Steel technology provider Voestalpine sees economic mood clouded over in several end-user sectors

Austrian steel and technology group Voestalpine said Aug. 9 that while individual sectors experienced different developments over April-June — its first quarter — with the economic mood in some of them having clouded over noticeably, trading was satisfactory overall.

“[But when] comparing the figures year over year, it is important to remember that we are measuring ourselves against the best quarter [April-June 2022] in the group’s history,” CEO Herbert Eibensteiner said in a statement.

The momentum of the past business year in the energy — oil & gas — sector was unchanged. The solar industry also continued to see strong demand. Voestalpine supplies solar projects worldwide and is supplying steel sections for one such project in Brazil.

Going forward, a certain softening was expected for the conventional energy — oil and gas — sector, but the renewable energy sector was expected to remain robust for the rest of the year as was the railway infrastructure business, which developed strongly in the April-June quarter.

High demand for Voestalpine’s track grades enabled full capacity utilization at the Donawitz site in Austria.

The first quarter of the company’s 2023-24 year (April-March) saw a continued positive trend in the aerospace industry, and demand in the storage technology segment was as strong as ever, according to Voestalpine.

By contrast, there was a noticeable slowdown in demand in the mechanical engineering, consumer goods, and construction sectors.

Central bank measures to fight inflation have hit manufacturing industry, the company said, adding that demand from those segments will remain weak throughout the rest of 2023-24 assuming no short-term policy reversal.

The automotive industry recorded satisfactory demand in the April-June quarter. The supply bottlenecks the industry faced during the previous two years have been dissipating, and it should perform steadily for the rest of the year.

From a regional point of view and from the perspective of the Voestalpine portfolio, the strongest economic slowdown was expected in Europe, while a moderately weaker development is anticipated for North America.

South America should be stable, while the Asian economic area (China) was likely to grow slightly.

Assuming the global economy was not hit by further central bank tightening and no further escalation in the Russia-Ukraine war or geopolitics more broadly, Voestalpine expected to generate Eur1.7 billion-1.9 billion EBITDA ($1.9 billion-$2 billion) in 2023-24.

Capex guidance was unchanged at Eur1.2 billion, which includes expenditure for the construction of electric arc furnaces at Linz and Donawitz sites, both in Austria.

Revenue over April-June was down 4.3% year on year to Eur4.4 billion, while EBITDA fell 43% to Eur505 million.

Voestalpine did not post production figures for the quarter. In 2022-23 and 2021-22, it made 7.20 million mt and 7.84 million mt, respectively, of crude steel.

Author Katya Bouckley