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I think this is a good idea against the background of the infections in Austria. We are very happy to present better figures than 12 months ago when we presented the last half year results in spite of the ongoing pandemic and the many challenges we see. The press conference in digital form is unchanged. We have a 30-minute presentation of the Management Board, and afterwards you have the opportunity to ask questions. Please log into the system five minutes before you ask the questions. You will find access data on our website. You also have media information on the website, the press release, and also updated photo and video material, www.voestalpine.com in the media section.
I would like to introduce the speakers today. CEO, Herbert Eibensteiner will start with a review of the past six months of the current business year, and we'll give you an outlook towards the end of the business year until end of March 2022. CFO, Mr. Ottel, will give some explanations behind the KPIs. Much for an introduction. I would like to ask the CEO, Mr. Herbert Eibensteiner, to start with his presentation. Mr. Eibensteiner, please.
Ladies and gentlemen, I'd like to welcome you most cordially to the presentation of the environment and the KPIs of the first half of voestalpine's business year. Let me start with the beginning of the first half of the current business year. Right at the beginning of the first quarter, we saw soaring demand. In some areas, we also saw an overheating of demand. High demand stabilized over the summer. Basically, we saw solid demand in most essential market segments, construction, engineering, and we see that there is a rebound in the oil and gas industry, the energy industry, due to rising energy prices and also due to the investment levels that are rising at the moment.
The oil and gas industry recovered, and we also see that the aerospace industry is slightly rebounding. We see increasing demand from the aerospace industry, in particular for short and medium-range airplanes. We also expect an improvement of the situation in this segment towards the end of the year. We also had problems in the supply chain, in particular with relation to the European automotive industry. After the summer, we also felt the first consequences of that. As far as the global economic environment is concerned, we saw positive trend, of course, with regional differences.
North America, for example, has a high dynamic, high demand and high growth rates, which is still persisting. We also see high employment there. In Asia, especially in China, after a good economic development, towards the end of the first half of the business year, we saw the dynamism to level out. Over the whole year, we expect solid growth. Europe lagged a little bit behind, but we also see a good demand environment in Europe in all essential sections or business segments, with the exception of the automotive industry, of course, which is hit by a scarcity in semiconductors. As far as South America is concerned, basically Brazil for first.
We see good performance against the good business environment and also benefited from the good development there. Let me continue with key figures. Mr. Ottel will present these figures in more detail a little bit later. Revenue, here we see a market increase to EUR 7 billion, and this is also evidence of the boost that we saw in the first quarter as well as partly in the second quarter. What is also very pleasing is earnings, EBITDA EUR 1 billion and EBIT of approximately EUR 650 million for the past six months. We are very happy about these figures, and what is important is that against this backdrop, against this background, we succeeded in reducing net financial debt of the group.
Our employees did a sterling job. I would like to thank our employees for that, and that takes me to employment. We have 49,000 employees again. That's an increase as compared to the last half year, of course, also based on the high demand that we saw in the first half year. voestalpine is growing but doesn't forget to think about the green future, a sustainable future. You know that decarbonization of our steel production is an essential part of such a green future, a path to a green future. voestalpine is committed to the Paris Agreement on Climate Change. We are working hard to find a path to climate neutrality with greentec steel until by the year 2050. CO₂ reduction can only be provided by a technological transformation.
We have a project, greentec steel, and we have a clear path in this direction. Up until 2030, by partly switching from a blast furnace to steel production using electricity, we want to reduce CO₂ emissions by about 30%. By 2050, green hydrogen will play an ever more important role in production, so that by 2050, we will have a CO₂-neutral production. What is important is, of course, green electricity. That's the solution for these technologies, which means that we need green electricity in sufficient volumes and also at digestible prices. We also need the energy infrastructure in order to achieve our long-term goals. I talked about hydrogen. You might know, and you also see it in the picture, we have a pilot plant where we can produce green hydrogen. That's a research project.
This research project will expire towards the end of the year, and we will continue to operate this plant. Currently, we are thinking about how to use green hydrogen in future. I would like to give you an example today that reduction of CO₂ and sustainability issues do not only limit themselves to the Austrian plants, but play a very important role throughout the group. We already have group-wide photovoltaic plants, 310,000 sq m, which are installed or currently being implemented. In Austria, this amounts to 100,000 sq m. This is 10 hectares. The performance of such PV plants are approximately 60 MW. It's a first and important step to a green in-house energy supply.
I talked about lines and cables in order to supply Linz and also Styria, and we are currently preparing the 220 kV cables, and this is a very positive thing to announce. All these our processes and issues resulted in a certification for voestalpine by ResponsibleSteel. We are the first steel producers that have received a certificate for sustainable steel production. I'd like to pass the floor to Robert Ottel to present the figures of the first half of this year.
Thank you very much, Herbert. I'm deeply sorry that I can't meet you in person. I miss you. I don't know whether you miss us, but direct exchange of ideas, exchange of information has always been an interesting process. It was more interesting and more enthusing than looking into a camera, definitely. This is due to the current circumstances, and I do hope that when presented the year-end results, we can meet you in person again after so many months of not having seen us. The first half of the current fiscal year was a good one. It wasn't the best one. It was the second-best year, at least as far as I recollect.
If you compare it with the first quarter of 2021, of course, we are comparing our figures with the COVID half year, the worst half year of the past years or decades. Of course, revenue rose by almost EUR 2 billion. Why did we see an increase in revenue? 50% by an increase in volumes, demand of our customers, and the other half by rising prices driven by higher raw material and energy prices. The operating result, EBITDA, rose from EUR 400 million to EUR 650 million, so half of it due to higher volumes and the other half resulting from better prices. EBIT, as opposed to EBITDA, EBIT from the previous year was influenced by an impairment loss of almost EUR 200 million.
This is the reason why EBIT was negative, and this is why the difference in EBITDA is smaller and EBIT, the difference is higher. We are reducing our debts. I will show that in the next slide. This means that the difference between EBIT and EBITDA is smaller because we don't have to pay so much interest. Profit before tax, EUR 611 million, and profit after tax, almost EUR 500 million . This is a respectable result which helps us also, thanks to the rather modest expectations in terms of dividends of our shareholders. This helps us to increase our equity. You can take that from the blue bars, that equity rose by EUR 500 million - EUR 100 million dividend payment.
This was the driver for the reduction of the gearing, that is to say, the relationship between net debt and equity. You see that we could not reduce net debt, as compared to the year-end of the last fiscal year. Why was that so? Although we have a good economic development, but also because we have a good economic development, it was necessary to have higher raw material inventories, and we also had higher prices, and this resulted in an investment in working capital of almost EUR 500 million . This trend is not expected to continue in the coming six months, at least according to my opinion.
If we look back to the end of 2019, we had EUR 2 billion more debt, and together with all our employees and all our colleagues, we could pay back debt in the amount of EUR 2 billion in the past two years. This trend of reducing our net debt will continue in the next six months, and this will mean that we have leeway to invest in attractive business segments, to invest in and extend interesting business segments. What we are planning will be presented by Mr. Eibensteiner.
Ladies and gentlemen, let me continue with the outlook. The first half year was marked by strong recovery. We expect raw material prices to remain volatile. We saw that towards the end of the second quarter, energy prices increased markedly. We also saw that supply chain problems in the automotive industry are expected to continue well into the next year. This means that production plans will also be shifted to the next year. We expect all other market segments to show a positive development.
This is why our outlook for the business year 2021-2022 remains unchanged. We expect an EBITDA between EUR 1.2 billion and EUR 2.2 billion at the end of the fiscal year. This means that we will continue the positive development of our company. Now, we are here to answer your questions. Thank you very much.
Thank you to the members of the Management Board for presenting the figures. We will continue with questions. Here you see how you can ask questions. On the one hand, via telephone. It will take three to five minutes until you are called in the system, and it will be your turn in the series of requests.
We'll also find a confirmation number, but you can also send us a question via email, mediarelations@voestalpine.com or via Twitter, #voestalpinemedia. Let's have a look. We see that the first are already dialing in, so it takes a little while, and then we start with the question-and-answer session. We have already received the first questions. Ms. Kneidinger from Kronen Zeitung, welcome. Please ask your question.
Good day, Mr. Eibensteiner. A question relating to the Corona situation. Austria and Upper Austria sees soaring infection rates. What about the situation at voestalpine? Are there limitations in production because you see Corona clusters? What precautions is voestalpine taking to avoid shutdowns?
Good morning, Ms. Kneidinger. We haven't had any production problems caused by Corona. As you know, we have this new 3G rule. Finally, we know what to do. It is all clear what has to be done. Of course, we will implement the 3G rule. For us, health and safety of our employees is key. As far as the current regulations are concerned, testing is important. How do we react to the current situation? We try to find a way to make sure that our employees have access to test capacities, and we also will prepare the logistics for the evaluation of tests. Employees are commuting to our locations and also are working in shift patterns. What we want to do is to make sure that testing is possible. We want to make sure that our employees have access to tests.
We think by setting such measures, we can keep infection rates low. As far as COVID is concerned, we are already preparing for the third jab or for virgin jabs, so to speak. We are planning to set up again vaccination capacities because the employees that were vaccinated before the summer would have to receive their boost in November and December.
Another question in relation to the tests. What does that mean? In Linz, Donawitz , Kapfenberg, how do you have PCR testing stations?
We are trying to get gargling tests and take over logistics and send the tests to the laboratories for evaluation.
Thank you.
Thank you. If you are in the system and want to ask your question, please use asterisk one in order to make sure that we can hear your question. We see that we have some people in the system that haven't registered for questions. We'll give you a further one or two minutes to dial in and to ask your questions. We have a written question by Kurier, Mr. Pressberger. I read the question to you. The European Union and the U.S. found an agreement in the customs problem. What about this agreement? Is it currently implemented, and how do you comment this tariff topic in hindsight?
voestalpine was hit by the Section 232 customs tariffs. Of course, we paid customs tariffs. All divisions had a high administrative burden. To qualify for exemptions in the U.S., the new regulations which will come into force on the 1st of January next year is positive because we will have a quota system. We can supply to the U.S. without paying customs tariff in a certain bandwidth. Of course, this will have positive effects for our tube business in the oil and gas business.
Next question, via the phone, Sigrid Brandstätter, Oberösterreichische Nachrichten. Please ask your question.
Good morning. I have several questions relating to your forecasts. Mr. Ottel said that is the second-best result. If we look back to the previous years, the half year 2017, 2018, we had an EBIT that was even higher than this year. Please come back to the outlook and the forecast. Will this be a record year? If you extrapolate revenue and earnings, and by simply multiplying them by two, this seems to be a record year, a record year, and this also means that you've left the crisis behind and overcome the crisis.
I am not certain that we will have a record year. You saw the outlook as presented by Mr. Eibensteiner. If we have the maximum of the outlook, it's a record year. If we stay in the bandwidth, it's not a record year. The answer, will it be a record year? Do we expect a record year? No, I can't give you any change of the outlook that was already presented.
Let me continue with a question relating to the divisions or the business segments. The result seems to be driven by the steel industry, EBIT margins of 13%-14%. Could you be a little bit more precise where this comes from? Because the steel industry, the steel segment, is the segment that normally would suffer from the standstill in the automotive industry, which is a very important customer segment.
Your observation is right. The result is very much driven by the steel division. Of EUR 650 million EBIT, EUR 370 million resulting from the steel division. The steel industry, yes, has a market exposure to the automotive industry, which is suffering from supply chain problems in the semiconductor industry and changes their demand policy. Of course, in the second quarter of this year, we see volume reductions also in our deliveries to the automotive industry.
We also know that we have a long-term customer structure, and when mixing the contract structure, we see a positive development, and we can also pass on price increases to the customers. As far as the second half of the year, the second quarter is concerned, we saw lower volumes due to the problems in the automotive industry, but we also saw higher margins. The automotive industry, of course, has an impact on the steel industry, but this is compensated by better prices and by a better contract mix.
Let me also ask a question relating to the COVID situation. You say you try to get antigen tests, but at the moment, the company doesn't have capacities to offer PCR tests in the company.
The tests have been ordered, and at the moment, we have this transition until we have a transition period, and it will be possible to have sufficient tests for our employees.
Thank you very much. Another question relating to the situation in the U.S. and the customs tariffs. You talked about administrative burdens. Can you also give us your expectations how this agreement will translate in monetary terms?
I don't dare to estimate how much the financial costs were for this administrative work. Mr. Eibensteiner said that Section 232 tariffs hit the companies that produce in Europe and export to America. That's the seamless tubes production in Styria, which of course has other markets as well, but the U.S. is a very important market for them. The market, of course, we delivered to that market also under the Section 232 tariff scheme, and we paid the tariffs. As soon as we continue with our deliveries, and we don't have to pay the tariffs, of course, this is a financial advantage which will improve the Tubulars result in Kindberg.
The last question relates to capacity utilization. Do we have sufficient capacity utilization or do we have segments that lag behind? You said that demand from the oil and gas industry is recovering. Are you working full capacity or do you have room to maneuver?
In most segments, we have a very good and high-capacity utilization. Of course, in segments where we are supplying directly the automotive industry, we had to adapt to lower demand. Of course, this happened partially. We, of course, would have additional capacities available. Of course, we had to adapt our capacities. If we look to the aerospace industry, we see increases in short and mid-range planes, but there is still capacity as far as long-range planes are concerned.
Thank you very much.
We have also received a number of written questions which I will read out. Let's start with Bloomberg. First question: limitations in zinc production by important European producers, is that limiting your production in zinc products? And second question: will the hot-rolled coil prices fall, or how will, are they probably developing in the long range average, or what do you expect?
As far as the first question is concerned, and zinc supply. At the moment, zinc supply is good. And we have good supply until the next year. We are not affected by problems in the delivery. As far as steel prices are concerned, this is always a very difficult topic. You know that we are having long-term contracts and don't have so much spot contracts. We have long-term contracts with our customers. We had a peak in summer in spot prices. Our prices have gone down again and stabilized at a rather high level.
Thank you. Next question. [audio distortion]. What do you think about the chip scarcity in the automotive industry? Some say 2022, some say this will last until 2023.
There are diverging opinions. What we hear from our customers is that they expect the shortage to last until 2022, and then there will be a recovery.
Thank you. Next question to you, Mr. Eibensteiner. You say that you are thinking about further using the pilot plant, the hydrogen pilot plant. What options do you have? Do you expand the plant, and do you need state financing? What are the key factors and was the plant successful? The question was asked by Monika Graf, Salzburger Nachrichten.
We tested this pilot plant for several years. It was a new technology. We know the efficiency and efficacy. We know how to operate such a plant. We know about safety concepts. Hydrogen is highly combustible, so we know about all that. We will further develop this project. The hydrogen hasn't been refined finally and isn't dried and condensed in order to transport it or to further use it. We will think about ways of doing that in the follow-up concept.
Thank you. Two questions by Kronen Zeitung via telephone, Mr. Ebeert and then Ms. Kneidinger.
Hello. Thank you very much. I would also like to ask a question relating to hydrogen. There are clear demands for state aids from the industry. What do you think is necessary, and which volumes are we talking about, or which volumes would first be needed for fully supplying the locations with hydrogen? You also talked about the aerospace industry. What do you think? What about the future development, production of new jets? Will the production of new jets reach pre-crisis levels? What do you think?
Hydrogen is an intensely debated topic, as you also said. At the moment, hydrogen that is produced from natural gas is of course has a CO₂ footprint and is cheaper than green hydrogen, which we are producing by electrolysis in our plant. It's a factor one-three, one-four as far as the costs are concerned. It's 3 x, 4 x more expensive than hydrogen that is produced from natural gas. This gap will probably close over time when plants are getting larger, when energy supply with green electricity will be cheaper as well.
I think the most decisive thing is that we have green energy at economical prices for the production of green hydrogen. All types of funding or subsidies are of course welcome.
Ms. Kneidinger?
I have a question relating to the semiconductor delivery problems. Mr. Eibensteiner, you talked about capacity adjustments. What does that mean? Is there already short-term working schemes, or what are we doing with the free capacities? Can they be shifted to other business segments? Do you have time accounts where people accumulate minus hours?
You most mentioned all ways of how we can solve this problem. In the German automotive in the German plants that are depending on the automotive industry, we have short-term working schemes where a certain number of employees has been registered for short-term working schemes. Here we also can react to short-term changes in demand. Here in Austria, we don't have any short-term working schemes. Here it's about consuming overtime. We have segments that have a high utilization, and we have shifting of employees among the companies in order to cope with rising capacities. In Austria, we don't have any short-term labor. As far as Germany is concerned, yes, there are such systems.
Let me come back to hydrogen production, the question that we heard before. The question was, we have a test plant that was erected for research purposes. It is a research plant. We need the 500-fold capacity to fully supply our plants. This would be 3,000 MW or an energy supply of 27 TWh per year. I think this illustrates and undermines what Mr. Eibensteiner said, that of course power and power supply is most important to support such a transformation.
Thank you very much, Mr. Ottel. Next question. Ms. Ungerboeck from STANDARD . Let me read the question. What about the wage agreements of the metal industry? It's very high, as employers and economists say. What does this new wage agreement cost for the group?
It was a high increase of wages, and for voestalpine, of course it means that we have to compensate the costs with efficiency boosts. The cost roughly is a middle double-digit million euro amount.
Thank you. Next question by Mr. Hager. Gentlemen, up until 2030, you plan to switch to electric arc technology to switch steel production to green steel. Would we need a green Danube? Where do you want to take green electricity at competitive prices in future?
If you look at greentec steel in a first step, we have a partial transformation from blast furnace technology to electric arc technology. The power demand is much lower. This is why we chose this path. We think by taking this first step, we can produce 2.5 tons of steel with reduced CO2 emissions.
Ms. Haas from Kleine Zeitung. First question, after a reduction of employees in the aerospace industry in Styria, will you increase number of employees? A second question, give us an update on Styria, Kapfenberg, are there further problems caused by supply problems? The second part of the question we'll ask after the first questions have been answered.
As far as increasing headcount in for the aerospace segment, yes. In Kapfenberg, in the aerospace segment, we are currently building up our workforce. As I said, order income is increasing, as I said before, as far as Tubulars are concerned, we already have increased the number of employees, and we think that in the coming months, in most segments, we will have pre-COVID levels, pre-COVID headcounts. Second question, Kapfenberg, I think you mean the steel plant? Steel plant Kapfenberg. Basically, nothing has changed as far as the situation is concerned, it has already been communicated. We are working hard to finish the plant. As already communicated, we will start full operations mid next year.
Second part of the question of Mr. Haas by Ms. Haas, Mr. Ottel, financial advantage for Tubulars in Kitzbühel, what can you name that? Another question relating to the price level, I think it was already answered. What is your view as far as price trends are concerned? The third question relates to segments, which you are planning to expand.
We had EUR 40 million in Kitzbühel that had to be paid in terms of tariffs. That was the year, the tariffs that we paid for the year. It is almost difficult to anticipate price trends. Prices are formed by supply and demand. Demand and we are very positive as far as the future outlook is concerned. Demand is expected to remain high. Given the increase in energy prices, we are forced to pass on the price increase to our customers. We will charge higher prices.
As far as business segments in which we are planning to grow are concerned, in segments where we have innovative products, high quality products, we will have an opportunity to grow, and we plan to grow together with our customers. We are developing new products and of course want to deliver such new products. That's one way of growing. Another way of growing is inorganic growth by acquiring other companies. This can happen in segments where we see profitable developments with a good return, and these will be the segments where we plan to grow. In terms of volumes, we will not grow in the steel industry. We are focusing on high-quality products.
Sigrid Brandstätter from Oberösterreichische Nachrichten has another question.
I wanted to ask questions relating to the topics that kept us busy in the past years. What about the situation in Texas in the HBI plant, as far as the financial situation is concerned and capacity utilization is concerned? As far as Cartersville is concerned, what about restructuring of that plant? Please also give us financial information.
The first half year with the HBI plant is over. We saw very good development and good demand development in the U.S. This is why we saw a positive development in Texas. The market is positive. We have a planned shutdown in Texas. We don't expect any major changes in the market environment. We hope that we see that in future we will see more electric arc technology in the U.S., and we see that very positively.
As far as Cartersville is concerned, we already had improvements last year. These improvements stabilized at a certain level, but we have to admit that even if the U.S. was not hit that hard by semiconductor supply problems, the automotive industry was hit. The enormous losses that we had in Cartersville have not occurred anymore.
Let me come back to the HBI plant. What is the capacity utilization at the moment? What is production volume, production output?
Mr. Eibensteiner described the market situation, which is very attractive, and everything which we produce can be sold. Of course, due to the planned shutdown, the annual capacity is lower, but as far as the sales side is concerned, we are working full capacity.
Mr. Rupprecht from ORF would like to know from Mr. Eibensteiner if voestalpine was surprised by the semiconductor problems over the summer and how the group reacted.
We were not surprised. We have permanent contacts with our customers and know when there are problems in the supply chain. Of course, we are hit by a certain degree. As I already said before, we are adjusting to the situation. We have fluctuating call-offs of our customers, and we are adapting to this situation. As I said before, in our plants in Germany, we registered some employees for short-term labor in order to be able to react more flexibly to the demand situation.
Basically, we were not surprised, but in some plants and some locations, the changes in the call-off behavior of our customers were difficult to foresee, and it was difficult to coordinate that in our production. Of course, we had some problems, and we had negative effects. Due to the change in behavior of the customers in their call-off behavior, we had problems in some locations.
Thank you very much. We have another question via telephone and by mail. Ms. Ungerboeck from STANDARD. Tubulars, how is the business development in the Tubular segment? Did you reach pre-crisis levels? Second question, are there backlogs or rather reluctant demand in other segments? Here, another question relates to short-term working schemes, and another question related to Cartersville, which was already answered. What does the ban on combustion engines mean for the automotive sector in the medium and long run? Is voestalpine preparing for this situation, and will demand of the automotive industry change? Will this have an influence on the sales of voestalpine?
As far as Tubulars are concerned, Ms. Ungerboeck, we have a 3.5-shift plus capacity utilization. This is a very high-capacity utilization and can be compared to pre-COVID levels. As far as combustion engines are concerned and the ban on combustion engines, let me state that our products are included in the body-in-white in tool manufacturing and very low components in combustion engines. This means that this transformation to electric vehicles or hybrid vehicles can of course be accompanied by us. It's not a disruptive development, at least in our view. We have a transformation towards e-mobility and we see chances first when thinking about the electric arc technology. We took up the challenges and converted them into benefits. The battery box also needs crash-resistant parts, and here we have high-quality product which will be another business opportunity for us.
Yes, there is this transformation, and yes, voestalpine can accompany this transformation from combustion engines to electricity.
Next question, Ms. Haas from Kleine Zeitung via the telephone.
Good morning. I have a question relating to Glasgow. Which impact do you see, do you expect, on the global steel industry, or don't you think that there will be any impact by Glasgow on the steel industry?
The talks in Glasgow are ongoing. We see different speeds in CO₂ reduction in different areas in the world. We have ambitious goals in Europe, then we have more long-term goals in China, even longer-term goals in India. I think this is a difficult political topic. We ourselves are focusing on Europe because we have our steel production here, and we have a clear situation, a clear legal situation. We have the Emissions Trading Act. We have the climate goals. Fit for 55 will be worded in the coming years, finally worded in the coming years. For us, the development in Europe is of course essential, but we also see that we don't have a level playing field as far as the climate measures are concerned in the various parts of the world.
Okay. No questions. Thank you. All questions that have been asked via mail or via telephone have been answered. It took us exactly an hour, that takes us to the end of the presentation of the half-year figures. I would like to thank the board for the presentations. I'd like to thank you for the questions, for having been with us, and I'd like to thank the team behind the cameras, behind the scenes. We will publish the Q3 figures at the beginning of February. Stay healthy. Stay in good mood, although we have the COVID situation. Thank you very much. Stay healthy, you and your families, and goodbye from Linz. See you again.