Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- voestalpine AG (VLPNF, Financial) successfully placed its first green bond, marking a significant milestone in the European steel industry.
- The company is on track with its Greentech Steel decarbonization project, maintaining both timeline and budget.
- International growth is evident with successful projects in the railway systems sector, including acquisitions and joint ventures in the US and Egypt.
- The company's global positioning and focus on high-quality products are helping balance earnings despite challenging market conditions.
- voestalpine AG (VLPNF) is strategically increasing its presence in the US market, aligning with its goal to enhance geographic diversification.
Negative Points
- Revenues decreased by EUR500 million, attributed to lower prices and volumes across all divisions.
- The European market remains weak, particularly affecting the automotive components business in Germany.
- The high-performance metals division is under pressure, especially in tool steel, prompting strategic divestments.
- The company faces a slowdown in the oil and gas business, impacting European production sites.
- EBITDA was negatively impacted by EUR81 million due to the Buderus sale and EUR40 million from natural gas storage valuation.
Q & A Highlights
Q: From an EBITDA mix perspective, how much of voestalpine's business is ex-Europe today, and where do you see its share evolving in the next three years?
A: Herbert Eibensteiner, CEO, stated that the company aims to increase its presence in markets outside Europe, particularly in the US. Currently, about 45% of EBITDA comes from outside Europe, and this is expected to grow as the company continues to expand its international operations.
Q: How much of an uplift in EBITDA do you anticipate from restructuring underperforming businesses like Buderus?
A: Herbert Eibensteiner, CEO, mentioned that the restructuring of automotive components is expected to yield a higher double-digit recovery in EBITDA over the next 2.5 years. The sale of Buderus, which was previously a EUR30 million to EUR40 million negative, is expected to result in a similar EBITDA uplift.
Q: How do you view the pricing dynamics in Europe, especially with current HRC prices?
A: Gerald Mayer, CFO, noted that while there has been a downward trend in market prices, recent weeks have shown some recovery. Historically, voestalpine has not experienced triple-digit declines in contract prices, and they do not expect such a scenario this year.
Q: What is the outlook for the steel division in terms of volume and margin development?
A: Herbert Eibensteiner, CEO, explained that Q4 is typically the strongest in terms of volume, but a margin squeeze is expected due to automotive contracts. However, a better mix, particularly in heavy plates, is anticipated to support EBITDA.
Q: How are you securing energy for the new EAF modules, and what are the current electricity costs?
A: Herbert Eibensteiner, CEO, confirmed that energy supply for the new EAF is secured, with contracts being discussed for upcoming years. Gerald Mayer, CFO, added that last year's electricity costs were around EUR450 million, and the company is working on managing the changing energy consumption profile.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
