2003 THIRD QUARTER RESULTS

Market Stainless Steels World market continues to have a weak demand, and such trend is sharpened in the third quarter due to season downfall.
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Market
Stainless Steels World market continues to have a weak demand, and such trend is sharpened in the third quarter due to season downfall.

The apparent consumption of cold rolled flat products has fallen by 2.9% in Europe, 7.4% in USA and it is steadily weak in the Far East with the important exception of China.

Inventories of finished products are low worldwide. Such situation allows for some optimism, and a substantial market improvement can be expected as soon as economic trust is recovered.

Raw Materials

Hikes of raw materials prices, 61% of nickel and 22% of ferrochrome, are penalizing the margins of stainless steel producers since within the present economic scenario it is not possible to transfer said hikes to the consumer in all markets.

Productions

The outputs of the Group factories continue developing satisfactorily and in accordance to the envisaged programmes for this year. Production of the Group melting shops at the end of September reach 1,605,615 MT which is 25.6% more than that of the first nine months last year.

North American Stainless -NAS- (Kentucky, USA) and Columbus Stainless (Mpumalanga, South Africa) keep raising substantially their production. The new Long Products Section of Kentucky factory has positively surpassed its coming onto stream and it is raising output and sales.

Construction in progress: No. 3 Sendzimir Mill and No.3 Annealing and Pickling Line of Kentucky factory, together with No. 3 Sendzimir Mill and the expansion of Annealing and Pickling Line (cold) of Columbus factory advance smoothly as scheduled..

Columbus has signed a Labor Agreement with the Unions for the next five years..


Results

Group Results in the first nine months even if they reflect the worse market conditions of 2003 compared to the previous year, they are clearly higher than those of another harsh year such as 2001. Group Cash Flow after taxes is only 14.4% less than that of the preceding year and 43.1% more than in 2001.

The Parent Company has a 5.9% higher result after taxes than that of last year, while those of its subsidiary Companies, even with positive results in most cases, have dropped in regard to the same period of the previous year. Particularly, Columbus Stainless, which exports 80% of its production, has suffered 34.1% rand revaluation in these twelve months in regard to USA dollar and 22.3% against euro.

In any case, such results show the high Group competitivity even under tough situation such as the present one.