Austrian steelmaker carves out profit in hard market

Austrian steelmaker Voestalpine said on Thursday it had pulled off a slight increase in full-year profits despite a "negative" international economic climate that has hampered steel and oil prices.

Austrian steelmaker carves out profit in hard market
Voestalpine AG

Investors cheered the results which beat analysts' forecasts. Shares in Voestalpine, which specialises in steel used in the rail, automobile, aviation, home appliances and oil and gas industries, jumped 5.5 percent on the Vienna stock exchange in early trading.

Chief executive Wolfgang Eder said the results showed that its focus on “technologically and qualitatively sophisticated market segments” was the right strategy.

Profit after tax rose by 1.2 percent to €602 million for the fiscal year running from April 2015 to the end of March, on sales that dropped 1.1 percent to €11.1 billion, the company said in a statement.

Stripping out one-off effects, net profit however fell 7.7 percent, it added.

The company said there had been “an economic environment made extremely challenging by the dramatic slump in the oil and natural gas sector and global price deterioration for steel commodities, primarily due to enormous overcapacity in China”.

China produces more than half of the world's steel and is accused of flooding the market with products sold below cost in violation of global trade rules.

Angry steel manufacturers have urged the EU, the second-biggest steel producer, to follow the United States in punishing China with harsh tariffs.

Voestalpine said it was pencilling in an operating result that “at least approximates the figures of the last business year” for the coming year as it eyes indications that the economic situation will recover slightly over the year.

“The continuing strong performance of the automotive industry as well as the railway and aerospace sectors is definitely a positive factor,” it added.

The company employs some 48,500 staff and operates in 50 countries.

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Germany’s BMW to put €1 billion into electric vehicles in Austria

German auto manufacturer BMW said on Monday it would invest "around one billion euros" in the production of electric vehicles at a plant in Austria from 2025.

Germany's BMW to put €1 billion into electric vehicles in Austria

Altogether, 600,000 units a year should roll off the line at the factory in Steyr under the investment plan, set to run until 2030, BMW said in a statement.

From 2025, BMW will “develop and produce the next generation of e-drives” at the Austrian site, BMW’s production chief Milan Nedeljkovic said.

The refurbishment of the plant will see two new production lines added and the location expanded by 60,000 square metres.

The new facilities would require €710 million in investment, while €230 million would be dedicated to boosting vehicle development at Steyr.

“Around half” the 4,400 employees at the site would be working on “e-mobility” by 2030, plant boss Alexander Susanek said.

The Bavarian manufacturer said it aimed to have two million electric vehicles on the road by 2025, promising 13 new electric models and a revamp of its Mini brand.

BMW has already said it will spend €400 million to upgrade its home factory in Munich to produce electric vehicles.