2001 FULL YEAR RESULTS

The distinctive feature of the year 2001 in the stainless steel sector is to have become the hardest year of its history: unprecedented plunges of apparent consumption in different markets, as consequence of the world economy deceleration, with downfall of raw materials prices, and rise of the accumulated inventories at the end of the year 2000.
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The distinctive feature of the year 2001 in the stainless steel sector is to have become the hardest year of its history: unprecedented plunges of apparent consumption in different markets, as consequence of the world economy deceleration, with downfall of raw materials prices, and rise of the accumulated inventories at the end of the year 2000.

The flat products apparent consumption in the European Union dropped by 8%, and that of wire rod by 18%. Despite such unfavourable scenario, the factories of ACERINOX, S.A. in Campo de Gibraltar, and of ROLDAN, S.A. in Ponferrada have achieved a record production in Melting Shop and Cold Rolling.

In spite of the North American economic slump and the 18% consumption downfall of flat products and 30% of wire rod in USA, our American subsidiary (NAS) has increased its market share, has reduced inventories, and the hot plate shop has come onto stream.

The net result of the Group amounts to 86 million €, which is 70% less than that of the excellent year 2000. Net Cash Flow totalled 184.2 million €, which is 52.8% less. If said performance is compared to that of the year 1998, the lowest webb of the previous cycle, the net result has risen by 56.5% and the net Cash Flow by 36.5%.

The results of the Consolidated Group show once again ACERINOX competitivity and its capacity not only to generate profits but also to launch substantital investments in the lowest tide of the cycle. Hence, we have made a Group investment of 270 million € which is 89% more than that of the year 2000. The same return to the Shareholder, as that of the excellent year 2000, will be proposed to the General Shareholders Meeting.

Despite all above, the gearing ratio on own funds has fallen from 21.3% down to 17.9%. 14.4% ROE ratio of the last cycle (1999 – 2001) and that of 17.2% ROCE are every day more a world benchmark in the steel sector.

Current prospects for 2002 are encouraging due to the reactivation tendency of the world economy, the increase in nickel price and the low level of stocks in the European and North American market. Levels of stocks in our subsidiaries are also low, and our order book is fulfilled up to May.

After closing the year, two very important events have taken place for the future of our Group:

- On this Feb.2 the Melting Shop of NAS factory in Kentucky has come onto stream. Thus, our North American subsidiary achieves a fully integrated manufacturing process which will enable NAS to reach a high competitivity level.

- On this January 9 ACERINOX, S.A. acquired 64% stake in the South Africa firm of COLUMBUS STAINLESS PTY. LTD. Its fully integrated manufacturing process in Middlebourgh factory enjoys substantial strategic and competitive advantages.

The joint capacity of our three factories with fully integrated flat products manufacturing process in Spain, USA and South Africa, amounts to 2.5 million tons which is 14% of the world production in the year 2001. This volume places ACERINOX Group as the third producer in the world ranking.
Our purpose is to achieve, at a non too long term, a competitivity in the Middlebourgh and Kentucky factories comparable to that of the factory of Campo de Gibraltar.