Annual Report 2003

A WORD FROM THE CHAIRMAN OF THE BOARD ANNUAL REPORT Ž E L E Z I A R N E P O D B R E Z O V Á 2 0 0 3 3 Dear Shareholders, 2003 was another successful and profitable year for Železiarne Podbrezová despite the privatisation of the distribution networks and Slovak gas industry in 2003, which resulted in a price increase in electricity and natural gas. This decision taken by our government resulted in an increase in our cost by 142 million SKK. This unfavourable event forced the Board of Directors of Železiarne Podbrezová a.s. to adopt a number of cost-cutting measures. Today, I am pleased to report that such measures proved to be effective and resulted in a profit for the company in 2003. All investments made in 2003 were aimed at maintaining and supporting our competitiveness. Under construction in 2003 and completed in early 2004 was a production line for precision welded tubes. This project totalling 200 mil SKK has put our company in a very favourable position, enabling us to supply components for the car industry in times when Slovakia is expected to produce roughly 800 000 cars per year. Such investment project enables us to fully exploit our production capacities and at the same time provides an extension in the range of products produced for this industry. Apart from the price increase of electricity and gas, economics of our company has been negatively impacted by exchange rate loss resulting from a weakening US dollar and Euro. Due to our financial management practices, this influence has partly been eliminated. In addition, we were surprised with sudden price rise in raw materials at the end of the year, which also impacted the economic situation of the company. Notwithstanding the aforementioned, the year 2003 was a success. I appreciate very much the performance of our sales companies, who succeeded in placing our products in markets worldwide. In addition, our subsidiaries responsible for providing complex services were profitable. September 2, 2004, was a remarkable day for the company as we opened our own Private Apprentice School of Metallurgy of Železiarne Podbrezová. After seven struggling years, we finally welcomed our first apprentices who will begin to prepare for their future, as professions in the field of metallurgy. The Board of the company believe that training of young professionals will guarantee the future well-being of the company. I would like to express my gratitude to members of Board of Directors and to members of the Supervisory Board, to all employees of the mother company, of our subsidiaries, and to everybody who contributed to our achievement, i. e., to our customers, financing institutions and business partners supplying us with raw material for our production… Since Slovakia's enter to the European Union, Železiarne Podbrezová has been incorporated within a large family of European steel tube makers protecting their interests, and I believe firmly that this will be of great benefit to us. Undoubtedly, we shall have to modify our business strategy and direct it towards extending final production sold in the markets of European Union. May I once again express my appreciation and belief that our company shall further be enhanced to the satisfaction and benefit of all involved. Ing. Vladimír Soták Chairman of the Board of Directors and General Director