Annual Report 2011/12 www.voestalpine.com Development of the Key Figures In millions of euros 2007/08 2008/09 2009/10 2010/11 2011/12 Revenue 10,481.2 11,724.9 8,550.0 10,953.7 12,058.2 Profit from operations before depreciation (EBITDA) 1,836.5 1,710.1 1,004.3 1,605.6 1,301.9 EBITDA margin 17.5% 14.6% 11.7% 14.7% 10.8% Profit from operations (EBIT) 1,152.6 988.7 352.0 984.8 704.2 EBIT margin 11.0% 8.4% 4.1% 9.0% 5.8% Profit before tax (EBT) 979.6 700.0 183.3 781.0 504.4 Profit for the period1 751.9 611.6 186.8 594.6 413.3 EPS – Earnings/share (euros) 4.69 3.26 0.65 3.04 1.98 Total assets 12,601.8 12,846.5 12,294.1 13,076.4 12,612.1 Cash flows from operating activities 1,135.8 1,357.9 1,606.1 957.6 856.5 Investments in tangible and intangible assets and interests 3,910.1 1,078.9 542.5 422.7 574.6 Depreciation 683.9 721.3 652.3 620.8 597.7 Equity 4,289.3 4,262.5 4,262.4 4,691.1 4,836.3 Net financial debt 3,571.7 3,761.6 3,037.3 2,713.1 2,585.7 Net financial debt in % of equity 83.3% 88.2% 71.3% 57.8% 53.5% Return on capital employed (ROCE) 13.4% 11.4% 4.4% 12.4% 8.6% Market capitalization, end of period 7,006.4 1,645.0 5,043.3 5,585.1 4,255.0 Number of outstanding shares as of March 31 159,235,738 167,003,706 168,390,878 168,581,289 168,749,435 Share price, end of period (euros) 44.00 9.85 29.95 33.13 25.22 Dividend/share (euros) 2.10 1.05 0.50 0.80 0.802 Employees (full-time equivalent), end of period 46,170 44,004 42,021 45,260 46,473 1 Before deduction of non-controlling interests and interest on hybrid capital. 2 As proposed to the Annual General Shareholders’ Meeting. Overview of the Key Figures voestalpine Group In millions of euros 2010/11 2011/12 Change in % Revenue 10,953.7 12,058.2 10.1 EBITDA 1,605.6 1,301.9 –18.9 EBITDA margin 14.7% 10.8% EBIT 984.8 704.2 –28.5 EBIT margin 9.0% 5.8% Employees (full-time equivalent) 45,260 46,473 2.7 voestalpine Divisions In millions of euros Steel Special Steel Metal Profilform Automotive Engineering Revenue 4,130.3 2,945.0 2,955.6 1,251.5 1,224.6 EBIT 226.5 272.9 96.9 126.6 58.5 EBIT margin 5.5% 9.3% 3.3% 10.1% 4.8% Employees (full-time equivalent) 10,702 12,363 11,344 4,556 6,808 Revenue EBITDA Profit from operations before depreciation In millions of euros In millions of euros 10,481.2 11,724.9 8,550.0 10,953.7 12,058.2 1,836.5 1,710.1 1,004.3 1,605.6 1,301.9 2007/08 2008/09 2009/10 2010/11 2011/12 2007/08 2008/09 2009/10 2010/11 2011/12 EBIT Profit from operations ROCE Return on capital employed In millions of euros in % 1,152.6 988.7 352.0 984.8 704.2 13.4 11.4 4.4 12.4 8.6 2007/08 2008/09 2009/10 2010/11 2011/12 2007/08 2008/09 2009/10 2010/11 2011/12 You can find the online version of our current Annual Report on our website www.voestalpine.com Highlights1 The first phase of the business year 2011/12—until the summer of 2011—still characterized by a broad-based feeling of optimism with regard to the economy. From the fall of 2011, increasing nervousness on the markets and cautious order patterns on the part of customers in some industries. Toward the end of 2011, a new escalation of the sovereign debt crisis in Europe; economic situation in the USA developed positively. The first signs of a certain cooling down of momentum in the growth regions of China and Brazil increased uncertainty around the turn of the year 2011/12 regarding the development of the global economy. Despite the difficult market environment, the divisions, which are strongly oriented toward downstream manufacturing, the divisions Special Steel, Metal Engineering (until March 31, 2012 Railway Systems Division), Profilform, and Automotive had a stable development, retaining the revenue and earnings level of the previous year. Very volatile development with regard to earnings in the Steel Division due to fears surrounding the economy and structural overcapacities in Europe. Despite a difficult economic environment, voestalpine boosts the Group’s revenue to an all-time high of EUR 12.1 billion. All reporting categories adversely affected by the non-recurring effects in the railway sector in the amount of EUR 205 million and therefore, remained significantly below last year’s figures. At EUR 1,301.9 million, EBITDA was 18.9% lower than the previous year (EUR 1,605.6 million), while EBIT was 28.5% below the previous year (EUR 984.8 million) at EUR 704.2 million. When the non-recurring effects amounting to EUR 205 million are excluded, the development of earnings is virtually stable. Reduction of the gearing ratio (net financial debt as a percentage of equity) from 57.8% to 53.5%. Dividend proposed to the Annual General Shareholders’ Meeting: EUR 0.80 per share. Number of employees (as full-time equivalents) of 45,260 as of March 31, 2011 rose to 46,473 as of March 31, 2012 (+2.7%). In the business year 2011/12, the (purely accounting) effects of the purchase price allocation (ppa) from the acquisition of BÖHLER-UDDEHOLM had an adverse effect on the Group’s operating result (EBIT) of EUR 47.4 million so that EBIT before ppa is EUR 751.6 million; this corresponds to an EBIT margin before ppa of 6.2%. 1 In accordance with IFRS, all figures after application of the purchase price allocation (ppa). Annual Report 2011/12 5 The Group Management Report 5 Highlights 30 Market environment 8 Overview of the voestalpine Group 32 Business performance 10 voestalpine Group – Global presence 38 Important events in the course of the year 12 Supervisory Board 40 Important events after the reporting date 14 Management Board 40 Investments 16 Letter of the Management Board 42 Acquisitions and divestments 18 Investor relations 42 Employees 22 Corporate Governance Report 45 Raw materials 29 Introduction of a 46 Research and development new compliance structure 49 Environment 52 Risk management 57 Disclosures in accordance with Sec. 243a of the Austrian Commercial Code (UGB) 58 Outlook 6 Annual Report 2011/12 Contents Consolidated Divisional Reports Financial Statements 60 Steel Division 91 Report of the Supervisory Board 66 Special Steel Division 92 Consolidated statement of financial position 72 Metal Engineering Division 94 Consolidated statement of cash flows 78 Profilform Division 95 Consolidated income statement, Statement of comprehensive income 84 Automotive Division 96 Consolidated statement of changes in equity 98 Notes to the consolidated financial statements 176 Unqualified auditor’s report 178 Management Board statement in accordance with Sec. 82 (4) of the Stock Exchange Act (BörseG) 179 Investments Service 195 Glossary 196 Contact, imprint Annual Report 2011/12 7 The Group Overview of the voestalpine Group In their core segments, the companies of the voestalpine Group are leading providers globally or at least in Europe and perform with top technology and quality leadership. The following is an overview of the individual divisions of the Group, their products, customers, and markets as well as the most important key figures for the business year 2011/12. Steel Division Top European player Top-three European supplier of high quality sheet and global top position in heavy plate for the most demanding applications. Special Steel Division Global leadership Worldwide leader in tool steel. Leading position in high-speed steel and special forgings. Metal Engineering Division (until March 31, 2012 Railway Systems Division) Global leadership European market leader for rails and processed wire, world market leader for turnouts and complete railway systems; leading position in welding consumables and seamless tubes. Profilform Division Global leadership Worldwide market leader in special sections and custom roll forming; leading position in precision strip. Automotive Division Top European player Top-three European player in the auto- motive supply industry for special components. 8 Annual Report 2011/12 The Group Revenue (in millions of euros) 4,130.3 EBIT (in millions of euros) 226.5 EBIT margin 5.5% Employees (full-time equivalent) 10,702 Revenue (in millions of euros) 2,945.0 EBIT (in millions of euros) 272.9 EBIT margin 9.3% Employees (full-time equivalent) 12,363 Revenue (in millions of euros) 2,955.6 EBIT (in millions of euros) 96.9 EBIT margin 3.3% Employees (full-time equivalent) 11,344 Metal Forming Division Global leadership Revenue (in millions of euros) 1,251.5 Leading worldwide provider of high-quality EBIT (in millions of euros) 126.6 metal processing solutions, in particular EBIT margin 10.1% special sections and precision steel coil as well as special components for the auto- Employees (full-time equivalent) 4,556 mobile industry. as of April 1, 2012 Revenue (in millions of euros) 1,224.6 Revenue (in millions of euros) 2,476.1 EBIT (in millions of euros) 58.5 EBIT (in millions of euros) 185.1 EBIT margin 4.8% EBIT margin 7.5% Employees (full-time equivalent) 6,808 Employees (full-time equivalent) 11,364 Proforma figures, added Annual Report 2011/12 9 The Group The Supervisory Board of voestalpine AG Dr.