Voestalpine reports solid result in a difficult market environment
The volatile economic trend since the beginning of the year and the recent slowdown of economic consolidation in Europe had an adverse impact on the performance of the voestalpine Group as well. After a solid first quarter of the current business year, the second quarter revealed some vulnerabilities in individual business segments that had not been anticipated in the early part of the summer.
A major reason for this achievement is the broad-based positioning of the Group, both geographically and with regard to its sectoral activities. It is especially the unique combination of steel production and processing that provides the company with a comparatively crisis-resistant value chain; the processing of other materials as well, such as aluminum, titanium, and plastics, which is growing, additionally differentiates the Group from its competitors.
Highlights of H1 of FY 2013/14
1. Revenue declines slightly by 3.5% from EUR 5.9 to EUR 5.7 billion
2. Operating result (EBITDA) of EUR 687 million 5.2% below the previous year’s figure
3. Profit from operations (EBIT) down by 8% from EUR 435 million to EUR 401 million
4. Margins remain almost unchanged (EBITDA dips from 12.2% to 12% and EBIT from 7.3% to 7%)
5. Equity above EUR 5 billion (+3.6%); gearing ratio reduced from 51% to 47%
6. Investments stepped up by 44% from EUR 301 million to EUR 434 million
7. Headcount significantly increased to 47,750 (+3.5%)
8. Implementation of “Strategy 2020” on schedule
Mr Wolfgang Eder CEO of Voestalipine sees it, there is no alternative, he said that “After years of declining demand, the steel industry in Europe has no choice but to come to terms with permanently lower capacity utilization levels. Alongside the unsolved question of how to eradicate the massive overcapacity on the European market, which presents an existential, industry-specific problem, Eder sees additional reasons for this tense situation in the EU’s generally anti-industry economic policies. “Environmental and climate policies that negate what is actually feasible in many areas, no energy strategy, costs for government and social services that exact the highest average tax rates worldwide all of this is hardly the stuff that the future of an economically successful continent is made of.”
In the first half of 2013/14, the voestalpine Group’s revenue decreased by 3.5% compared to the same period of the previous year due to lower raw materials prices, falling from EUR 5,933 million to EUR 5,724 million. The operating result dropped from EUR 725 million to EUR 687 million (-5.2%). Profit from operations declined by 8% to EUR 401 million (previous year: EUR 435 million). The financial result that improved slightly in a year-to-year comparison kept the decline in profit before tax at a reasonable level of 7.9% (down to EUR 320 million from EUR 348 million in the previous year). Profit for the period amounted to EUR 240 million compared to EUR 270 million (-11%), partly due to a somewhat higher tax rate. In a year-to-year comparison, equity rose by 3.6% to EUR 5.06 billion as of September 30, 2013. This figure remained practically the same compared to the closing date of March 31, 2013 (EUR 5.08 billion) despite payment of a dividend. This also resulted in a slight increase in net financial debt in the first half of 2013/14 compared to the beginning of the business year, which went from EUR 2.26 billion to currently EUR 2.37 billion, with free cash flow positive for the period. Compared year to year, the net financial debt was reduced by 5.1%. In a year to year comparison, the gearing ratio (net financial debt in percent of equity) declined considerably and was 46.7% as of September 30, 2013.
Source – Strategic Research Institute