voestalpine Warns Over Second COVID19 Wave Disruptions
The financial key performance indicators of the voestalpine Group for the first half of the business year 2020/21 were shaped entirely by the COVID-19
pandemic. While the business year’s first quarter was characterized by the massive meltdown in demand in almost all customer segments and regions, the second quarter saw a considerable rebound in major sectors. Particularly the European and the U.S. automotive industry but also the consumer goods and construction industry quickly regained their momentum following the lockdown measures that had been imposed in the spring. Thanks to rising demand for high quality steel products, in September voestalpine thus was able to restart the small blast furnace in Linz in Austria that it had shut down temporarily. In regional terms, the Group’s plants in China returned the fastest to pre-crisis levels of production capacity utilization. The situation in the aerospace as well as the oil and natural gas segments, which are hit especially hard by the ramifications of the pandemic, remained as difficult as before. The technology segments railway systems and storage systems continued to develop along a solid trajectory in this highly challenging environment.
Although the economy recovered incrementally from the economic meltdown at the start of the reporting period, both revenue and earnings for the first half of the business year 2020/21 fell far short of those for the same period the previous year. The decrease in revenue by 21.9% from EUR 6.5 billion to EUR 5.1 billion stems from smaller delivery volumes and lower prices. On the earnings side, voestalpine succeeded in generating a substantially positive operating result of EUR 395 million in the business year’s first half despite extremely difficult market conditions. Against the backdrop of the COVID-19 crisis, EBITDA dropped 40.6%, down from EUR 666 million in the same period the previous year. In turn, this pushed the EBITDA margin from 10.2% a year earlier to 7.7% in the current reporting period. The decline in EBIT was much more pronounced: Apart from the pure operating performance, it was due especially to some EUR 200 million in impairment losses on assets at voestalpine Texas and voestalpine Tubulars owing to global market changes that were exacerbated by the COVID-19 pandemic. In sum, EBIT dropped from EUR 230 million in the first half of the business year 2019/20 to EUR –215 million in the first half of the business year 2020/21. Profit before tax fell year over year from EUR 163 million to EUR –268 million, and profit after tax from EUR 115 million to EUR –276 million.
Outlook - There has been a dramatic increase in the number of COVID-19 infections in many areas of the world since the end of the reporting period. In Europe, many EU member states have reacted by imposing lockdowns of varying severity yet again. The impact of these measures on economic growth going forward cannot be prognosticated in detail at the time this report is published. What is certain, however, is that the uncertainty regarding forecasts of future developments is much greater now. Against this backdrop, the voestalpine Group will continue to focus on managing costs and stabilizing earnings. At the same time, our efforts to manage working capital will remain high and investments will remain low in order to strengthen the Group’s cash flow as well as its asset and capital structure.