The world stainless steel market trend has changed in the months of January and February 2006 and from the month of March an important improvement in demand has taken place. The current prices in all markets are higher than those of the fourth quarter 2005, which reached their all-time record low. Consequently the prospects for the rest of the year are optimistic.
Notwithstanding, as far as consumption and prices are concerned, the stainless steel market evolution during 2006 will depend on the nickel price development, which due to speculative movements, has shown a new and important increase, reaching at present an all-time high.
In this context, the Group flat products output has been slightly lower to those obtained in the previous year, basically due to the less capacity used in COLUMBUS. The melting production of the group, 593.521 Mt, is 0.8% lower. Hot rolling production, 513,536 Mt, is 7% lower due to the decrease of hot coil sales. Cold rolling output totalled 371,536 Mt, which is 1.9% lower to the production obtained in the same period during 2005. Regarding long products, hot rolling production, 61,570 Mt, is 12.7% higher.
Our factory at Campo de Gibraltar has reached a melting production of 251,325 Mt. The improvements carried out last year are noticeable and it is working at full capacity. The order book covers the production capacity until the month of July. In the first quarter the parent company, ACERINOX, S.A. has obtained a result after taxes of 9.6 million euros (62% lower if compared with the figure of the first quarter the year before). Net cash flow amounts to 17 million euros, which is 47% lower.
NORTH AMERICAN STAINLESS has reached a melting production of 206,671 Mt. During the month of March the new cold rolling No.4 ZM, aimed for higher added value products, was put in operation. The No.2 Electric Furnace works follow the foreseen schedule. The result after taxes amounts to 13.8 million USD (-72%) and a net cash flow of 30.6 million USD (-53%).
COLUMBUS STAINLESS has decreased by 22.5% the production of its Middelburg factory, totalling 135,525 Mt, due to the lower hot coil demand for re-rollers in the Far East. Cold Rolling production has been similar to that of the previous year. The company has obtained a negative result of 3.3 million euros, with a positive cash flow, which totals 4.4 million euros (-79%). The demand improvement for hot rolled products for end use in all markets, make us feel optimistic about COLUMBUS positive contribution to the results of the Group in the following months.
The Consolidated Group, with Net Sales amounting to 1,166 million euros (+1.7%), has obtained a Net Profit of 23.2 million euros, which is 69.8% lower than the figure totalled in the first quarter 2005, but it shows an evident change in the trend with regard to the fourth quarter 2005.