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voestalpine: Earnings and Outlook Reflect Strength of Austrian Economy

December 14, 2010

Austrian steel conglomerate sees modest and sustainable growth ahead  

In the first half of its 2010-2011 business year, voestalpine Group saw a boost in revenue, up 24.2% from 4.18 billion Euro last year to 5.19 billion Euro. A slightly downsized permanent staff of under 39,000 increased EBIT (earnings before interest and taxes) to 414.2 million Euro, an almost ten-fold increase over last year.

voestalpine attributes this significant increase in revenue and operating results to strength in all of its five divisions: full utilization of crude steel production capacity in the Steel and Railway Systems divisions and near-full capacity in the Special Steel, Profilform, and Automotive divisions. The conglomerate sees this trend continuing in the upcoming months thanks to an overall positive development in most of its key markets.

Closer analysis of voestalpine´s markets reveals a more differentiated outlook. The large economies in Asia, parts of Europe and Brazil continue to develop positively. In contrast, the group sees the situation in the USA as critical. A similar ambivalence is stated regarding various industry sectors. Automotive engineering, machine building, consumer goods, renewable energy and oil and gas exploration continue to recover. The construction and building sector is less favorable due to the effects of cuts in public spending in many countries.

Looking head, cautious optimism remains. According to Dr. Wolfgang Eder, CEO of voestalpine AG, “As dramatically as the broadly-based economic reversal began two years ago in the fall of 2008, so swiftly and unexpectedly did the recovery start in the summer of 2009 at least for the industry. But anyone who is using the dangerously overheated economic situation of the first half of 2008, as a yardstick will have to wait for quite some time for an all-clear signal. And that is a good thing, because then, the next economic slump would be inevitable. For the near future, we should be satisfied with growth that is not quite so dynamic, but modest and sustainable.”

In the remaining half of the 2010/11 business year, voestalpine has a confident view that their profit from operations (EBIT) will double over the last year to exceed 700 million EUR.

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