voestalpine profits halved in the first half of the year

The listed Linz-based steel and technology group voestalpine felt the economic slowdown in the first half of 2023/24 (at the end of September). Profit after tax has more than halved from 715 to 333 million euros compared to the same period last year, as the company announced on Wednesday morning. Earnings per share (EPS) fell from 3.80 to 1.58 euros. Sales fell by 8.4 percent from 9.3 to 8.5 billion euros.

“The current result is in line with the long-term average and is quite satisfactory in view of the current economic conditions,” said CEO Herbert Eibensteiner.

With the launch of greentec steel, “voestalpine’s ambitious step-by-step plan for green steel production”, an important step for the future viability of the group was recently taken (you can read more about this here). By 2027, one blast furnace at each of the Linz and Donawitz locations is to be replaced by an electric arc furnace powered by green electricity, thereby saving 30 percent of CO2 emissions. The official opening of the new high-tech stainless steel plant in Kapfenberg also represented another milestone for the future.

However, particularly in Europe, economic dynamism declined in the reporting period, according to management. As a result, voestalpine recorded declining demand from the construction, mechanical engineering and consumer goods industry segments. Exports by Chinese steel manufacturers have also led to “massive pressure on the international steel markets”.

Automotive and solar industry as a ray of hope

There were also positive developments: In the automotive industry, the easing of the global supply chain situation was reflected in stable production. The railway and aviation industry, the conventional energy sector (oil & gas) and the renewable energy sector (solar industry) also continued to “develop very well” against the overall economic trend. There was also positive demand for storage technology.

Overall, however, the operating result (EBIT) fell by 40.9 percent from 898 to 531 million euros. Before interest, taxes, depreciation and amortization there was a profit (Ebitda) of 915 million euros – 36.7 percent less than in the same period of the previous year (1.4 billion euros).

The margins fell accordingly: the Ebit margin fell from 9.7 to 6.2 percent, the Ebitda margin from 15.6 to 10.7 percent.

Net debt in relation to equity fell from 32.7 to 26.6 percent. The bottom line is that the number of employees in the group increased by 1.7 percent to 51,212 full-time equivalents worldwide.

The management board is sticking to the forecast for the entire 2023/24 fiscal year (as of the end of March) – with slightly reduced expectations: Assuming there are no massive economic upheavals triggered by central banks’ interest rate policy or geopolitical escalation scenarios, management is now expecting one EBITDA “at the lower end of the previously mentioned range” (1.7 to 1.9 billion euros) and “thus in a range around 1.7 billion euros”.

The impact of current geopolitical developments remains “difficult to assess”. What is clear, however, is that the war in Europe and the armed conflict in the Middle East have “significantly increased the risk of unforeseeable influences on the economic environment,” according to voestalpine. “This makes all forecasts more uncertain.”