (margin –6.5%).

As of December 31, 2024, the number of employees (FTE) in the High Performance Metal Division was 13,042, down 2.0% on the previous year’s figure of 13,308.