voestalpine AG — Earnings Release 1998

Nov 20, 1998

News Details

Ad-hoc | 20 November 1998 10:34

Ad hoc-Service: VOEST-Alpine Stahl AG 1

—————————————————————— Ad hoc-Service: VOEST-Alpine Stahl AG 1 Ad hoc-Mitteilung übermittelt durch die DGAP. Für den Inhalt der Mitteilung ist allein der Emittent verantwortlich. —————————————————————————— 1 VOEST-ALPINE STAHL GROUP ACHIEVES A NOTABLE RESULT AGAINST A BACKGROUND OF CRISIS In the past few weeks, the European steel market has experienced a downturn of unparalleled speed. Despite these extremely difficult circumstances, the listed VOEST-ALPINE STAHL AG continues to expect a result for the 1998/99 business year, which will surpass that of 1997/98. The reason for this optimism is the prompt reaction of the Group to the deterioration in the market situation, in the form of a further intensification of cost base optimisation. In addition to the systematic economy drive, which has been running for a considerable time and will bring savings of ATS 500 million in the current year, new cost reduction potential is under scrutiny. Furthermore, the cost advantages from the investments of the past three years can now be fully exploited, which obviously occured at the right time. Lastly, investment is continuing in activities aimed at extending the value added chain and reducing the cyclical nature of Group business. For example, in the first half- year, the British section producer METSEC plc was purchased and a holding was taken in the Austrian turn-out manufacturer VAE. The balance for the first half of the 1998/99 financial year is outstanding. Consolidated Group turnover amounted to ATS 18,136 million (8% higher than the comparative figure from the preceding year), the EBIT (operating result) stood at ATS 1,480 million (56% up), the result from ordinary activities totalled ATS 1,379 million (57% up) and the half-year profit was ATS 1,328 million (73% up). The operating results before depreciation (EBITD) amounted to ATS 2,748 million (31 %up). As at September 30, 1998, the VOEST-ALPINE STAHL Group employed a total of 14,424 people (March 31, 1998: 14,416, both figures excluding apprentices). The turnaround in the international steel market During the second and third quarters of 1998, the European steel industry came under increasingly massive pressure due to the crises in South-East Asia and Russia, and the growing financial problems in South America. The global effects of the difficulties are a world-wide steel surplus, the re-routing of large quantities of steel from the crisis areas to the European Union and the USA, a price downturn in the commodity sector since early summer and increasing price pressure on the higher quality product range. This situation has resulted in anti-dumping measures in both the USA, and for the first time, in the EU, as well as sharp losses in the value of steel stock on the markets and recent steel company bankruptcies in the EU. The third calendar quarter of 1998 in the Western European steel industry was characterised by a dramatic price slump and increasing difficulties in achieving capacity utilization at a number of steel producers. The fact that in 1998, Europe became a net steel importer for the first time and Southern Asia emerged as a steel export region, is a clear indication of the dramatic nature of the situation. Satisfactory course of business despite a difficult general situation Despite the difficult economic climate, the VOEST-ALPINE STAHL Group developed very satisfactorily during the first half of 1998/99 business year. Following production of 1,193,000 metric tons of steel in the first quarter, the Group produced a total of 2,330,000 metric tons of crude steel in the first half-year 1998/99. Crude steel production at the Linz location amounted to 1,770,000 metric tons (2.2% less than in the comparable period of the previous year). In the same period, the Donawitz mill produced 560,000 metric tons of crude steel (11.7% down). The drop in production in Linz is attributable to a loss of several days production due to a fire, that in Donawitz to a scheduled standstill for the relining of a blast furnace and the installation of a new CPE seamless tube plant in Kindberg. The slightly lower production was more than compensated for by the purchase of semis. Therefore, at 2,310,000 metric tons, the volume of Group shipments for the first half of this financial year was 2.2% higher than the comparable figure for the previous year. From the first to the second quarter of the financial year, the VOEST-ALPINE STAHL Group experienced a price level turnaround. There was an overall fall of little over 1%, the main price reductions being on hot rolled coil, heavy plate, cold rolled strip, standard rolled wire and oil field pipes. Ende der Mitteilung