Austrian steelmaker Voestalpine AG has posted a net loss of €70 million for the first quarter ended June 30 of the financial year 2020-21, compared to a net profit of €90 million recorded in the same quarter of the previous financial year. In the first quarter of the financial year 2020-21, the revenues of the company amounted to almost €2.4 billion, down 28.1 percent year on year. In the given period, the company's EBITDA was €158 million, decreasing by 58 percent year on year.
The company stated that it was affected by the massive meltdown in demand from almost all of its customer segments on account of the Covid-19 pandemic. The strong downturn in demand led to a decline in steel prices which, due to the strength of China’s steel industry, did not go hand-in-hand with a decline in iron ore prices, thus intensifying the negative impact on earnings. Whereas the economies in North and South America experienced substantial downturns as well, the group’s locations in China returned to pre-pandemic capacity utilization during the reporting period.
“We managed to adapt very quickly to the completely new environment. Voestalpine succeeded in generating a positive operating result for the first quarter of the business year 2020-21 despite the extremely challenging environment. This is due, above all, to our consistent cost management and the rapid implementation of steps aimed at optimizing earnings within the group on the whole. In addition, we also still have adequate liquidity,” Voestalpine AG chairman Herbert Eibensteiner said.
The end of the lockdown in the first quarter of the business year 2020-21 led to an incremental recovery in demand. According to Voestalpine, the second business quarter is expected to see seasonally slightly weaker demand over the summer, as usual, for example, due to customer shutdowns. Given the ongoing volatility in an uncertain market environment affected by the coronavirus, the Voestalpine Group stated that it will continue to focus on cost management and earnings stabilization. At the same time, the company’s efforts to manage working capital will remain high and investments will remain low in order to strengthen the group’s cash flow as well as its asset and capital structure. Voestalpine expects to generate EBITDA of between €600 million and €1 billion in the business year 2020-21.