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Voestalpine CEO sees strong demand for car parts boosting profit
August 24, 2017 / 3:19 PM / 3 months ago

Voestalpine CEO sees strong demand for car parts boosting profit

LINZ, Austria (Reuters) - Austrian speciality steel maker Voestalpine expects continued strong demand from car makers to lift full-year revenue by at least 6 percent and help earnings increase “significantly”, its chief executive said on Thursday.

The logo of Austrian specialty steelmaker Voestalpine is seen during a news conference in Vienna, Austria June 1, 2017. REUTERS/Heinz-Peter Bader

The company has specialized in finished parts for the automotive, aerospace and railway industries in recent years to deal with the effects of price falls, strong competition and overcapacity in its traditional markets.

Analyst estimates of revenue of 12 billion euros ($14 billion) in 2017/18 “seem realistic,” Wolfgang Eder told Reuters in an interview at Voestalpine’s Linz headquarters. “Our operating profit will be significantly higher than last year‘s.”

Adjusted earnings before interest and tax reached 840 million euros on revenue of 11.3 billion in the year to March 31.

The auto industry has become Voestalpine’s major customer under Eder’s 13-year leadership, contributing a third to group revenue.

Germany’s emissions scandal had not affected the group so far. On the contrary, Voestalpine’s capacity to handle car manufacturers’ orders is stretched to its limits until the end of the year, the CEO said.

“The trend of steady growth is continuing. After a three-year upturn, there is no indication that this will change in the foreseeable future,” Eder said, when asked about developments in the auto sector.

GROWTH OPPORTUNITIES

The industry veteran sees growth opportunities for his group in a trend toward lightweight construction and e-mobility. Voestalpine is in talks with key players including Tesla, which aim to make ever lighter engines and battery bodies for electric cars, he added.

A $1 billion plant in the United States, which opened last year, worked as planned and the Austrian group did not experience any “significant economic disadvantages” since Donald Trump came to power, he said.

The Trump administration is considering restrictions on imports of steel and aluminum, a move that some experts have warned could trigger a global trade war.

Eder said U.S. import duties could apply to the stainless steel, car parts and pipes for the oil industry that Voestalpine sends to the United States, and reduce the group’s 1 billion euro revenue in the country by 400 million euros in a worst case scenario.

Voestalpine’s medium-term targets, which include 15 billion euros in revenue and an operational (EBIT) margin of 9 percent by 2020, are still valid, the chief executive said.

He said prospects in Europe and China were overall very encouraging, but uncertainty regarding geopolitical tensions and central bank strategies made it difficult to predict future developments.

“From today’s view, I would estimate the 15 billion as feasible, although ambitious.”

($1 = 0.8474 euros)

Reporting by Kirsti Knolle; Editing by David Holmes

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