This article first appeared on GuruFocus .
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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voestalpine AG ( VLPNY ) achieved solid earnings and free cash flow in a difficult environment, supported by its robust strategy.
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The company's Greentech Steel project is on time and on budget, with the first electric arc furnaces set to ramp up in 2027, reducing CO2 emissions by 30% by 2029.
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voestalpine AG ( VLPNY ) secured long-term contracts, including a 10-year deal with Canadian National Railway and the Rail Baltica contract, strengthening its railway systems business.
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The flat steel division gained market share in the automotive industry due to strong quality and logistics performance, contributing to a very good performance.
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The company's reorganization and portfolio optimization efforts are on track, with significant cost savings already realized, including a reduction of over 900 employees year-on-year.
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voestalpine AG ( VLPNY ) expects positive results from the EU safeguard measures and CBAM, with price increases anticipated in the second half of the year.
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The balance sheet remains solid with reduced net debt, providing room for strategic growth, particularly in railway systems and aerospace.
Negative Points
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voestalpine AG ( VLPNY ) faces ongoing trade-related uncertainties, particularly from US tariffs, which have disrupted markets and impacted the tubulars business.
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The automotive components business is challenged by weak demand from European OEMs, requiring additional restructuring measures.
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The company's tubulars and heavy plate businesses are suffering from project delays due to the conflict in the Middle East, with limited visibility on when conditions will improve.
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Customer inventories in the European steel market are elevated due to pre-ordering ahead of safeguard measures, which may take until autumn to normalize.
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voestalpine AG ( VLPNY ) continues to incur restructuring costs, with 16 million euros booked in the first quarter, and faces headwinds in construction and mechanical engineering markets.
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The high-performance metals division is experiencing subdued tooling markets in Europe and North America, although partially offset by strong aerospace demand.
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The company's guidance for EBITDA remains unchanged at 1.6 to 1.85 billion euros, reflecting persistent uncertainty and mixed market conditions.
Q & A Highlights
Q: Can you remind us if you will incur any ramp-up costs for the new electric arc furnaces (EAFs) over the course of 2027, and how will the like-for-like margins compare to your existing blast furnaces as you commission the EAFs and decommission the blast furnaces? A: CFO Gerald Mayer: We do not assume significant ramp-up costs. Our R&D department has been preparing for a smooth ramp-up, and we have a testing environment in Donawitz. In Linz, it will take roughly 150-200 people to run the new equipment, and we are not forced to take our blast furnaces out of production immediately. On margins, we will see reduced CO2 burdens from the ETS system (we paid over 200 million last year), and we are working with customers to secure green premiums. CEO Herbert Eibensteiner added that there is demand for greener steel, particularly from automotive and railway customers, and we will stick to our high-quality strategy even with the EAF route.
Q: Based on your initial assessment of the revamped ETS framework, how do you expect it to impact your business, and do you think you may be able to apply for retroactive grants for your Greentech investments? A: CEO Herbert Eibensteiner: The first announcement was positivethere is a longer curve for free allowancesbut it's not enough. There will be a lot of discussions with the commission and parliaments; we are at the beginning of a long path. On subsidies, we received 90 million for the first step of Greentech, and we will go for subsidies for the second step as well, though it's still open.
Q: You mentioned a strong second-half for the steel division. Can you give us some detail around what you're assuming in your guidance with respect to price increases? A: CEO Herbert Eibensteiner: The price increase coming from CBAM and the EU safeguard is around 100 per ton plus, starting in January. In our planning, we see this as achievable. Due to our contract structure (yearly and half-yearly contracts), we are already halfway there, and we expect to see the full 100 per ton by the end of our fiscal year because of the time lag in our contract structure.
Q: Your balance sheet is looking pretty good with net debt down. How are you thinking about strategic flexibility and using the balance sheet to reach your medium-term return target? A: CEO Herbert Eibensteiner: Our strategic goal is to grow in certain areas, most notably railway systems, which is currently a 2.2 billion business. Our goal is to reach 3 billion after 2030, which will require acquisitions. We have a shortlist of targets. Aerospace is more organic growth, and warehouse and rack solutions also offer M&A opportunities. These are all high-ROCE targets. Our capital allocation strategy gives us room to follow Greentech, growth, and dividends.
Q: For the Donawitz second EAF, can you give us reassurance that you can deliver the 100 million CapEx number given cost inflation? Also, are there any other one-off items for Q2 EBITDA modeling, and how is progress on the 400 million cost-saving journey? A: CFO Gerald Mayer: No significant one-offs are expected for the rest of the year. On cost savings, we are roughly 400 FTEs down in metal forming, which adds up to roughly 40 million in savings this year. Our clear plan remains to achieve 400 million plus/minus in EBITDA by the end of 2028/29 for both HPM and metal forming divisions. CEO Herbert Eibensteiner added on Donawitz: The EAF equipment is tailored to our specific demands. We already invested the basic CapEx for the second step; the 100 million is for logistics, additional energy supply, and secondary metallurgical treatment. With this, we get fully electrified production in Donawitz, leading to the shutdown of two blast furnaces and the sinter plant by 2030, reducing employees by around 450 people.
Q: Can you give us more information on customer inventorieshow long will it take to revert to normalized levels, and which businesses saw the most pronounced inventory increases before the regulatory measures? Also, can you give figures on restructuring one-offs going forward? A: CFO Gerald Mayer: We booked 16 million in restructuring this quarter. From next year onwards, you will see a similar magnitude of cost release. The rest relates to consolidating warehouse activities and taking down stock values. On customer inventories, CEO Herbert Eibensteiner added: We see some customers wanting to buy earlier in expectation of higher prices, while steel service centers are fully booked. From experience, I would say normalization will occur in October or November, which would be a good environment for January price negotiations.
Q: On the cladded plate business, is there pent-up demand, and what indications are you getting from customers? Also, on metal engineering's seamless business (tubulars), what other than policy change can help turn it around, and would you consider a sale? A: CFO Gerald Mayer: On tubulars, we are not burning moneywe had a very small single-digit negative number in Q1, but we expect to generate cash flow going forward. We are managing through the storm, and we expect price pickups in the US. The Middle East war is the main issue; we assume it could be very positive when the war stops. We've reduced a shift and taken other measures so we don't burn money. CEO Herbert Eibensteiner added on cladded plates: We are finishing old orders, and several projects (mostly deep-sea gas pipelines) are postponed until the environment improves. The projects are still alive, and we see the first tenders starting. When there is a ceasefire, there will be many projects waiting and much to repair, which will be good business for us.
Q: On your reorganization efforts at the HPM division, what is a realistic medium-term EBITDA run rate excluding one-offs, and what restructuring actions still need to be executed? Also, how do you explain the discrepancy between strong steel sheet demand and struggling automotive components? A: CFO Gerald Mayer: We reconfirm that in business year 2028/29, we expect 400 million EBITDA for HPM. We are on the right track. We recognized 16 million in additional restructuring in Q1, and we do not expect material additional restructuring costs for the rest of the year or next year. CEO Herbert Eibensteiner added on autos: Steel sheet is good because we deliver to every OEM producing in Europe, so
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
