voestalpine posts solid performance in first half results
November 15, 2021
Austria’s voestalpine Group has reported that in the first half of the business year 2021/22 (April 1 to September 30) it was able to build on the previous business year’s positive development, despite challenges such as the global increase in energy prices, partly disrupted supply chains, and continuing COVID-19 issues. All key market and product segments of the steel and technology group were said to have delivered very solid performances.
Supply chain problems intensified over the summer in the automotive segment, though voestalpine’s North American and Asian facilities were said to be much less affected by the lack of semiconductors than the European ones. Orders from the aerospace industry rose for the first time since the onset of the COVID-19 pandemic. The satisfactory trend in the energy segment, which reportedly benefited from growing investment activity in the oil & natural gas industry, continued. The railway business segment posted stable performance and the storage technology segment also did well: orders in this segment were at record highs due to the e-commerce boom.
Herbert Eibensteiner, CEO, stated, “We were able to deliver strong revenue and earnings increases in the business year’s first half thanks to very solid demand for voestalpine’s products in all markets and product segments that are material to us, our focus on efficiency-boosting measures, and the excellent commitment of our employees.”
Compared with the first half of the previous business year, revenue rose by 37.8%, up from €5.1 billion to €7 billion. EBITDA surged year on year by 165.8%, from €395 million to €1 billion. After €-215 million in the first half of 2020/21, EBIT soared to €651 million in the first half of 2021/22. Profit before tax for the reporting period jumped to €611 million (H1 2020/21: €-268 million), and profit after tax to €486 million (H1 2020/21: €-276 million).
The positive development of the company’s net financial debt from €3.5 billion as of September 30, 2020, to €2.7 billion as of September 30, 2021, was said to showcase the company’s ability to generate strong cash flow, especially in the previous business year’s second half. Equity rose year over year from €5.3 billion to €6.1 billion. The gearing ratio (net financial debt as a percentage of equity) improved year over year, from 66.2% to 45.1%. And the number of employees (FTE) in the voestalpine Group climbed by 2.4% compared with the previous business year, from 47,917 to 49,068.
Outlook
Toward the end of the reporting period, the high volatility on the raw materials side was accompanied by sharp increases in energy costs. The company expects no change in this situation on the purchasing side until, at least, the end of the current business year.
As far as sales are concerned, voestalpine’s expectations are said to differ depending on the market and region. The automotive industry continues to suffer from semiconductor supply chain difficulties, a situation perhaps unlikely to ease before the middle of the next business year. Voestalpine states that is important to note in this regard that the decrease in automotive production does not stem from a weakness in demand. It is to be expected, therefore, that some areas will see a time lag in order call-ups for voestalpine’s products.
Demand from the construction, mechanical engineering, and consumer goods industries for the voestalpine Group’s products are said to remain high. At this point in time, the group expects the railways segment – a stabilising earnings factor – to continue delivering good performance despite the usual seasonal weakening. The energy sector (oil & natural gas) has rebounded substantially of late, and the company expects this trend to continue throughout the second half of the business year 2021/22.
Aerospace, too, is said to be showing signs of a recovery. Recently, the major aircraft manufacturers issued more optimistic forecasts for short and medium-haul jets, a trend that is already reflected in rising order levels.
Based on voestalpine’s results for the first half of the business year 2021/22, and the assumption that there will be no unexpected economic distortions, the management board expressed its belief that an EBITDA of between €1,900 million and €2,200 million for the business year 2021/22 can be expected.
