voestalpine AG — Earnings Release 1998

Aug 28, 1998

News Details

Ad-hoc | 28 August 1998 08:20

Ad hoc-Service: VOEST-Alpine Stahl AG

—————————————————————— Ad hoc-Service: VOEST-Alpine Stahl AG Ad hoc-Mitteilung übermittelt durch die DGAP. Für den Inhalt der Mitteilung ist allein der Emittent verantwortlich. —————————————————————————— 1 VOEST-ALPINE STAHL GROUP ACHIEVES ITS BEST QUARTERLY RESULT SINCE GOING PUBLIC Business year 1998/99 with further improvement in profits As Dr. Peter Strahammer, the Chairman of the listed VOEST-ALPINE STAHL AG stated on the occasion of the presentation of the company’s quarterly report from June 30,1998, the development of the VOEST-ALPINE STAHL Group during the first three months of the 1998/99 business year can be summed up in just a few words. ‘It was an excellent first quarter with the best quarterly result achieved by VOEST-ALPINE STAHL AG since it went public in autumn 1995.’ With an EBIT of ATS 903 million the comparative figure for the first quarter of 1997/98 was more than doubled. This was due to full use of production capacity as a result of continued high demand, good price levels in all the main product segments and the coming into effect of the cost advantages derived from the realised investment program of recent years. Business development In detail, developments with regard to crude steel production were as follows: Crude steel production 1st quarter 1997/98 1st quarter (in metric tons) 1998/99 Flat Products (Linz) 905,000 877,000 Long Products (Donawitz) 312,000 316,000 Group overall 1,217,000 1,193,000 The slight drop in the Linz crude steel production over the first quarter of 1997/98, was caused by the loss of production. However, this several days shortfall was compensated for by the purchase of crude steel slabs. The volume of shipments continued to show an upward trend: Shipments (in metric 1st quarter 1997/98 1st quarter tons) 1998/99 Flat Products 888,000 914,000 Long Products 288,000 297,000 Group overall 1,176,000 1,211,000 All in all, the price level of the first quarter of the current business year was 7% up on the overall average for the 1997/98 business year and around 3% above the level for the final quarter of the last business year. The positive operative development was accordingly reflected in the main financial key figures of the Group and the two production divisions (all figures consolidated). Fl Lang Group overall ach in ATS m 1st 1st 1st 1st 1st 1st quarter quarter quarter quarter quarter quarter 1997/98 1.998/9 1997/98 1998/99 1997/98 9 1998/99 Turnover 6.810 7.315 2.027 2.293 8.628 9.365 EBITD*) 858 1.323 174 225 1.013 1.517 EBIT**) 356 780 110 154 446 903 *) Earnings before Interest,Tax and Depreciation **) Earnings before Interest and Tax At ATS 9.4 billion, consolidated Group turnover was 8.5% above the comparative figure for the preceding year. With ATS 1.5 billion the EBITD was 50% up on the previous year and an EBIT of ATS 903 million means a 102% increase compared to the first quarter of 1997/98. As at June 30, 1998, the VOEST-ALPINE STAHL Group employed a staff of 14,471 (excluding apprentices), 55 employees more than at the end of the last business year (March 31, 1998). However, as Strahammer clearly stated, ‘Irrespective of this positive development is, it must be said that the second calendar quarter traditionally has the highest demand in the steel industry. A repeat of this result in the current structurally weaker summer quarter cannot be assumed, alone due to the holiday period and related plant closures.’ OUTLOOK. FURTHER IMPROVEMENT IN RESULTS OVER 1997/98 On the basis of order backlog, particularly that relating to longer term contracts, satisfactory use of capacity levels can be anticipated until the end of the current business year. As over 50% of turnover derives from longer term contracts, which are mostly on a yearly basis, average earnings in this area should remain at an attractive level until the end of the year. The situation in the short-term business is somewhat more complex, particularly with regard to quarterly contracts. Here, the prices for hot and cold rolled sheet and heavy plate, as well as the proces for tubes, sections and wire rod have partially come under distinct pressure due to increased imports from South- East Asia, Central and Eastern Europe. At all events, a drop in price levels must be anticipated in these areas. Although the programme of the VOEST-ALPINE STAHL Group is not immediately threatened by these commodity imports due to ist high quality level, in the long run these imports do have a generally negative effect on price levels, with the result that subsequently declining prices must also be expected in the upper quality sector. However, at present, the prices for galvanised and other coated sheet, as well as rails, remain stable at a satisfactory level. From the current perspective, it is unclear as to how quantities and prices will develop during the fourth quarter of the business year (first calendar quarter 1999). They will depend both on the results of thenegotiations concerning the annual contracts for 1999 (automotive industry, white goods industry, raw materials), which are due this autumn, and further developments in South-East Asia. Nonetheless, on the whole, the VOEST-ALPINE STAHL AG Managing Board continues to expect overall results for the 1998/99 business year that will exceed the figures of the last year with regard to both, operative profit and net profit the year. Currently there are no new developments in Poland. The indications are that negotiations concerning the privatisation of the Polish steel industry will not intensify before September. Linz, August 28, 1998 Ende der Mitteilung