Austria’s voestalpine Group has reported results for the first half of its business year 2020/21. The company stated that its financial key performance indicators (KPIs) were shaped entirely by the coronavirus (COVID-19) pandemic, with a first quarter characterised by a massive meltdown in demand in almost all customer segments and regions.
Despite this difficult start to the year, the group reported that the second quarter brought a considerable rebound in major sectors; in particular, the European and the US automotive industry saw improvements, but the consumer goods and construction industry also quickly regained their momentum following the lockdown measures imposed in the spring of 2020.
Thanks to rising demand for high-quality steel products, in September 2020 voestalpine was able to restart its small blast furnace in Linz, Austria, which it had shut down temporarily at the height of the pandemic.
In regional terms, the group’s plants in China returned pre-crisis levels of production capacity utilisation soonest. The situation in the aerospace, oil and natural gas segments, which were hit especially hard by the ramifications of the pandemic, remained difficult. The group’s technology segments railway systems and storage systems were said to have continued to develop along a solid trajectory despite the pandemic.
Although the economy recovered incrementally from the economic downturn at the start of the reporting period, the company reported that both its revenue and earnings for the first half of the business year 2020/21 fell short of those for the same period in the previous year.
A decrease in revenue by 21.9% from €6.5 billion to €5.1 billion stemmed from smaller delivery volumes and lower prices. On the earnings side, voestalpine succeeded in generating a substantially positive operating result (EBITDA) of €395 million in the business year’s first half despite extremely difficult market conditions.
EBITDA dropped 40.6%, down from €666 million in the same period the previous year. In turn, this pushed the EBITDA margin from 10.2% in the previous year period to 7.7% in the current reporting period.
The decline in EBIT was said to be much more pronounced: apart from pure operating performance, this was said to be due especially to some €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 total, EBIT dropped from €230 million in the first half of the business year 2019/20 to €–215 million in the first half of the business year 2020/21. Profit before tax fell year over year from €163 million to €–268 million, and profit after tax from €115 million to €–276 million.
The group reported that thanks in part to intensive measures aimed at cost and earnings optimisation, as well as lower investments of €245 million, during the business year’s first half voestalpine generated substantially higher operating cash flow of €563 million and free cash flow of €281 million.
Looking to the next period, voestalpine observed that 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 nations have reacted by imposing lockdowns of varying severity to curb the spread.
The impact of these measures on economic growth going forward cannot be accurately predicted, the company said, but noted that uncertainty regarding forecasts of future developments is much greater now. Against this backdrop, the voestalpine Group stated that it will continue to focus on managing its costs and stabilising earnings.