Economic Headwinds Impact voestalpine’s H1 2023/24 Financial Results

Economic Headwinds Impact voestalpine’s H1 2023/24 Financial Results

(IN BRIEF) voestalpine, a steel and technology company, reported its financial performance for the first half of the 2023/24 fiscal year. The company faced economic challenges with declining revenue and earnings due to a changing economic landscape. While some sectors like construction and consumer goods experienced reduced demand, others, such as the automotive, rail, and aerospace industries, remained stable. voestalpine launched a plan for green steel production and achieved milestones in its sustainability initiatives. The company expects EBITDA for the full fiscal year to be around EUR 1.7 billion but remains cautious due to uncertainties in the geopolitical environment.

(PRESS RELEASE) LINZ, 8-Nov-2023 — /EuropaWire/ — Voestalpine AG (VIE: VOE), an Austria-based leading steel and technology group with a unique combination of materials and processing expertise, has reported its financial performance for the first half of the 2023/24 fiscal year. Despite facing challenges in a changing economic landscape, voestalpine remains resilient and focused on strategic initiatives for sustainable growth.

Financial Highlights for H1 2023/24:

• Revenue decreased by 8.4% from EUR 9.3 billion to EUR 8.5 billion compared to the previous year.
• EBITDA declined by 36.7% from EUR 1.4 billion to EUR 915 million.
• EBIT dropped by 40.9% year over year, from EUR 898 million to EUR 531 million.
• Profit before tax is EUR 440 million (H1 2022/23: EUR 846 million); profit after tax is EUR 333 million (H1 2022/23: EUR 715 million).
• Gearing ratio improved year over year, from 32.7% to 26.6%.
• Employee count increased by 1.7% to 51,212 FTE.

“In a market environment that was challenging at times, voestalpine was able to demonstrate its strengths in the first half of 2023/24 with its focus on high-quality products, particularly for the mobility and energy industries. The last business year saw record figures. The present results are in line with the long-term average and are definitely satisfactory in view of the current economic conditions” commented Herbert Eibensteiner, CEO of voestalpine AG.

Economic Environment: voestalpine faced a challenging economic environment during H1 2023/24, with varying impacts across sectors. Demand declined in construction, mechanical engineering, and consumer goods segments due to a weaker overall economic situation in Europe. Additionally, competition from Chinese steel manufacturers affected international steel markets. Despite these challenges, the company’s strategic focus on quality ensured positive performance in vital customer segments.

The automotive industry remained stable due to improved global supply chain conditions. Industries such as rail, aerospace, conventional energy (oil & natural gas), and renewable energy (solar) continued to perform well, defying the overall economic trend.

Strategic Initiatives: voestalpine launched greentec steel, a comprehensive plan for green steel production. By 2027, the company aims to replace one blast furnace at each of its Linz and Donawitz sites with green electricity-powered electric arc furnaces, reducing carbon emissions by 30%. The recent inauguration of a state-of-the-art stainless steel plant in Kapfenberg marked a significant milestone for the company’s future.

Outlook: The economic slowdown, anticipated for some time, affected certain areas of voestalpine Group, particularly in the second quarter of H1 2023/24. Challenges in construction, mechanical engineering, and consumer goods industries are expected to persist, leading to stagnating demand at a subdued level.

The automotive industry is expected to remain robust in the second half of 2023/24. The conventional energy sector has normalized, while the renewable energy sector (photovoltaics) is projected to maintain its positive market environment. Railway systems, aerospace, and other sectors are expected to perform well.

Despite ongoing challenges, the Management Board expects EBITDA for the full fiscal year 2023/24 to be at the lower end of the previously stated range (EUR 1.7 to 1.9 billion), approximately EUR 1.7 billion, in line with market expectations.

The impact of geopolitical developments presents uncertainty, with the war in Europe and conflicts in the Middle East introducing unforeseeable influences on the economic environment. voestalpine remains vigilant in navigating these challenges and opportunities for sustainable growth.

The voestalpine Group