Austrian steel and technology company Voestalpine said Aug. 4 there was good demand for its high-quality products in all segments over the April-June quarter despite the difficult environment due to the Russia/Ukraine war, increases in energy prices and ongoing disruptions in logistics.
Looking ahead, demand from rail technology, energy, aerospace and automotive industries should support the steelmaking in the second half of 2022, but other steel end-user industries were a cause for some concerns, with the EU’s general economic outlook largely pinned to natural gas supply issues, Voestalpine said.
The April-June quarter was marked by positive changes in certain steel end-user sectors. The European automotive industry, which has had to contend with supply chain bottlenecks for over a year despite strong order levels, benefited from slight upward trends in the April-June quarter.
The aerospace segment profited from rising passenger numbers in regional air traffic and the resulting increase in demand for single aisle aircraft.
In the oil and natural gas segment, demand rose considerably year on year.
The sharp increases in energy prices are creating incentives to invest in oil and natural gas projects.
The conversion of US Section 232 tariffs into a quota system with effect from Jan. 1, 2022, was positively impacting Voestalpine’s European plants, it said.
Its Railway business division repeatedly posted stable performance. And the reported period saw continued strong demand for storage technology, while the photovoltaics segment, which Voestalpine supplies with substructures, achieved record growth.
All the above helped Voestalpine deliver record strong financial results over April-June, and prepare to dealing with the risks stemmed from economic uncertainty in the remainder of 2022.
Outlook cautious
Voestalpine said it could not assume its earnings will stay at the record level achieved over April-June — the first quarter of its financial year — through the end of March 2023.
Signs were pointing to a significant cooling of the economy from October through March, potentially affecting the company’s cyclical businesses such as flat steel production for the construction, mechanical engineering, consumer and white goods sectors.
The steelmaker said its outlook presupposed that Europe continued to receive sufficient supply of natural gas and that other risks, including raw materials and energy prices, remained manageable.
While Europe had adequate supplies of natural gas, the ‘threat’ scenario of them becoming insufficient as a result of the political tensions arising from the war in Ukraine had recently intensified, the company said.
In the April-June quarter, Voestalpine had revenue of Eur4.6 billion ($4.7 billion), up 38% on the year, while its EBITDA climbed 68.5% to Eur879 million and profit after tax rose 137% to Eur615 million. The company expected full-year EBITDA of Eur2 billion.
— Ekaterina Bouckley