Annual Report 2005/06 - voestalpine

until the end of 2006. A balanced supplyand-demand
situation in Europe, minimal
pressure from imports, low inventory on the
customer end, and the continuing consolidation
in the European steel industry allow us
to anticipate that the economic environment
of the associated industries will remain favorable
for the time being. However, this
positive trend is tempered by rising prices
for some raw materials (in particular, ore
and zinc). Nevertheless, it should be possible
for the Division Steel to again achieve
an operating result for the 2006/07 business
year on the same level as last year.
In its core business in the tracks/switches
segment, the Division Railway Systems is
profiting from both the improved economic
situation in Europe and attractive overseas
markets, which continue to be stable. In the
two additional niche segments of wire and
seamless tubes, the market situation continues
to be favorable, however, the very
high price level for seamless tubes could be
subject to increased volatility because of
growing capacities and the weaker US dollar.
However, even taking these uncertainties
into consideration, the 2006/07 operating
result of the Division Railway Systems
could again come close to last year’s record
figure.
The Division Profilform is anticipating a
similarly stable operating result, whose
backdrop is the very solid economic environment
for both the division’s standard and
tailored tube and section products, which
has been ongoing since early 2006. The
growing regionalization of the operational
units of this division is having an additional
beneficial impact because this results in a
natural effect that mitigates cyclical fluctuations.
The situation in the storage technology
segment is somewhat more challenging,
as this segment is characteristically a
business on a project-by-project basis and
therefore subject to greater fluctuation.
Overall however, reaching last year’s operating
result in 2006/07 seems possible for
the Division Profilform.
In the 2006/07 business year, the Division
Automotive should be able to continue its
upward trend despite the economic environment
that continues to be challenging.
While the segments of safety technology,
laser-welded blanks, and special stamping
parts and components are anticipating a
positive and stable development, this is contrasted
by the insourcing trend in the automotive
industry, which makes the situation
for large and complex press parts and tool
manufacturing more difficult.
Because appropriate structural adjustments
and cost optimization measures have already
been approved for these segments and
are being implemented, we anticipate a continued
improvement of the operating result
and therefore of the division’s margin profile
in 2006/07.
Seen overall from today’s vantage point, the
voestalpine Group should achieve a similarly
excellent profit in the 2006/07 business
year as in 2005/06.
Management Report
Annual Report 2005/06