Water level too low

Voestalpine has suspended freight transport on the Danube

Voestalpine usually transports materials to its plants by ship as well.(Bild: RALPHFISCHBACHERwerbefotograf.at)

The Linz-based steel giant Voestalpine has currently switched the transport of materials to its plants via the Danube entirely to rail due to low water levels. In the first quarter of the fiscal year, the group saw a jump in profits due to a one-time effect. And in 2027, the first electric arc furnace is scheduled to go into operation—the power demand is high.

“We’ve switched everything to rail,” says Voestalpine CEO Herbert Eibensteiner. The low water level of the Danube currently makes economical freight shipping impossible for the steel group. Voest transports approximately 17 million metric tons of materials to its plants each year. The majority (nearly 80 percent in 2024) is already delivered to the production facilities by rail. About one-fifth is typically transported by ship.

“A few years ago, we made a strategic decision that we needed to have multiple options for logistics routes—and that’s paying off for us now,” says Eibensteiner. Although it is a “logistical challenge” that everyone now has to switch to rail, the shift does not result in any additional costs for Voestalpine. The subsidiary LogServ is responsible for logistics.

Profit Jump Due to One-Time Effect
Unlike shipping, the Group’s earnings are currently in calm waters. In the first quarter of the current fiscal year, operating profit (EBITDA) rose from 361 million to 495 million euros, as Voest announced on Wednesday. This figure includes approximately 100 million euros in one-time effects, resulting in part from the sale of the subsidiary Böhler Profil, as well as from the Group’s ongoing reorganization measures.

Revenue rose slightly from 3.9 billion to about four billion euros. The bottom line for the first quarter was a profit of 196 million euros—an increase of 84.6 percent compared to the previous year. The number of employees worldwide fell by 1.8 percent to 48,640. The decline is primarily due to the reorganization in the High Performance Metals Division and the Automotive Components business unit. For CEO Eibensteiner, the figures are “very solid” overall, “in an environment marked by significant uncertainty,” as the CEO emphasizes.

Mixed Performance Across Business Segments
Performance varied across the individual business segments. While the Group benefited from a major order worth 470 million euros for the new Rail Baltica high-speed rail line in the Railway Systems business unit, demand in the construction, mechanical engineering, and consumer goods industries remained subdued. Business with the automotive industry was also affected by the persistently difficult market environment, particularly in Europe.

Power for electric arc furnaces is “secured”
A milestone for Voestalpine in the coming year will be the commissioning of two electric arc furnaces, which will produce “green” steel using electricity instead of coal and coke and will replace two old blast furnaces. One will be built in Linz and the other in Donawitz, Styria. The electricity demand is high: “We will need about 1.5 terawatt-hours more energy,” says CEO Eibensteiner. By way of comparison: According to the 2024 Energy Report, the entire state of Upper Austria consumed around 14 terawatt-hours. And the new Google data center currently under construction in Kronstorf will consume a maximum of 1.3 terawatt-hours in its first phase, according to an estimate by Netz OÖ.

“The power supply is secured,” says Eibensteiner. “What’s important for us are the power grids. We need robust grids to actually be able to implement the cyclical operation of the electric arc furnaces.”