2007 been a difficult year for the stainless steel industry, having been featured for two parts dramatically different. The first half of the year, until May, was defined by the strength of the market. And the second half of the year, by the nickel price plunge, which in three months went from his all time high in the London Market Exchange (L.M.E), 54,200 USD/Mt, to 25,000 USD/Mt.
The nickel plunge created a dramatic reduction of the book of orders, which led to a realization of the available inventories. This has resulted in sharp all of prices in every market.
This situation went on during the whole second half of the year, with demand and price levels exceptionally low, which virtually affected all the world markets.
The estimated world production of stainless steel, 27.8 million tons, has been slightly lower than 2006 output (which had increased by 16.7%). The production has decreased in every country, with the exception of China, the first stainless steel producers with 26% share of the world production, which has allowed to increase strongly the exports to the most developed countries.
In this complex scenario, ACERINOX Group activity has evolved satisfactorily , although it has been subject in every moment to the situation of demand and the low prices of our markets .
Due to the above mentioned market conditions, our productions have been lower than the outputs achieved in the previous year.
Net sales of the Consolidated Group, 6.901 million euros, is 22.4% higher than the invoiced figure of the year before. Results after taxes and minorities, 312.3 decreases by 37.9% with regard to year 2006.
By the end of the year, an extraordinary provision for adjusting inventories to net realizable value for an amount of 97.4 million euros have been carried out.
The results after taxes and minorities, 312.3 million euros, is the second best result in ACERINOX Group history, despite the impact of nickel price plunge.
NORTH AMERICAN STAINLESS has achieved 264.5 million USD, the best net result in its history, having completed a splendid year in spite of the market difficulties.
ACERINOX, S.A has registered a net result of 130.7 million euros, only 6% lower than the excellent figure of 2006.
COLUMBUS STAINLESS has had more troubles in the year, due to the fact that it is more dependent of the sales of semiproducts. This situation will be corrected once the Nº4 cold rolled Sendzimir mill will be put into operation. Despite this fact, it has achieved a meritorious net positive result of 13.4 million euros..
CONDENSED BALANCE OF ACERINOX CONSOLIDATED GROUP
Prospects for 2008
In this first quarter the market situation has improved regarding demand, prices and also the entry of orders, which allow productions in our factories return to normal levels.
This includes COLUMBUS STAINLESS productions, which will not virtually be affected by the electric power restrictions imposed in South Africa.
All this make us feel optimistic with regard of the Group evolution in the next months.
The extraordinary provisions carried out by the end of the year are sufficient in view of the current market situation.
In the fourth quarter new equipment will come on stream in NORTH AMERICAN STAINLESS and consequently our capacity will increase in 400.000 Mt up to achieve an installed melting capacity of 3.5 million Mt (12% of the world production in 2007.)
This capacity, strategically distributed in three continents, will allow to face the new market needs successfully.
ACERINOX, S.A. Board of Directors in its meeting held on the 25th February has approved a second Interim dividend on account on Year 2007, for 0.10 euros per share, which will be effective on the 4th April.
ACERINOX, S.A., as it was reported, has 2% of its share capital, purchased in the market at an average price of 15.85 € per share. As we announced on 16th January, the Board of Directors intends to propose their redemption in the next General Shareholders Meeting.
Acerinox financial strength and the current situation of the stock market have favoured this measure, which is the result of the Board of Directors’ interest to benefit the shareholders, always searching the most effective formula to create value.
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