Annual_report_2006

REPORT BY THE BOARD OF DIRECTORS A N N U A L R E P O R T 14 further extensive growth through invest- ments in technological equipment. Upon the implementation of oxygen-fuel burners in the electrical arc furnace in 2007, we expect an increase in hourly outputs by more than 5%. A record volume of production has also been recorded in the production of seamless hot rolled tubes, 185 955 tonnes. Throughout the whole period, demand exceeded our pro- duction capacities which enabled us to plan our production constantly; however, we were unable to satisfy customer requirements. The seamless tube mill operated non-stop in shifts throughout the whole period. Increased performance was only possible with the perfect organisation of work and a gradual reduction of production line idle time. Of overall production, 112 671 tonnes were sold to our customers, and the remaining volume was used for the production of precision seamless tubes and welded tube elbows. Customer demand for precision seamless tubes exceeded our production possibilities, which are limited by the capacities of some production nodes in which we established a permanent shift pattern. In 2006 we pro- duced a total of 53 495 tonnes of precisely drawn seamless tubes, a 3.5% increase year- on-year. In the first quarter, the permanent shift pattern was also employed in the pro- duction of welded elbows and reductions. We supplied our customers with 4 237 tonnes of such products, more than 18.5% increase year-on-year. In 2006, the production line of welded tubes with small diameters, which was put into use in March 2004, produced 5 267 tonnes of cold calibrated tubes and 909 tonnes of cold drawn tubes. This represents an increase of more than 50% compared to 2005; however, after two years of new production line opera- tion we have not fulfilled the project’s expec- tations in terms of business, technology, or economy. In the production mill for welded tubes with large diameters, we produced and marketed 4 400 tonnes totalling SKK 156 million. From the tubular product section focusing on the finishing treatment of precision tubes and hydraulic tubes, we supplied our customers with 4 045 tonnes of products totalling SKK 204 million. When evaluating production performance in 2006, we again demonstrated a significant improvement in the quality of products. This is a result of the implementation of several technological innovations in steel production and the metal shaping procedure, which rep- resent the achievement of the technical progress plan developed in long-term coop- eration with Ústav materiálového výskumu (the Institute of Materials’ Research) at the Slovak Academy of Science in Košice. Quality management system as per the API Q1 standard went through re-certification by the American Petroleum Institute. In 2006, the quality management system was enhanced by the requirements of ISO/TS 16949:2002, and its compliance was certifi- cated. Thus we have created further sales opportunities for our products in the automo- tive industry. The environmental manage- ment system was also recertified by SGS Slovakia in accordance with ISO 14001:2004. In 2006, we supplied our customers with products and services worth a total of SKK 8 194 million, which represents annual growth of 5.8%. Over 86% of products were exported, being purchased by customers in 43 countries on all continents. The 2006 sales which were the highest in our history resulted from a successful business policy. We took full advantage of the worldwide boom in metallurgy to the benefit of our Company. The positive impact of the acceler- ation of steel product prices continued throughout 2006, which significantly eliminat- ed losses caused by the strengthening of the Slovak crown exchange rate. In the period from 1 January 2006 to 31 December 2006, the Slovak crown exchange rate averaged SKK/EUR 3.288, i.e., exchange rate strength- ening by 8.68%.