Metal Engineering Division

MARKET ENVIRONMENT AND BUSINESS DEVELOPMENT

In the first nine months of the business year 2024/25, the Metal Engineering Division performed satisfactorily overall thanks to strong global demand in the Railway Systems business segment. However, business performance in the Industrial Systems business segment varied in the individual product segments of welding, wire technology and tubulars.

The positive market environment in the Railway Systems business segment has continued throughout the reporting period to date, although the third quarter of 2024/25 is characterized by the usual winter seasonality with somewhat reduced investment activity in the railway networks of the Northern hemisphere. In line with the high European demand, rail production capacity at the Donawitz site in Austria was fully utilized in the first nine months of the 2024/25 business year and there was good demand for turnout systems in all regions of Europe and the UK in the turnout systems product segment. The markets in Germany, Austria and Switzerland developed particularly dynamically. In North America, market conditions were satisfactory overall. While demand in heavy haul traffic (Class 1) flattened out somewhat, passenger traffic (transit) performed very well. The heavy haul/freight transport segment also provided good market momentum in South America and South Africa. In Egypt, the new joint venture for turnout plants with the Egyptian National Railways has developed very positively and the first turnout systems have already been successfully delivered. The Chinese market for railway infrastructure was unable to match previous years in the current financial year but was satisfactory overall. After years of developing the (high-speed) rail network, China is increasingly becoming a mature market for railway infrastructure, with growing demand and orders from the maintenance sector. The markets in Australia and India also showed a good demand for turnout systems.

In the Industrial Systems business segment, the welding product segment remained stable thanks to its global positioning. While demand in Asia developed well overall, business in the rest of the world was mixed. Demand from the energy sector was mostly good, while the automotive industry performed weakly, particularly in Europe. The wire technology product segment, which focuses on the European market, was confronted with a challenging market environment in the first three quarters. Although the energy industry, with its niche product of shaped wire, saw a good demand trend, requests from the automotive, mechanical engineering and construction industries were very subdued. After a good start to the 2024/25 business year, the tubular product segment increasingly lost momentum over the course of the reporting period. The global slowdown in oil and gas exploration for crude oil and natural gas and the low natural gas price in North America led to both falling demand and declining prices in the OCTG (oil and gas exploration tubes) sector.

DEVELOPMENT OF THE KEY FIGURES

At EUR 3,177.9 million, the Metal Engineering division’s revenue in the first three quarters of 2024/25 was almost stable year-on-year (Q 1 – Q 3 2023/24: EUR 3,241.0 million). While the Railway Systems business segment was able to increase its business volume, the challenging environment in the Industrial Systems business segment led to a declining level of sales. At EUR 348.1 million (margin 11.0%), EBITDA in Q 1 – Q 3 2024/25 was 21.5% lower than in Q 1 – Q 3 of the previous year (EUR 443.4 million, margin 13.7%). The weakening is primarily due to a moderate revenue level in the tubulars product segment. By contrast, the Railway Systems business segment recorded a slight increase in its operating result. EBIT fell by 32.4% to EUR 209.6 million (margin 6.6%) in the first three quarters of the current business year, after the division reported a figure of EUR 309.9 million (margin 9.6%) in the same period of the previous year.

In a comparison of the second and third quarters of 2024/25, the Metal Engineering Division’s revenue decreased by 9.0% from EUR 1,095.0 million to EUR 996.5 million. The decline is primarily the result of seasonal effects in the form of lower project activity in the railway infrastructure sector during the Northern winter months. Accordingly, the division’s operating result (EBITDA) also fell by 20.8% in a direct quarter-on-quarter comparison, from EUR 120.6 million (margin 11.0%) in Q 2 to EUR 95.5 million (margin 9.6%) in Q 3 2024/25. In addition to the seasonal effects in the Railway Systems business segment, EBITDA also weakened somewhat in the Industrial Systems business segment. EBIT decreased by around one third from EUR 74.1 million (margin 6.8%) in Q 2 to EUR 49.0 million (margin 4.9%) in Q 3 2024/25.

As of December 31, 2024, the number of employees (FTE) in the Metal Engineering Division was 14,789, up 3.5% on the previous year’s figure of 14,287.