Voestalpine keeps mixed contract durations, reduces earnings

In the upcoming negotiations for long-term supply contracts to OEMs and other large customers, voestalpine will retain a mix of annual, half-year and quarterly terms, says chief executive Herbert Eibensteiner.

One year ago, many mills were heard trying to keep contract periods shorter, preferring half-year over full-year contracts, presumably in expectation of a spot price surge, which in fact started in December. At voestalpine, “we have not significantly changed the structure of contract durations,” Eibensteiner said during the group’s September-quarter earnings press conference when asked by Kallanish. He indicated that temporary market developments will influence negotiations, but did not go into details.

In the first half of voestalpine’s fiscal year – 1 April to 30 September – results were considered solid despite a decline in demand from the construction, mechanical engineering, and consumer goods segments.

After the group achieved record levels of revenue and earnings in the first half of the previous business year, 2022/23, the current reporting period was invariably weaker, executives noted. Revenue decreased by 8.4% on-year to €8.5 billion ($9 billion) in the first half of 2023/24; Ebitda fell by 36.7% to €915 million.

The Metal Engineering Division was able to increase both revenue and Ebitda, supported by strong performance in the Railway Systems business unit and the Tubulars (seamless tubes) product segment. The other three divisions reported weaker development for the reporting period.

In the construction, mechanical engineering, and consumer goods industries, voestalpine expects stagnating demand at a subdued level. However, the automotive industry should remain largely robust in the second half of 2023/24, it says.

Christian Koehl Germany