A New Era for European Steel: Voestalpine’s Strategic Advantage Emerges

The Austrian steelmaker Voestalpine has seen its share price more than double over the past twelve months. This remarkable surge is largely attributed to a fundamental shift in the competitive landscape for European steel producers, driven by the European Union's Carbon Border Adjustment Mechanism (CBAM), which took full effect at the start of 2026.

The implementation of CBAM has fundamentally altered the rules of the game. Importers of steel into the EU are now required to purchase CO₂ certificates at European price levels. This policy has several direct consequences:

• Importers face additional costs ranging from €40 to €70 per tonne of steel.
• EU import quotas will be cut in half to 18.3 million tonnes starting in July 2026.
• Tariffs on excess volumes will increase from 25% to 50%.

This regulatory shift effectively erodes the long-standing cost advantage held by competitors from regions like China and Turkey. For the first time in years, European producers, including Voestalpine, can anticipate more stable pricing and the potential for improved margins.

Financial Performance Reflects Improving Conditions

The company's half-year results for the 2025/26 period provide early evidence of this changing environment:

Should investors sell immediately? Or is it worth buying Voestalpine?

• Net Profit: €199 million (an increase of 8.6%)
• EBITDA: €722 million (up 0.6%)
• Free Cash Flow: €296 million
• Gearing Ratio: 19.5% – representing the lowest level of indebtedness since the 2006/07 fiscal year.

The second quarter was particularly strong, with EBITDA reaching €361 million, which surpassed market expectations by 7-8%. In response to this performance, management raised its full-year free cash flow forecast from €300 million to €350 million.

Market Analysts Revise Targets Upward

A wave of analyst upgrades has followed these developments. JPMorgan leads with an "Overweight" rating and a price target of €40.60, projecting EBITDA growth of 15% for 2026 and 35% for 2027. UBS upgraded the stock to "Buy," setting a fair value estimate of €43 and raising its EBITDA estimates for the steel division by as much as 72%. Both Morgan Stanley and Deutsche Bank have reaffirmed their positive outlooks, with price targets hovering around the €40 mark.

Railway Systems Division Provides Stability

While the core steel business is subject to cyclical fluctuations, the Railway Systems division offers a reliable source of stability. It generated revenue of €1.15 billion in the first half of the year, achieving an EBITDA margin of 10.6%. The division's position as a global market leader was further underscored by the December 2025 opening of the Koralm Tunnel, which is equipped with premium rails, switches, and signaling technology supplied by Voestalpine.

Restructuring Efforts Continue Amid Favorable Winds

Despite the improved market outlook, the company continues to execute cost-reduction initiatives. Approximately 340 positions are being eliminated, and shift operations are being scaled back at the Kindberg and Mürzzuschlag sites. Overall, the workforce has been reduced by 4.1% to 49,600 employees. These measures are a response to US tariffs and weak oil prices, which continue to pressure the company's tube business. Management has confirmed its full-year EBITDA guidance of €1.40 to €1.55 billion for the 2025/26 fiscal year. The upcoming quarterly report on February 11 will reveal whether the margin improvements anticipated by analysts are materializing as expected.