Last updated: June 15, 2014 1:53 pm

Voestalpine goes on acquisitions trail

A logo sits on a sign at Voestalpine AG's headquarters in Linz, Austria, on Monday, April 29, 2013. Steel demand won't rebound before next year after reduced European spending on cars and railways contributed to oversupply, said Wolfgang Eder, chief executive officer at Voestalpine AG, Austria's largest steelmaker. Photographer: Akos Stiller/Bloomberg©Bloomberg

Voestalpine is looking at possible acquisitions to complement its special steel division, as the Austrian steel group presses ahead with ambitious plans to double its revenues by 2020.

“We are currently reviewing possible targets in North America and China for our special steel division,” said Wolfgang Eder, the long-serving chief executive of the Linz-based group, in an interview with the Financial Times.

“In our metal-forming business we are looking worldwide, and in metal engineering there might be opportunities in welding utilities and wires.”

Mr Eder said that Voestalpine planned to invest €1bn a year until 2020, of which €800m to €850m would go into fixed assets, leaving up to €200m a year for acquisitions.

However, if the opportunity for a larger deal materialised, Voest would be able to take it, as it did when it bought its compatriot steelmaker, Böhler Uddeholm, for €3.72bn in 2007, Mr Eder said.

“Our gearing is slightly above 40 per cent, and it is falling,” he said, referring to the company’s ratio of debt to equity. “If a chance for a bigger deal came along, we could comfortably increase our gearing to 70 per cent. That would be no problem; we would be able to work it off again in a couple of years. And it would give us about €2bn of headroom.”

However, he added that he was interested only in assets that would enhance Voest’s earnings, and not in assets in need of turning round.

Voest, once part of the massive public sector conglomerate that dominated Austrian industry, has grown rapidly since it was privatised in 2003, with revenues rising from €4.6bn 10 years ago to €11.2bn last year.

The group aims to double its revenues again to €20bn by 2020 and has made significant investments in the US and China as it seeks to increase its exposure to markets that are growing faster than its European heartland.

Mr Eder, who joined Voest in 1978 and has headed the company since 2004, is also working to reposition the group as a maker of industrial goods that use its advanced steel technology, rather than a straightforward steelmaker.

The group’s steel division remains the largest of its four businesses – which also include special steel, metal forming and metal engineering – and currently provides about a third of Voest’s revenues.

However, the division is more vulnerable than the others to fluctuations in the steel price, which is driven by the twists and turns of the global macroeconomy. Mr Eder said that he expected its share of the group’s revenues to fall to about 25 per cent after 2020.

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