EUROPE
In the first three quarters of the 2024/25 business year, the European economy was subdued throughout. Growth stagnated close to the zero line and there was no discernible upward trend at the end of the third quarter. In Germany in particular, the weakness of the industrial sector remained unchanged. The construction industry also showed no noticeable improvement and continued to decline in the third quarter. Contrary to original expectations, the usual seasonal upturn in the fall failed to materialize. On the contrary, well-known European companies reported profit warnings and had to revise their forecasts downwards.
In response to the economic slowdown, the ECB decided to cut the key interest rate again in June 2024 after a phase of almost two years of interest rate hikes. The third interest rate cut to around 3.0% (main refinancing rate, key interest rate) took place towards the end of the third quarter of the report.
Europe remained the most difficult market for voestalpine in the current business year. Above all, the continuing weakness in Germany is having an impact on demand figures. In the first three quarters, demand in the construction, mechanical engineering and consumer goods sectors declined. By contrast, the railway infrastructure, aerospace and warehouse technology market segments showed a stable performance with solid growth. With the expansion of international locations and structural adjustments, the management is actively countering the increasingly restrictive regulatory and economically difficult environment in Europe. The sale of the German Group subsidiary Buderus Edelstahl to Mutares SE & Co. KGaA was completed with the closing on January 31, 2025. The reorganization of the Automotive Components business in Germany entered the implementation phase over the course of the business year, with the aim of optimizing costs and strengthening core technologies.
USA/NORTH AMERICA
The economic situation in North America was positive overall. The slowdown expected at the beginning of the reporting period has not yet materialized and economic growth has remained solid, with private consumption in particular performing well in the first nine months. The employment situation and the labor market continued to perform well and the positive trend on the financial markets ensured a positive mood among consumers. Although momentum slowed slightly towards the end of the third quarter, it remained on a growth trajectory. While the service sector continued to perform well, the investment sector showed increasing restraint.
Although inflation in the US fell steadily in the first half of 2024/25, it rose again in the third quarter of the financial year. The Fed lowered the key interest rate for the first time in four years in September and made its third interest rate cut in December 2024 to a range of 4.25% to 4.50%.
In this environment, voestalpine performed satisfactorily throughout. Demand in the capital goods segment was subdued and investments in oil and gas exploration also declined in the course of the reporting period due to the lower oil price. By contrast, demand in the Railway Systems, Warehouse & Rack Solutions and Tubes & Sections business segments remained stable throughout all three quarters and performed consistently well.
BRAZIL/SOUTH AMERICA
Economic momentum in Brazil showed a steady growth trend in the first half of the business year, but slowed noticeably towards the end of the third quarter of the report. High employment and rising wages led to high private consumption and good development in the service sector. The agricultural sector, an important part of Brazil’s economy, was significantly negatively impacted by the heavy rainfall and flooding in the southernmost state of Rio Grande do Sul in the summer months (northern hemisphere). In contrast to Brazil’s overall economic growth, industrial production was rather subdued. In addition to stagnating demand from the market, many industrial companies were confronted with increased imports, particularly from China. The sharp interest rate hikes by the Brazilian central bank towards the end of the reporting period further dampened the investment climate in Brazil. The BDB (Banco do Brasil, Brazil’s central bank) raised its key interest rate to 12.25% in December 2024 in response to the significant rise in inflation expectations.
The voestalpine sites in Brazil developed satisfactorily overall in the first nine months of the business year. The Railway Systems and Tubes & Sections business segments in particular performed well over the entire reporting period. The Brazilian voestalpine special steel plant Villares Metals was confronted with declining demand and increased competition from imports in the third quarter of the business year.
CHINA
The Chinese economy continued to grow overall in the first three quarters of the 2024/25 financial year. The positive economic development was largely driven by good industrial production. Both exports and the economic stimulus package initiated by the central government in the summer were responsible for this. Domestic consumption also benefited from the latter in some segments. Overall, however, Chinese consumers remained cautious. Persistently unresolved problems in the real estate sector are largely responsible for this. Falling real estate prices, coupled with increased debt rates and low growth in household incomes, are leading to deflationary price trends in the service and consumer goods sectors.
The Chinese voestalpine sites benefited from good industrial production. Both the Chinese automotive industry and the consumer goods industry showed growing demand for high-quality tool steels from voestalpine in the first nine months of the business year 2024/25. After a very good first half of the year, the Chinese voestalpine Automotive Components plants were confronted with declining customer call-offs and falling capacity utilization in the third quarter of the 2024/25 financial year.