EANS-News: voestalpine AG Economic slowdown and cost of raw materials impact
voestalpine?s earnings for Q1 2019/20
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Quarterly Report
Linz - As far as the voestalpine Group is concerned, the macroeconomic
environment has clouded over significantly since the start of the business year
2019/20. By and large, this is due to the fallout from the international trade
conflicts and the associated, growing weakness of the global economy, which
affects above all Europe's export-oriented industries, and the slumping
automotive industry in particular. Furthermore, strong increases in iron ore
prices in a weakening market along with falling prices for steel products as
well as rising costs for CO2 emission certificates in the EU put pressure on
profit margins.
Development of revenue and earnings figures
At EUR 3.3 billion, voestalpine's revenue for the first quarter of the business
year 2019/20 was 3.8% lower than the revenue of EUR 3.5 billion for the first
quarter of the previous business year. All four of the Group's divisions were
confronted with a slight decline in revenue resulting mainly from declining
delivery volumes. Aside from the reductions in the sales volume stemming from
economic developments as well as the increases in both iron ore prices and CO2
emission certificates, the start-up costs at the Group's automotive plant in
Cartersville, USA, also put downward pressure on earnings in the reporting
period.
As a result, the EBITDA of the voestalpine Group declined by 27.7%, from EUR
513.0 million to EUR 370.9 million.
The gearing ratio (net financial debt as a percentage of equity) rose from 49.0%
as of June 30, 2018 to 58.1% as of June 30, 2019. For the most part, this
increase in the first quarter of the business year 2019/20 stems from changes in
international financial reporting requirements (recognition of leases pursuant
to IFRS 16), which raised the interest-bearing liabilities by about EUR 437
million compared with the annual reporting date.
Outlook
At the start of the business year 2019/20, the Management Board of voestalpine
AG came to the conclusion that the previous year's EBITDA would likely be
achievable in the current business year too, provided certain assumptions come
to pass.
The key influencing variables in market and cost terms on which this assumption
was based were a cooling of the economy in the markets that are key to
voestalpine, but no recessionary or crises scenarios; a cooling of the momentum
in the automotive industry, but no new dramatic distortions in the automotive
market on account of the new emissions test to be introduced in Europe in
September 2019; no negative effects from the global trade conflicts and/or the
Brexit above and beyond the anticipated cooling of the economy; a normalizing of
iron ore prices over the course of the business year; and positive dispositions
of challenges internal to the company.
Generally speaking, it can be said that the economic uncertainty has grown since
the start of the business year and that negative effects from the global trade
conflicts and/or the Brexit are likely to increase further. The assumption that
iron ore prices would fall has not materialized to date. So far, a situation
where rising ore prices occur in tandem with falling steel prices has held sway
for short periods only. This is why we expect that, this time too, the present
unfavorable constellation will be resolved during the second half of the
business year. The momentum in the automotive industry is undoubtedly cooling
off. This has affected the four divisions of the voestalpine Group differently
in the first quarter of the business year 2019/20, with moderate to material
impacts on earnings. Customers of voestalpine in the automotive industry are
confident that they will be able to handle the new emissions test in September.
The intracorporate challenges are being dealt with. Hence this particular set of
topics should have less of an impact on the current business year's second half
than it did on the first.
Management is counteracting the current developments through intensified
programs aimed at boosting efficiency and cutting costs. First positive results
of these programs should also take effect as early as in the second half of the
current business year. The Management Board of voestalpine AG continues to work
in a difficult environment, particularly with respect to the development of ore
and steel prices, on achieving EBITDA for the current business year that is
comparable to that of the previous business year even though the uncertainties
have mounted since the start of the current business year.
KEY FIGURES - voestalpine GROUP
_____________________________________________________________________________
|(pursuant_to_IFRS)________|Q1_BY_2018/19________|Q1_BY_2019/20________|Change|
|__________________________|04/01/2018-06/30/2018|04/01/2019-06/30/2019|in_%__|
|Revenue___________________|3,469.0______________|3,336.1______________|-3.8__|
|EBITDA____________________|513.0________________|370.9________________|-27.7_|
|EBITDA_margin_in_%________|14.8_%_______________|11.1_%_______________|______|
|EBIT______________________|323.8________________|156.7________________|-51.6_|
|EBIT_margin_in_%__________|9.3_%________________|4.7_%________________|______|
|Profit_before_tax_________|294.3________________|124.4________________|-57.7_|
|Profit_after_tax_*________|226.3________________|90.4_________________|-60.1_|
|Earnings_per_share________|1.21_________________|0.44_________________|-63.6_|
|Gearing_ratio_in_%_(06/30)|49.0_%_______________|58.1_%_______________|______|
|In_millions_of_euros_________________________________________________________|
* Before deduction of non-controlling interests and interest on hybrid capital.
The Report of the first quarter of 2019/20 of voestalpine AG as of the June 30,
2019, may be accessed on the company's website at www.voestalpine.com [http://
www.voestalpine.com/] under the 'Investors' tab.
Further inquiry note:
DI Peter Fleischer
Head of Investor Relations
Phone: +43/50304/15-9949
Fax: +43/50304/55-5581
mailto:peter.fleischer@voestalpine.com
http://www.voestalpine.com
end of announcement euro adhoc
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issuer: voestalpine AG
voestalpine-Straße 1
A-4020 Linz
phone: +43 50304/15-9949
FAX: +43 50304/55-5581
mail: IR@voestalpine.com
WWW: www.voestalpine.com
ISIN: AT0000937503
indexes: ATX, WBI
stockmarkets: Wien
language: English