Annual report 2016

ANNUAL REPORT 2016 • Železiarne Podbrezová a.s. 3 INTRODUCTION FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS Overall, 2016 was marked by the situation on global and European markets. Europe and America are facing strong competition from Chinese exports. Energy pri- ces remained unchanged, and the prices of our main input material (scrap steel) fluctuated. However, after the crisis year of 2009, we have taken a number of mea - sures to lower costs. As a result of these measures and the overall operational results, we can be satisfied with the current situation. Products are sold via our business network. Very good communication and cooperation between our subsi- diaries significantly contributed to positive operational results. I would like to extend my gratitude to all tra - ders and agents who work for us globally, and I believe that this well-run business will be the backbone of fu - ture positive financial results. We recorded no negative impacts on Železiarne Pod - brezová. We appreciate the approach to work of our employees at all departments. Based on clues from Q4 2016, we expect 2017 to be the first year in which the Company will be able to make better use of net working time due to technology in the tube rolling mill and the steel plant, and the transition to a four-shift system. In late 2016, we won a number of contracts with better prices, and given overall global developments, the prices of finished goods of Železiar - ne Podbrezová are expected to rise in 2017. Therefore, we began recruiting at the end of 2016, and this trend continued in Q1 2017. Our problem is, and will continue to be, finding skilled employees. There are currently labour shortages, and the registered unemployed at labour offices available in our region do not meet our quality criteria. This relates to issues associated with the training of new employe- es. Greater demands are placed on senior employees who are required, in addition to their own responsibili- ties, to train new employees as quickly as possible, due to the technological nature of work. The funds invested in our private schools, particularly ŽP‘s Private Secondary Metallurgy Apprentice School, have proven to be sound investments. Approx. 50 gra- duates are hired annually, and I believe that another 50 new young people will be well prepared in 2017 for blue-collar professions at our Company. An advantage is that they already know the workplace and Company rules before they join the Company. Železiarne Podbre - zová has organised education for 80 years. In the future, the Company will also have to hire new employees from outside of Slovakia. State authorities will have to open the labour market for the nationals of neighbouring states. I think that this will primarily apply to Ukraine, Croatia and Serbia. Given the demo - graphic changes in Slovakia, it will be vital to resolve the labour problem to maintain industrial production in Slovakia at current levels. The emergence of new opportunities and foreign investments underlines the need for skilled workers. It is very pleasing to see that Železiarne Podbrezová a.s. has retained its global market share, and its EU market share is particularly important. I believe that the quali- ty of products and services provided to our customers guarantees the retention of our market position in the future. We also plan new production investments to retain our competitiveness and make good use of synergies within the ŽP group. Železiarne Podbrezová will undoubtedly become the leader in the small-diameter precision tube sector. It is also important to note that we have also made significant progress in heat exchanger tubes. Positive results were achieved thanks to our foresight and the establishment of our R&D centre. ŽP VVC currently has highly-qualified employees who closely cooperate with the management of manufacturing plants. We plan to invest in the extension of our warehouses in the near future to reduce the time needed to transport goods to our customers to the minimum. Železiarne Podbrezová a.s. currently has highlyskil - led employees which provides a guarantee to our customers that our motto will continue to hold true: “OUR TUBES = YOUR SUCCESS”. Ing. Vladimír Soták Chairman of the Board of Directors and Chief Executive Officer