The challenging macroeconomic climate is increasingly leaving its mark on the real economy, especially in Europe. In addition to the construction and construction supply industries, which have still not returned to their former levels after the crisis years 2008 and 2009, significant parts of the automobile industry and of the energy sector have now begun to suffer from a growing weakness in demand.
These adverse effects cannot be compensated by the development in the mechanical engineering, aviation, and railway infrastructure segments, which continue to be satisfactory. In this environment, very specific challenges are looming for the European steel industry. “The industry, which continues to be impacted by structural overcapacities, is a long way from the recovery that we had hoped for in early 2012,” Eder said, analyzing the situation. “Massive underutilization of capacity in Europe, especially in the ordinary steel industry, combined with extremely volatile raw materials prices, which are, however, trending downward, is resulting in destructive price wars.” Now, in mid-2012, the growing volatility of the Chinese and Brazilian economies as well as persistent doubts about the crisis resistance of the financial markets are not conductive to strengthening confidence in a positive economic outlook for the rest of the year.
Against this backdrop, once again, the voestalpine Group’s consistent downstream strategy, in conjunction with its technology and quality leadership, is proving to be the key to differentiating us from the competition. “Today, the three processing divisions are generating two thirds of the Group's revenue and, for the past several quarters, their stable operating results have been largely compensating the volatility of the Steel Division,” stated Eder looking back at the year. As far as the operating result is concerned, this means that despite the difficult environment in the steel sector, due to the Group’s robust downstream operations, “from today’s perspective, an operating result that is at about last year's level” should be attainable in the business year 2012/13. Ultimately, however, the development during the rest of the year will continue to be driven by the all too familiar macroeconomic topics of debt crisis, capital market volatility, and skepticism regarding the financial markets as well as the rate of growth in the threshold countries.