1 st Half 2014/15 Press Conference, November 5, 2014 Welcome! - - PowerPoint PPT Presentation

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1 st Half 2014/15 Press Conference, November 5, 2014 Welcome! - - PowerPoint PPT Presentation

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1 st Half 2014/15 Press Conference, November 5, 2014 Welcome! voestalpine AG voestalpine AG www.voestalpine.com voestalpine Group Business model (I) High-tech steel as the basis also processing of other materials (titanium, aluminum,

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voestalpine AG www.voestalpine.com voestalpine AG

1st Half 2014/15

Press Conference, November 5, 2014 Welcome!

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voestalpine AG | |

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voestalpine Group Business model (I)

High-tech steel as the basis – also processing of other materials (titanium, aluminum, …)

Consistent "downstream strategy"  technology and capital goods group (two thirds of revenue)

Combination of top metallurgical know-how and leading processing expertise  new technological solutions and innovative products

Global market, quality, and technology leadership in the core business segments

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voestalpine AG | |

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voestalpine Group Business model (2)

Focus: markets with highest technology and quality demands  mobility and energy (62% of revenue)

Long-term R&D partnerships with customers and scientific partners as the key to innovation

Industry benchmark in Europe for environmental standards, resource efficiency and earnings

500 Group companies and sites - 50 countries - 5 continents

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voestalpine AG | |

voestalpine Group

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Results and Highlights 1st Half 2014/15

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voestalpine AG | |

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voestalpine Group 1st Half 2014/15 - Highlights

Revenue at EUR 5.6 billion only slightly below previous year (-1.5%)

EBITDA rose to EUR 757 million (+11.2%), EBIT to EUR 445 million (+ 12.2%)

EBITDA positively influenced by non-recurring effects of EUR 67 million, EBIT of EUR 45 million ( sale of Flamco/Plastics)

Profit before tax increased from EUR 312 million to EUR 392 million (+ 25.5%) and for the period from EUR 238 million to EUR 324 million (+ 35.9%)

Also after adjustment for non-recurring effects: profit before tax increased by 11%, profit for the period by 17.7%

Gearing ratio increased from 47% to 59% due to calling of hybrid bond 2007 (EUR 500 million)

Start of construction for the direct reduction plant in Texas in July

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voestalpine AG | |

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voestalpine Group 1st Half 2014/15 - Market Environment

Inconsistent global economic trend

Growth in Europe (eurozone) loses momentum over the H1 2014/15

Stable growth in the USA – driver of global economic growth

China stable with 7% growth course

Brazil and Russia with continued slow development

voestalpine Group business performance stable in a volatile environment

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voestalpine AG | |

voestalpine Group Overview of key figures (values rounded)

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In millions of euros

BY 2013/14 H1 2013/14 H1 2014/15

Change (in %) Adjusted H1 2014/15

Revenue 11,228 5,643 5,561

  • 1.5

5,561 Operating result (EBITDA) 1,383 680 757 11.2 690 EBITDA margin (%) 12.3 12.1 13.6 12.4 Profit from operations (EBIT) 792 396 445 12.2 400 EBIT margin (%) 7.1 7.0 8.0 7.2 Profit before tax (EBT) 656 312 392 25.5 347 Profit for the period 523 238 324 35.9 281 Gearing ratio (%) 45.8 46.8 58.8 Employees (full-time equivalent) 48,113 47,126 47,379 0.5

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voestalpine AG | |

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voestalpine Group Gearing ratio

831 635 684 377 526 3,572 3,762 3,037 2,713 2,586 2,259 2,421 2,899 1,786 1,853 2,125 2,547 2,882 4,289 4,263 4,262 4,691 4,836 5,075 5,261 4,932 47% 34% 32% 15% 18% 83% 88% 71% 58% 54% 45% 46% 59% 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 H1 2014/15 Net Debt (€m) Equity (€m) Gearing Ratio (%)

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voestalpine AG | |

voestalpine Group

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Position: EU climate and energy policies 2030

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voestalpine AG | |

EU climate and energy policies 2030 Goals

Reduction of greenhouse gas emissions at overall EU level by at least 40% against 1990

Reduction of greenhouse gas emissions for sectors subject to emissions trading by 43% against 2005

Increase share of renewable energies against 1990 to at least 27%

Energy savings of at least 27% against 1990 (indicative, i.e., due to be revised in 2020, although target of 30% remains; member states can also set higher targets at national level)

Relief for "poorer" EU member states

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voestalpine AG | |

EU climate and energy policies 2030 Evaluation (1)

+ Free allocation remains (extent still to be defined) to 2030

In future the (currently unrealistic) benchmark values for free allocation will be periodically examined; therefore allocations can also be reduced at any time + The best facilities in each sector should not be subject to any "undue" direct and indirect costs which result in the loss of international competitiveness and lead to the relocation of production ("carbon leakage")

However, it is unclear how this formulation ("inappropriate, illegitimate, excessive") should be interpreted + Commitment to protect industry from carbon leakage, also after 2020, where no comparable climate protection regulations are in place in other global economic regions

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voestalpine AG | |

EU climate and energy policies 2030 Evaluation (2)

+ Fundamental commitment to continuance of industry in Europe and consideration of international climate protection agreements  But: goals and partly also liabilities will be precisely quantified, however, relief measures remain vague + Council remains involved and instructs Commission to maintain constant dialog with all those affected

Further arrangement and specification of the framework, as well as more precisely defined protective measures, will be decisive for the final evaluation

This applies in particular to the drawing up of the allocation mechanism (goal: 100 % free allocation for the best 10% of facilities, i.e., with no deductions)

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voestalpine AG | |

CO2 emissions Share by region in %

25.1 1.4 6.1 13.5 3.8 1.4 2.1 5.3 17.1 16.8 1.1 4.9 26.7 5.3 1.5 2.2 4.1 11.5

5 10 15 20 25 30 USA Australia Russia China India Brazil South Korea Japan EU

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Source: Cologne Institute for Economic Research IW Consult, International Energy Agency, BP 2000 2012

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voestalpine AG | |

voestalpine as benchmark – international comparison

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Source: EBFC - European Blast Furnace Committee – 2013

1300 1350 1400 1450 1500 1550 1600 1650 1700 1750

CO2 blast furnace process based on carbon input (in kg/t crude steel)

European competitors voestalpine (Linz and Donawitz) Blast furnaces

2014

Currently unrealistic benchmark value for free allocation: 1,328 kg/t!

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voestalpine AG | |

CO2emissions trading: effects on voestalpine

3% 28% ?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008-2012 2013-2020 2021-2030

20 ?

Purchase requirement for certificates in %

  • Max. additional costs

in million euros

...and yet to date voestalpine is the only steel company in the EU that is a net payer within the emissions trading system!

Purchase requirement increases during the period from 2013 to 2020 by 3% to 28% (= 28 million certificates). Actual cost burden depends on CO2 price.

According to current planning assumptions (i.e., with existing allocation mechanism and continuation of current carbon leakage protection) we can assume a further, massive increase in the period 2021 to 2030.

However, after the Council commitments these should be improved. The precise effects now depend on the further design of the emissions trading system and therefore cannot currently be quantified precisely.

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?

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voestalpine AG | |

voestalpine Group

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Outlook BY 2014/15

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voestalpine AG | |

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voestalpine Group Outlook

Expectation: Results (EBITDA, EBIT) slightly above BY 2013/14

Conflicts in the Near and Middle East and Russia/Ukraine are putting increasing pressure on economic development in Europe – recovery delayed

Only moderate level of voestalpine Group activity in conflict regions (< 2% of overall revenue)

USA and China remain strong with stable growth

Brazil and Russia with continued economic problems

Expectations for several large customer segments (construction industry, mechanical engineering industry) more reserved than at start of the BY 2014/15

Even so: solid development across all four divisions for the remaining six months – largely full capacity utilization expected

Outlook for the BY 2014/15 unchanged despite increasingly challenging environment:

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voestalpine AG www.voestalpine.com voestalpine AG

1st Half 2014/15

Press Conference, November 5, 2014