Voestalpine AG (VOE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Good morning, and welcome to this conference call and press conference from voestalpine AG in Linz, Austria. Thank you very much for your time. Thanks for being with us. I'm Peter Felsbach, Head of Corporate Communications, and I'll be your host in this press conference. This year as well, for reasons of safety and in your interest and the interest of our employees and staff, it will be in virtual and online and streamed event, not face to face yet. But we very much hope that [indiscernible] when we speak about the first half year of business, we will meet face to face. I believe we are all versed now at online meetings. You know how it stands. At the end of the press conference, of course, you can also ask your questions. The media information, pictures, videos and the presentations, the PowerPoints can be found right now on voestalpine.com in the Media area. And let me tell you that as regards to our sustainability projects, there are some new pictures and videos, please use them. The business year 2020/'21, in every respect, has been a special one. The COVID pandemic in the first quarter has caused a full stop to the industry and to all industries, but then there was an upswing quite fast. And this is the reason why in spite of the crisis, we have quite good figures, which we are sharing with you. As for the voestalpine Group and its development, the members of the Executive Board will deliver their presentations. And here, I'd also like to say hello to the members of our Executive Board, first, the Head of Metal Forming division, Peter Schwab; then High Performance Metals Division, Franz Rotter; CEO of voestalpine, Herbert Eibensteiner; CFO, Robert Ottel; Steel Division, Hubert Zajicek; and for Metal Engineering, Franz Kainersdorfer. The presentation will take some 45 minutes. And after that, as I said before, you can just send your questions. You just dial in the dialing that you will find before the start of the Q&A session. That much on my introduction. And now I hand over to Herbert Eibensteiner for the first part of his presentation. Over to you, Mr. Eibensteiner.

Thanks, indeed, Mr. Felsbach. Ladies and gentlemen, a cordial welcome to the presentation of the business year 2020/'21 of voestalpine. Peter Felsbach has said it already. It is, of course, a special year for all of us. And first of all, let me talk you through the most decisive factors in the elapsed business year. The business year definitely was shaped by the COVID-19 pandemic. In the first quarter, we saw a massive meltdown in demand in virtually all areas, all of our business segments. And for us, it has been very important to implement all safety and health measures, which were so important and still are in order to grant health of our staff and this has been of utmost importance to us and was always our top priority. Due to the crisis, there have been some impairment losses to the tune of EUR 197 million. From today's vantage point, we can say that the crisis management did stand the test of time. And at every moment, we have been able to deliver to our customers. It was entirely clear that during such a crisis, we focused on cost management. We have done everything in order to stabilize results. The cash flow was optimized. And during the crisis as well, we have continued the plan of the year before to reduce our debt even further. And we should make particular mention of the highest commitment and flexibility of all our staff. It was a difficult year for all of us. And at the end of the day, we can say that the management and the employees and workers altogether have implemented the necessary measures. And at the end of the day, there has been a very favorable result. And my cordial, our cordial thanks go to all of you for that. In the course of the business year then after summertime as it were and then also on into end of Q2 and Q3 and Q4, there was a special momentum which meant that the economy has recovered. And clearly, and here you see some information on our respective markets. We did see that China posted the most rapid improvement. Even early in our business year, we saw a very favorable and picking up growth and demand. And China, in spite of the crisis, ended the year with some positive economic growth in the calendar year 2020. North America then went better and better during the year due to a very good vaccination strategy also. And then with some delay, the business situation, the economic environment also improved in Europe and showed particular momentum in the second half year. In South America, you see that the business situation was a bit difficult. It was a fair to middling picture, and were still characterized very much due to COVID-19. And in spite of a difficult situation, we saw an excellent performance there. What is then today's situation? Presently, we see a very high demand for high-quality steel products. And we see that in the automotive industry, in the consumer goods and mechanical engineering, also in the construction industry, there is an extremely strong demand. In Railway Systems, that is rail turnout, we see an unchanged and still very solid performance, and this also was the area which during the crisis was most stable, if I may say. And if it is solid here on the slide, solid on a very high level, so order backlog and demand are very high, particularly as regards rail. Two areas were most hit, that's the oil and natural gas sector and also aviation or aerospace industry. We see in both areas that after hitting rock bottom, there has been an incremental trend toward recovery, and there is a slight recovery also in oil and gas. But what remains to be said is a tight supply and demand situation in the steel market, and we should add to this as well also in the raw materials market. So we see of course a scarcity in steel, but we also see a scarcity of raw materials and extremely high prices materials side, and of course, tight supply chains. What are the lessons learned after this crisis? We have seen that voestalpine's strategy as a broad-based and globally leading steel and technology group is very robust and resilient. And the basis of such strategy is to focus on a combined materials and processing competence and expertise. We are keeping this business model. We are still focusing on premium product and systems solutions made of metallic materials. So we focus on top quality, and these products from metallic materials will also be processed and produced for our customers. Increase in shareholder value has become more and more important as well. And since we talk economics as well, we see that in this area, we keep trying to focus on innovation. Technology leadership is what we are aiming at, and we develop our processes and products in collaboration with our customers. And this focus on digital transformation and operational excellence has proved to be a successful implementation of operational excellence. And investments of the past, investments into digitalization, have made processes and storage handling much easier and clearer, storage handling as well, logistics. So these areas, we will focus on them in the future as well. Much more in the focus now is the key topic of sustainability. Sustainability is an integral component of our group's strategy. All these measures in retrospective, and let me just pick out a few figures, have meant that most clearly, we have also seen a reduction of revenue, but we have an EBITDA of EUR 1.1 billion, which is almost the same value as last year, but still we see a much clearer EBITDA margin. All divisions have contributed to the positive EBIT, so they all posted a positive EBIT. And cash flows from operating activities have been stepped up clearly to EUR 1.6 billion. And we have shown that even during crisis, the net financial debt has decreased to EUR 2.7 billion, and this is a very important milestone for voestalpine. We have also lost some 1,000 staff. The total workforce now amounts to 48,700. And due to this result, we will propose to the Annual General Meeting a dividend of EUR 0.50 per share, which is a plus of EUR 0.30 when compared to the previous year. And now I'd like to hand over to Robert Ottel, our CFO. He will tell us much more about figures in detail. Thank you.

Ladies and gentlemen, I'm Robert Ottel. For 17 years, I've been working in the Executive Board of voestalpine. And today, I'm quite proud because for me, the elapsed business year has been the most successful one of the 17 years for voestalpine. I do know, of course, that for you this seems to be in stark contradiction to the economic framework, which we suffered from or are suffering from during the COVID crisis. It's even maybe in contradiction to the figures I'm sharing with you. But I still subscribe from my statement. In difficult times, and this has been a very difficult year for voestalpine as well. The solidity and resilience of a company and also the expertise of the staff can be seen much better than during economic tailwind. And this is why I'm so proud of this year because voestalpine have shown that we are a very robust and resilient company. What you see here is a comparison of this year and last year. And even if the previous year was a bit weak-ish already in the year of the COVID crisis, once again, some EUR 1.5 billion of revenue has been lost. The major part of that, 85% of that revenue decline, was, of course, caused by lacking volume, lacking quantities, particularly in Q1 and Q2 of this very business year. And in spite of us losing this EUR 1.5 billion of revenue, the whole group has clearly improved or kept mainly constant the operating result, and this is an outstanding achievement, if I may say so. In some further categories, EBIT, EBT and also profit after tax, you see a clear improvement. And such improvement is due mainly to reduced onetime effect. On the most difficult conditions during COVID, the group and all our staff still have earned some profit at year-end, [ which is ] EUR 32 million. That in spite of a special burden of EUR 197 million. This EUR 32 million more or less corresponds to what we are -- what we've paid out to our shareholders as a dividend, the EUR 0.20. And here also, our thanks goal to all our shareholders, they have been so modest in their dividend request and this is how we have mastered this difficult year. For this year, we are going to propose to the AGM a clear increase of the dividend to EUR 0.50 per share. This chart here shows us the last 2 years. Because it does show where we come from and it shows us also where we stand today. First, related to debt. And you see in the gray chart on our left, the indebtedness 1st of April 2019. And to the very right, the debt end of the business year we are reporting on now. And you see that at EUR 4.1 billion debt, we started out too high. The debt was too high. Then this is why more or less in summer 2019, we started to subscribe to the principle of debt reduction being priority #1 for us. It took us one quarter. And you see that from Q1 '20, the group and our colleagues did deliver. Our strategy bore fruit, and we saw that across the entire period, EUR 1.6 billion of free cash flow was achieved in spite of COVID. And due to a clear drop, you see that in the green line, the quarterly pattern of revenue before COVID, EUR 3.3 billion, not an outstanding quarter but pre-COVID. And then in the second quarter '20 with EUR 2.4 billion, so a revenue decline of almost 1/3. And since then, an incremental catching up and recovery. And you see that in Q1 '21, we are back to the revenue level of pre-COVID times. This can also be seen here in the results. In Q4, we have an EBITDA of EUR 450 million and an EBIT of EUR 250 million. These endeavors, which we focused on during these 2 years, can also be seen from our gearing ratio. This means debt and equity compared, debt as a percentage of equity. And you see that when compared to the previous year, there is a clear decline in equity of EUR 1.1 billion. Why is that so? First, caused by paying back a hybrid bond, which had been equity. And then, of course, it was replaced by normal debt. Second, due to the fact that we paid out EUR 2.1 billion of dividend, and there was a year of loss, of course, mainly caused by those nonrecurring effects of EUR 485 million in that year. So massive loss of equity and an increase of debt also in that year, in spite of us having more than EUR 500 million of free cash flow due to the hybrid bond and due to lease obligations and liabilities. That gearing ratio, of course, was too high. And in this year, in spite of COVID, we have brought it down by a stable equity and by massive debt reduction. And that is why, for me, this year is the most successful of voestalpine, and that's because first voestalpine has shown once again that from its own energy and forces, without selling assets, without help from third parties, voest can master such crisis. Thank you very much. And now you'll hear the individual divisions. First, Mr. Zajicek speaking for the Steel Division.

Thanks, indeed. Thank you very much, ladies and gentlemen. Here are some highlights from the Steel Division. For our Steel Division, it has been a highly challenging business year as well. And at the end, as Mr. Ottel has just explained, it has been a highly successful one. Because early in Q1, due to the COVID crisis, all our segment revenues and all our sales of products have gone clearly down. So we were obliged end of March and in April to also decommission one of our blast furnaces. And you see that there has been a rapid restart of the blast furnace 5. Thanks to a proactive and successful working of the marketing [ early and some ], we understood, that our most important segment in automotive picked up again quite clearly. And due to such rebound, the blast furnace was taken into operation in September again. And during the second half year of the elapsed business year, we are running at full speed, maximum production capacity. That is we are back to a very stable and reliable operation. Due to these cost-cutting measures and the upswing, we have witnessed and are still witnessing, it did turn out a successful year in view of the environment and economic situations, major investments have been taken up again. For instance, the investment in the [ tandem ] a cold rolling mill, also innovative testing technology, galvanization plants, galvanizing lines and their optimization and new testing center in BETA 3. At Steyrling, for instance, we saw the relining of the Linz kiln 7 in Steyrling precisely, in Austria. And a major focus of ours during the crisis as well is our project, greentec steel, which is nothing else than our innovative concept where we prepare for a carbon neutral steel-making that is away from coal-based production, with a view to decarbonization and transformation of the energy sector. We are continuing this very intensively. And as a summary, let me say that I have well found the optimism for this business here. Thank you very much, indeed. And now I hand over to my colleague, Franz Rotter, High Performance Metals Division.

Good morning, ladies and gentlemen. Let me talk you through some highlights of the High Performance Metals Division business in 2020/'21. Our division early in the elapsed business year already faced a negative development in oil and gas and aerospace and some more inference from COVID. The COVID pandemic, in particular, had an accelerating effect upon all our industrial segments, the industrial segments like toolmaking, in particular, aerospace and oil and gas were massively hit by the impact of COVID crisis. The industry segments in the international markets as well saw that most massively. And the Asian market, and in particular China, have been most robust and resilient. In a nutshell, the value-added service areas have contributed considerably to stabilization, even during that environment characterized by the COVID crisis. How did we react to all of this? We had a major adaptation and we also focused on digitalization projects and automation projects in order to also increase competitiveness in that most intensive market environment, particularly the international one. We did not only maintain but even strengthened that element. And another key element was also the continuing of strategic and important investments. Let we make mention, for instance, of investments even in the aviation segment. Today, we are having the most modern and state-of-the-art component transformation plant at Kapfenberg. And of course, our new special steel part in Kapfenberg is also a major focus. We have decided to continue this investment in spite of the challenging situation. We are in full swing and speed there as well, knowing, of course, that COVID is having an impact upon cost factors and operational factors, but still the importance of this strategic investment is such that there has not been any doubt. And of course, we are continuing this project. From today's perspectivity, the [ full ] start of the plant will take place end of 2021. And full operations of the special steel plant should come mid-2022 at the latest. It's also key for us to raise the project volume due to digital transformation that, in particular, the 3D printing facilities as reported last year. The HPM Division has invested into powder and also 3D printing facilities. We are now having 7 3D printing facilities worldwide. And obviously, here as well, there is a very favorable trend. Of course, the market environment has not been very conducive to a massive development here, but still more or less in the most important areas we have conquered some new market share. Now the focus has been on increasing project volume, as I've said, due to digital transformation. The competence center, which we founded 3 years ago, now has been outsourced into a company of its own in order also to use international external network and integrate them into our digital transformation. This is a key element of our group strategy. Thank you for listening. And now I hand over to Mr. Kainersdorfer.

Ladies and gentlemen, once again, the most important aspects of Metal Engineering. Let me get started with Railway Systems. There was a stable development just interrupted briefly in Europe, China, Australia and Brazil, our core markets. And again, that was the backbone of our division. In North America, there was a certain decline of demand, but that was compensated in the other markets. In contrast, in the industrial systems, wire and welding and tubeless and that, of course, even intensified by Section 232 tariffs. And the crude oil price in the very first part of the year were hit considerably by the COVID pandemic thing. In the second half year only, there was a moderate to good recovery. Investment-wise, we can say that the successful and world's most advanced Continuous Casting Plant, CC4, in Donawitz, Austria was started up, and this means that we have extremely low maintenance rate on the highest quality level now. And at the end, when we also speak to digitalization, we saw the successful creation of digital twin in Railway Systems in collaboration with Graz University of Technology, Virtual Vehicle and Austrian Railways. That's a research collaboration which will lead to a digital twin for the Railway Systems. And the idea here is in the future for preventive maintenance and development of components for railway systems, there will be some extensive simulation models we can use. Thank you very much. Now on to Peter Schwab, Metal Forming Division.

Ladies and gentlemen, the Metal Forming Division as early as January 2020 was hit by COVID-19. End of January in China, we had to shut down all our factories and plants and could restart them in March only. So we had some idea already of what will be in face -- what will be in store for us, I beg your pardon. In Europe as well, we react to that very swiftly. We protected the delivery and supply chain, and we did not lose any of our customers because of difficult deliveries. At the same time, of course, we have to reduce cost massively. And still, that perfect storm could not be weathered entirely. In April, for instance in Automotive, we only had a revenue of 15%, meaning a decline of 85% due to cost-cutting measures as early as June. With a revenue of 70%, we generated positive EBIT already again, and slowly but truly during the year, the economic situation returned. But it took us until February 2021 to reach pre-COVID levels, 124 million EBIT and EUR 101 million profit was then the result. And segment Automotive was most hit in April and May in Europe and North America. In China, the entire year was excellent. In China, we overperformed. We outperformed 2019 and 2020. Then we had a more rapid recovery. Even in Q4, we would have reached pre-COVID level had not been the influence of semiconductor bottlenecks with our customers. In Tubes & Sections, we saw a similar pattern, a clear decline in April and May, yet a rapid recovery, even more rapid due to strong agricultural machinery and cabin construction. In storage technology, there is an unabated boom, thanks to the enormous growth in online commerce. That has been stepped up again due to e-trading as it were, and we had an all-time high in order backlog. As in innovation, you see leova SMART, the intelligent vineyard post. The vineyard post means that you can grow the vine much more purposefully. Lenz Moser in Rohrendorf near Krems, Austria developed this way of vine growing in 1920. And after the First World War, then there was a new type of vine growing. And there a wooden post was used, which cannot be used today in the long run. That's why voestalpine AG then invented steel vineyard post, which has been developed and is now being marketed worldwide. And now the leova SMART intelligent vineyard post can measure the microclimate in the vineyard, so it records precipitation, humidity, temperature, frost, humidity of the leaves and so on. All of that is fed into a forecast model. And on the basis of such model, the vintner or vine growing then gets an early warning, for instance, against fungi or against frost and it can, of course, also grow the vine in much better. And this will then also lead to a more ecologic and then as a final result even a better wine. Thank you.

Thanks to the heads of divisions for their short overviews, multifaceted, you see the multitude of topics in our group. After that, you can, of course, address questions to the gentlemen. And before we speak to the outlook, which is the traditional end of our press conference, we should like to show you a long-term project of voestalpine. Greentec steel was mentioned already. Now we should like to show you the project. This is nothing else than a long-term technology transfer towards decarbonization of steelmaking, our pathway towards a green steel production. And just as it is, before Mr. Eibensteiner, a short video. [Presentation]

Ladies and gentlemen, in the first part of my presentation, I spoke already about sustainability and climate protection, which are a most important part of our strategy. In particular, this relates to climate protection. And here, of course, we want to be part of a solution. And this is why we have this clear decarbonization plan, which we call voestalpine greentec steel. We do know, of course, that voestalpine in steelmaking is best-in-class, a worldwide benchmark in this very area. And in the last few years, we have also seen here in Linz and in Donawitz that EUR 2.4 billion have been invested into environmental expenditures. And in that very area, we have certainly witnessed best development and lowest emissions. But one key principle of today's steelmaking is that CO2 is produced. And that is why, here, we have to implement technology transformation. We do know that this breakthrough technology just does not exist, the panacea, the solution encompassing everything. That is why we have opted for an incremental step-wise implementation and have developed this hybrid approach, meaning a switch or partial switch from the blast furnace route to electric arc technology, and this means that we can reduce CO2 emissions by about 30% by 2030. This is 3 million to 4 million tonnes of CO2 per year. And then in a future step by 2050, we will focus on green hydrogen, meaning we add some further technologies. And this will make a total carbon neutral production possible. An example here would be sustainable steel. In Styria, Austria, we have a hydrogen plasma project for energy production, and this is a project which we are developing step-by-step. As to the CO2 reduction on a worldwide basis and also across Europe, of course, there is also a political effort has to be mastered. We ourselves as voestalpine, we also try to develop new technologies. We are having a patent now, which is a CO2-neutral pre-material, a patent which applies in Europe's key steel producing countries. And this patent is used to manufacture sponge iron in a direct reduction process using green hydrogen and biogas. That means that it will be entirely climate -- or CO2 neutral. This patent is being used. We have been granted the patent officially. And it is, of course, part of some other projects of some of our competitors. They also wants to change their steelmaking to CO2 neutral. For this transformation, we also require, of course, political support. This change has to remain economical. And for that, we also need in Austria and in Europe, enough renewable energies at competitive prices, and of course, also from high-efficiency grids. That's also a task which, in the next few years, will have to be implemented. Here some outlook on the business year 2021/'22. We take it that there will be economic recovery across the board. That's expected by end of the calendar year 2021. We also see that the impetus for growth through stimulus packages in the EU and U.S. are highly successful, and we can, of course, also expect some growth [ impulse ]. The crisis has not yet been overcome. You see that also from very tight supply chains. And from today's perspective, this cannot yet be predicted 100%. We do not have an entirely settled and stable situation in the economy, and this is why the topic of efficiency increase and cash flow optimization will remain a target of ours. But value-added growth will be in the focus and in the core of voestalpine more and more. And this takes me now to the outlook. Under the assumption that the current economic momentum continues, and that there will be no distortions of that, we expect an EBITDA of between EUR 1.6 billion and EUR 1.9 billion. Thank you very much for your attention. And of course, we expect your questions.

Thank you, Mr. Eibensteiner for the end of your presentation. Now we are exactly on time, just 1 minute longer. And now it's over to you. Please send in your question here. You see the phone patch. You also see the e-mail address. You see Twitter. So you know our Media Relations at voestalpine.com, a well-known address to you. Or else, also Twitter or the other social media where you can find us. Do send in your questions and we will then, of course, also answer after the press conference, not necessarily now only. We will, of course, now deal with your questions according to the sequence of them coming in. It might take a while before the phone patch actually is active. And I can see some colleagues already being in the system now. And as soon as we have the first question, we will try to give an answer. The greentec steel video, maybe just as an information, you can, of course, also find in the media area of our website as well as some new pictures. There will also be a new series of photos you can find there and you can use. And we also have very recent pictures of the new special steel plant at Kapfenberg, Austria. That's already on our website, highly impressive photo showing already how much progress has been achieved in the construction there. Just a second, if you will. [Operator Instructions] The first questions, the first one comes from Claudia Haase, Kleine Zeitung, Graz, Austria.

I have 3 questions. Since Mr. Eibensteiner has just said in the last [ 10 ] years EUR 2.4 billion was spent on climate protection and investment, having a favorable impact on the environment. How much could it be in the next few years in terms of investment in total? And how much of that will be CO2 relevant? Next question, Styria. And thus Mr. Rotter, many staff have left the oil, gas and aerospace industries? Those are the ones most hit. And I take it that you will not have to further reduce headcount. And then a basic question on the 3D printing. How large has this become in the meantime in terms of revenue?

Ms. Haase, I'd like to get started with your first question. We have an incremental plan, which we have presented. And in the first rough estimate, we did communicate this already before. For the first step, we have a reduction of 30% of CO2, and that will be accompanied by an investment of around EUR 1 billion. As to the second question, in Styria, we lost 515 staff in Styria, and we do not see any further reduction on the basis of the favorable trend we are witnessing.

As regards aerospace and oil and gas, a precise allocation, of course, is difficult because in its entirety, the companies were hit in other industrial segments as well, but maybe a rough estimate from 200 staff were hit by that. In the meantime, however, short-time work has been ended in Styria, Steiermark as well, so that we have a very stable headcount, which will remain as is into the next business year. And on the other hand, some capacity demand is being seen already since some industrial segments are picking up very well. As to 3D printing, direct 3D printing, we have revenue of some EUR 10 million. And what is even more remarkable for us is that as a system and innovation supplier with that technology as a windfall product, we can now use it also for total systems, that we have high alloyed materials of the traditional processing route, and they also [ sell ] on this new technology. So in and around the 3D printing, another EUR 15 million to EUR 20 million of systems revenue in the form of materials, coating, heat treatment and also component processing can be added to this. So our strategy bears full fruit. We estimate for this business year that there will be a doubling of the revenue, particularly of the direct 3D printing revenue.

Thank you for the first round of questions and answers. [Operator Instructions] The next question comes from Die Presse Daily Newspaper, Ms. Madlen Stottmeyer.

I should like to speak about raw materials scarcity. How much was voestalpine hit by this? The WTO speaks of summer relaxation and recovery in autumn. Do you share their view? Are supply chains now much more difficult? Will this go on like this? What can you say about this scarcity of raw materials, particularly also related to China, because they buy everything from Korea, for instance, and so on?

In raw materials, quite obviously, we very much depend one ore coal alloying elements, and we also see, of course, those very tight market situation prices have gone up considerably. And we see that cost has gone up considerably for voestalpine. So, so far, we can say that during the entire crisis as well and even now, we are being supplied with raw material. And this, of course, is a topic which we really have -- in the focus of our efforts is, of course, the management task which has to be solved. But up to now, it has worked out well. Of course, we see with some of our customers that clearly they have difficulties as well in the supply chain, and this also relates to the chip scarcity in the automotive industry. And there is some impact, of course, upon our plants as well.

Thank you very much. We're having 4 more questions in the loop presently. The next one comes from Birgit Kremser, Austria Press Agency.

Two questions of mine, if I can. First, still about Styria. And speaking about the special steel plant at Kapfenberg, Austria. How many staff will there be? Someone spoke of around 100 at the onset of the project that was mentioned. How many people will work there just as a compensation to staff reduction measures nearby? Because it's a quite fully automated plant, but there will still be some drops. How many more or less? Second question, the new Head of the Supervisory Board, as we know Wolfgang Eder, the previous CEO, would be the candidate there. When will the decision be taken? There are some reports say that will not be before next year or only after this AGM. Yesterday, there was a Supervisory Board meeting, how are things?

First, as to the special steel plant, it is, of course, the most modern plant, and this is being built with a very high automation and digitalization approach in order to also see that in technology and cost, we are a world market leader. And of course, this means highest productivity growth. And so it will indeed be around 100 staff in that plant. Today, in the area of steelmaking, there is more staff, but they are highly qualified staff. And in our initial planning, we see that in the downstream areas, they can be accommodated as well. So for that very reason, there will not be any laying off of skilled workers. In contrast, we require highly qualified staff in the future, in particular in order to develop the location as such. Ms. Kremser, as regards the Supervisory Board, we have an appointed Supervisory Board. We have been elected Chairman of the Supervisory Board. If something changes in that configuration, the Chairman of the Supervisory Board will definitely communicate that.

And could that be after the AGM on the 7th of July? Or what is the earliest moment?

You know that in these questions, it's the Supervisory Board deciding autonomously, and they will communicate as soon as they can.

Thank you very much. Then on the question coming in by e-mail from Manfred Schumi, Kronen Zeitung, another daily. What is the impact of more expensive raw material upon the voestalpine result to your benefit on the steel side?

Mr. Schumi, as explained, the trend in raw materials is highly volatile and clearly growing. This goes hand in and glove with a growing demand in most market segments. On the steel side, we are now seeing that this is being passed on to the market. We see that there are specific contractual structures [ that do not ] have spot market. And we see that the results -- that this raw material cost [ can ] be passed on, but even be overcompensated.

Then a question coming by phone, Bernhard Ecker, [ business ] magazine, trend., a magazine.

Two questions. The first one, the nonrecurring effects and the impairment loss of EUR 197 million, how can that be explained? And second, the HBI plant in Texas in connection with greentec steel. You, Mr. Eibensteiner, have received this patent, green hydrogen or biogas is the basis here. What is the role and value of this plant in the decarbonization strategy? Are there even some further investments, which are possible and make sense?

Mr. Ecker, as to your first question, the EUR 197 million can be allocated to 3 areas of these impairment losses: EUR 163 million is the Texas plant; the second one, tubulars, very much hit by the COVID pandemic, EUR 25 million, that is; and a smaller area in wire of EUR 9 million.

Mr. Ecker, as to your HBI question. Our Texas plant has a production of some 2 million tonnes. We ourselves, for our ideas, require some 700,000 tonnes. The rest is sold on the free market. And in the future, there will certainly be some reflections as to how the CO2 footprint can be further reduced by using hydrogen. But we have to add here that the CO2 emissions via HBI has been clearly reduced, and it's definitely lower than it would be if produced by means of blast furnaces.

Thank you. Thanks, indeed. Next phone question comes from Sigrid Brandstaetter, Oberösterreichische Nachrichten, another regional daily.

I've got several questions. First, decarbonization. Second, the present situation. It has been said before that at Linz, you can overcompensate and you can also have good prices on the market. In April, there was talk of small steel traders in Austria. They spoke about a steel market being sold out, so to speak. And in 2022, capacities would be available on the market. How is the situation from voestalpine's business perspective? In particular, the Linz location? That's the one thing. And then also linking up with Bernhard Ecker, decarbonization from 2030. In the past, 2025 was mentioned already and this seems to be pushed back now a bit. There seems to be some delay. Can you explain how you want to embark on this avenue? The CO2 emissions cost is going up. And also relates to the company, maybe we can hear about the present utilization situation perspective from CO2. And maybe you can also speak about the pathway from blast furnaces to electric arc. What is the idea? And what kind of investment? Can you elaborate on this a bit, please?

Maybe on your question number one. voestalpine and this bottleneck or the demand in steel. We can say that our plants are used full capacity. And we also have some positive feedback our customers. We see that the delivery performance of voestalpine is also highly positive. And of course, we also have to see that in the environment we are operating, if demand is very high, some additional imports in Europe can be expected. Maybe on decarbonization, you see that we have always been communicating that the plant, until it is fully operational, might take until 2030 before then it can finally deliver. And we also need, of course, some ideas like the grids, for instance, which have to be high performance. They are not yet been built, all of them. So it also takes a certain time, a certain lead-up time. And the [ UGS ] innovation front, we submitted the project to them as well, and they also take some time for their decision. So when I say in 2030 as a milestone, this means that if everything works well, by 2030, the 30% can be saved.

And could you maybe specify the pathway towards that? When will we have an electric arc plant in Linz? And what will be the cost?

Ms. Brandstaetter, we are thinking in scenarios. Today, already, we can also change the system, and CO2 reduce still is being offered already and some customers also want to have that. We are on talks already. That's the first step. A further step is the electric arc plant, steel plant. And as Mr. Eibensteiner said, in that variant, we have submitted the project greentec to the [ innovation fund ], a 220 kilovolt feeding in. Authorization, there are some clear milestones, a submission, a bid, a financial close, which has to be done. And so this means that fields have to be freed up. And the CO2 reduced still can certainly be one further step of the electric arc furnace. So in the second half of this decade, it should be possible to achieve more, and this depends on many factors, of course, particularly towards the economics of that project. And at the end of this decade then, by all means, there will be the minus 20%, 30%. But of course, it will be the formal submission. It will also be the financial closing, and these will be the first concrete steps until 2030. And the company [ list ] also the many other projects of ours, because the [ primary ] conditions are not yet entirely clear. And here we commit to many, many [ pathways ], if you want, in order to take the right decisions. But our top topic is greentec steel with the electric [ premise ] in the second half of this decade.

The investment sum?

From today's vantage point, that's the mentioned EUR 1 billion, yet this applies to the locations of Donawitz and Linz together.

Thank you. Now we have an e-mail question coming from KURIER Daily, Thomas Pressberger. Steel and raw materials have been answered. But really 2 questions from my perspective remain. First, this goes towards the steel price trend. How do we see it? And second, also, the question of the tariff U.S. How realistic is it that, that conflict will be settled?

Thank you very much. As to the steel price, starting end of the previous calendar year, there has been an upward trend, which, as I've said before goes hand-in-hand with steel raw materials price increase. If you see the forecast, which we also keep watching very closely, we take it that the first opinion was in February it will go down, then they said in March, then they said in May it will go down. Now forecast points is better with our own appreciation. We also see that, as I've said before, in the long run, there are some contracts which we signed for years or half years, and so we also see that those steel price increase will also be continued in the next few years. We will see that also on the basis of some [indiscernible] such as signings. And towards the end of the calendar year, we believe that the curve will decelerate and we'll go back to a more normal steel environment.

As to your question on the tariff conflict, what is relevant for us is the Section 232. We can say that for us, there is a positive sign showing that there is talk about it. And the 2 sides now have agreed to reach a settlement by the end of this calendar year or at least to discuss the matter and try to find a solution. What the solution can be from today's perspective cannot yet to be said. But I believe there were some quite favorable signs showing that at least in this, for us so important topic, negotiations will be launched and that also signals that there will be a preparedness for a solution.

Thank you, Mr. Eibensteiner. The next few questions. And before, it will be Boersen-Zeitung and [ Standard ], we have Claudia Haase, Kleine Zeitung again.

Quite fast, I promise. I'd like to know when the EUR 1.5 billion of lost revenue will come back. Maybe this year already? And will you make it with 1,000 staff less? Or will you have to build up staff here or there? And when we speak about maximum capacity utilization, we speak about the Steel Divisions. But the downstream plants, there, maybe the situation is fundamentally different.

Ms. Haase, as to the EUR 1.5 billion in my midline charts, I tried to show that the quarterly revenue in our Q4 or in the first calendar year quarter can be back to pre-COVID [ level ]. This drop of volume in particular, of course, was witnessed in Q1 and Q2 of the business. Yes, as you are saying, the individual divisions' business areas were hist most different then also as to the time line. And then also in the starting up in the new demand, quite obviously, it's the Steel Division but also the automotive area. In the Metal Forming and some other areas, as you are saying, rather in the project business, on data, are slower, more slowly. And that you will certainly see -- here you will see an improvement in the course of the ongoing quarters.

And that replies links up with Mr. Robert Ottel's presentation, obviously, of course, it's a result of our efficiency measures. And we will, of course, try to also continue these efficiency increase measures, but there will be more and more demand. We can assume that. And if all of those being late will recover as well in the future, that will probably also be more staff, can be.

Thank you. Then we have to Boersen-Zeitung, Stock Exchange magazine, Ms. Antje Kullrich.

Decarbonization, which year is the baseline for your reduction targets, 2030? And CO2 reduction targets of voestalpine, are they in sync with the 1.5 degrees of the Paris Agreement? Have you used an independent body to evaluate this?

I think that we will be guided by 2 sites, the pathway towards 2050 climate neutrality with some intermediate steps, 30% by 2030. On the other hand, of course, there is also feasibility, which we see ahead of us. And there, there will be, of course, joint endeavors on the political side as well because the topic of infrastructure, extension of grids also across Europe and also the creation of sufficient renewables, that is certainly not yet a continuous plan or strategy, and this will certainly play a part as well.

If I can add to this. What's the baseline for the minus 30%? The baseline is the status quo before the COVID crisis. We are aware of the fact that, as a matter of fact, if we see the periods of comparison used by the EU as a yardstick as well, improvements are even bigger. We say 2030, minus 30%. So this more or less is measured on the basis of today's point in time.

And the Paris agreement? So you did not evaluate this? Did you?

Let me give you the following answer. In the past as well with the technology we are using today, we had been a benchmark also confirmed independently. But we are, of course, not resting on our laurels. We have a full commitment to decarbonization. There are 99% of the [ strategies ], which we know and read, and they confirm the effect of the climate influence. So we see that, of course, and we have a full commitment as the next major task in order to also show our contribution. We will continue decarbonization, minus 30% in 2030, new technologies by 2050 in order to reach climate neutrality. And from our perspective, it will not make any sense to speak about who we believe in. As long as we have shown full commitment to the targets and we use our energy in the following way and contribute to this in order to reach this target together in Europe.

Yes, but it can be measured whether CO2 reduction targets of companies are in agreement with the Paris target of 1.5.

Yes, there are many studies which have meant that the European Commission have also revised their previous targets. They are much more stringent now. We take it as is and we contribute towards that. You can also see that if you see the global warming that that's also a moving target and studies made 10 years ago are not valid any longer. But of course, we are guided by the targets and framework which are defined in Europe.

Question answered?

Not really, because I still have no answer. And probably this means that there has not been an independent party evaluating this.

What do you mean? Maybe I do not entirely understand your question.

Yes. I'd like to know whether an independent party has evaluated whether your CO2 reduction targets are in line with the 1.5 degrees reduction according to the Paris Climate Agreement.

Okay. I'll try to fully answer. The 1.5 degrees of the agreement are reflected in the reduction targets which have been defined and even intensified on the European level. On such basis, Austria has also defined each targets and made them more ambitious. And within this total analysis, we are in close consultation also with the responsible bodies. And we contribute our part, so that together, we can reach the target which results from the Paris Agreement. That's the approach we are having. If you ask for a study, scientifically corroborating that, there is no such study.

We have also submitted our project. And then before we go to the next question in the loop, we have Kronen Zeitung, Upper Austrian and Bloomberg. [Operator Instructions] And the next one is Luise Ungerboeck, Der Standard, a daily.

Linking up with my lady colleague, how many tonnes of CO2 will you have to reduce so that you have the minus 30% by 2030?

Our target in the project is 3.2 million tonnes of CO2 reduction per year.

Okay. And emissions per year, presently, how high are they?

Rounded off, our emissions are in the area of 11 million tonnes, not quite 11, and 30% of that is the 3.2 million tonnes.

Okay. And as to the impairment loss, Texas is in the books with how much still? And Cartersville, is it on the full load really? Are issues solved there? And third question, supply chain issues. What causes them? And in which regions is it particularly difficult? You say it works quite well, but we hear also from other companies that the reliability also is not perfect. And the deliveries do not come in and the prices go up. If you have to purchase it, you know more about the market. Can you tell me more?

Texas, in the latest calculation, has a carrying amount of EUR 415 million in the books. As to the market, we get this feedback from our customers as well. So we have been praised very much also in statements of the major processing industry. We are the only ones keeping our delivery promises. We do not cut volume and we deliver more or less on time, because we have very stable value chains. We have never been in the negative situation of many competitors, that we didn't have any raw materials when starting up, because we have long term relations and good relations to our raw materials suppliers. So we have sales for this very nicely. And as regards voestalpine, in terms of delivery, loyalty and full capacity utilization and quantities, we have always kept our contracts and our word. And what you are mentioning, I know it from other steel makers, delivery loyalty and keeping contracts is not always seen so favorable and kept so well by others as voestalpine have. And as to Cartersville, in spite of the enormous revenue growth, we had a positive operational result and EBIT in Cartersville. Of course, you can never eliminate all issues, but we are on an all-time high production basis there.

Thank you, Mr. Ungerboeck -- Ms. Ungerboeck, I beg your pardon.

Since you know the market very well, what about the problems in raw material scarcity? Even if you are not concerned, you certainly know more. Can you tell us more results being reported, maybe? I don't understand where it's particularly bad.

My [ picture ] is that many competitors at the start of the crisis, where everything went very fast, some orders just get lost. We've seen a few weeks, it went down from a more or less normal level to nothing. And some competitors just stopped their raw materials flows that wasn't well matched with the suppliers. That's about coal. For instance, from Eastern Europe and ores are a topic as well. And at the same time, some other regions of this planet have [ coal ] operated like China. And so there was a rechanneling of delivery flow. So the company is canceling raw materials in Europe, particularly in coal and ore and also scrap metal. There was a reaction because China went up again, and so there were some scrap and coal flows and other raw material flows just deviated into other regions in order to make profits. And during start-up, the ones cutting delivery relations so abruptly just did not get the raw materials back, because the raw materials were sold elsewhere with profit. So it was kind of a hodgepodge. Yes, indeed. And we do it differently. Even when we maybe go down with something and then we start up, so in good times and in bad times, we act differently.

Now we will have to end the list. We're having 90 minutes already now of the press conference. We have 3 last questions: [indiscernible] Kronen Zeitung, Upper Austria is first. But please, now focus on short and the most important questions. Thank you.

That's about the debt reduction and the efficiency measures. Can you elaborate on this a bit in order to show which measures had a particularly good effect upon debt reduction? What about further efficiency? Mr. Eibensteiner mentioned that. What about greentec? What about [ target ] plant, is it still on, up and running in Linz? Or what's the intention here?

Thanks a lot for the question. The debt reduction, in particular, was caused by 2 effects. First, investment clearly below depreciation, even below the very low investment of the previous year. And on the other hand, a very strong working capital reduction or intermediate storage systems or liabilities. And so they had to be managed in such a way during those 18 months that we could generate a very high amount from such working capital. In the next few months, in particular, during start-up, restarting with the entire economy, that won't be so easily possible. But as in contrast, we have better operational result now.

Thank you. As to efficiency measures, in all areas of voestalpine, we have continuous improvement programs, CIPs, which has been implemented. And there, of course, we have also shown that we can do this very well. And some further cost-cutting measures can be generated, throughput times which get shorter, consumption which goes down, energy efficiency which goes up, you name it. Investments also in order to then have more favorable cost and so on. So these efficiency measures are also continued in a systematic manner. And as to the H2FUTURE, the plant still exists and is still running. And presently, we are also working upon its further use afterwards, so we will also use the plant in the future in order to produce hydrogen. As said before, you have set pilot plant. That plant, of course, can only cover a very, very small part of the hydrogen demand.

We have said that it will run until the end of the calendar year, and then we will report on a follow-up project. The last but one question comes from Bloomberg, Jonathan Tirone.

Just one question. What about the tariff for adaptation? What will be impact for instance on HBI imports from Texas? And the second question, what do you say about the eco-social tax reform of the federal government? Are you as skeptical as the chamber of the economy?

As regards the carbon border adjustment mechanism, which is being discussed, this is discussed in isolation. And that's positive, because we're in the EU. When compared with other regions of the world, there are highly ambitious CO2 reduction targets. And there's an ETS regime already which is enforced, where today already, we pay for that. Whether this will have an impact on HBI, let's call it a list of articles I've been looking at, which is an addendum to this draft which exists. There, HBI or DRI is not on the list, but it will be presented officially on the 14th of July only. So those should not be concerned as regards to imports from Texas into the EU. But that's only an intermediate statement. Blooms would be on the list. So blooms into Europe would, of course, be concerned. And the CBAM is also discussed and the carbon leakage for the industry is also for steel. There is a rule until the end of this decade, that is until 2030. If there is a change, as an extreme example, CBAM comes, carbon leakage is deleted without replacement. Then that will not be an advantageous situation, it depends very much on the outcome of this discussion process and how in total the 2 dimensions are to be seen. So CBAM as such is good due to the EU targets. HBI, according to my information, is not concerned. But very essentially, you see how the carbon leakage that is free reallocation, how that evolves by 2030 and beyond.

As regards the eco-social tax reform in Austria, we have to say on the one hand that as a company, which is already burdened by the ETS. We carry some load already for our investment. We paid for them already. On the other hand, the details are not yet determined and we are talking to relevant parties of the federal government. We are in good collaboration. But I believe the major difficulty in tax reforms and this change of the tax system will be that there is not only burden, but also the companies receive the possibility of adaptations on the one hand due to the investment, and on the other hand, also in order to make sure that energy infrastructure and energy is available and at competitive prices in order to implement this transformation. So direct impact for voestalpine, I do not see any, but I believe close consultation and close observation of the situation is required.

Thank you. Then we have the last question, Sigrid Brandstaetter, Oberösterreichische Nachrichten.

Thank you very much for the second opportunity, and it links up with what has just been said. If we see the ETS cost, which is going up massively, can you elaborate on them? And also as a perspective, there are some scenarios where EUR 80 per tonne is being mentioned. How do you calculate that? Which financial burden do you expect? And a question as to your outlook, EUR 1.6 billion to EUR 1.9 billion in terms of EBITDA, what should remain as an EBIT from today's vantage point?

Ms. Brandstaetter, as to your first question, of course, we have a precise plan for the next few years until 2030 on the basis of emissions, which we know in terms of the status quo. If you add to this, how the development of the 3 certificates is, the process would be known until 2030. With the uncertainty of the question of before, carbon boarder adjustment, when that comes, if that comes, I do not give an answer to this. It will be the more complicated. But for this development, the allocation is being reduced by 1.6% to 2.5% year-after-year, so the certificates, which first have been -- we'll to buy, will grow more or less. And why that scarcity CO2 price increase is forecast, what is happening right now has not been seen before. Now the CO2 price is quite stable at around EUR 50 per tonne and this should have been sold during towards the end of the year. And with some other mechanisms, there is also speculation, which I cannot assess now. But we do assess the strength of the necessary purchase of CO2 certificates, first in our budgets and also in the medium and long-term planning, and we also observed this very precisely. And if measures and rules change, we will have to reassess that. But it's very important finding and observation, which we have, of course, in all our outlooks, and we factor this always in.

Can you give us some figures? Which ETS cost did you have last year? How do you see the trend with a view to this stepping up in the last few months?

Well, if we take an example, situation is such that it's a difficult answer because of the fact that these certificates and 3 certificates are also aperiodic, which can mean over or underperformance. But if you see the allocation, for instance, in the elapsed calendar year, let me give you the figures now, we are at an allocation where 2 million to 3 million tonnes of CO2 certificates more or less are missing. According to the moment of buying them, [ trusting other ] bank to an average price of CO2 certificates, if you can multiply that, you will also see the order of magnitude of the [ burn ]. So for linked, for instance, it would be around 3 million tonnes certificates times 50 as we're having now. It would be very high, some, which we pay today already for CO2 when compared to other regions of this planet.

So EUR 150 million now and it won't go down again, will it?

It is a development. If you see the long-term forecast, it is elsewhere, indeed. In the short-time segment, the CO2 price, we are expecting that in the medium term, they will normalize again, and we saw that in the past already. It depends on how scarce they are. And we are guided by the long-term perspective, of course, which is also the basis for the European Commission for their reduction target. I believe today's situation is a situation where CO2 certificate prices are high. This has a lot to do also with the scarcity we are seeing now.

As to the outlook, EBIT resulting from EBITDA, we are expecting depreciation of EUR 800 million. So then the [ bandwidth ], which results from that of EBITDA is EUR 1.6 billion to EUR 1.9 billion. This would mean EUR 800 million to EUR 1.1 billion EBIT.

Okay. Thank you very much. All questions answered. Our thanks go to the members of the Executive Board. Our thanks go to all of you. Thanks for having tuned in. Thanks to the journalists. Thanks for everyone on a management team. On the 7th of July, there will be the AGM. And on the 4th of August, there will be the first quarterly figures. So that's what I had. Thanks for being here, and we hope that next time, it will be face to face or soon. And we wish you all the best. Until then, a nice start of the summer. See you soon. Bye-bye. [Statements in English on this transcript were Spoken by an interpreter present on the live call.]