Annual Report 2009

INTRODUCTION FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS Dear Shareholders, After many years of success our company was among those affected by the global economic and financial crisis in 2009. That period will go down in history as the year in which the global crisis had an immense impact. The crisis was not caused by overproduction but by the virtual economy originated in the USA as a consequence of the impairment of moral values. The economic and financial crisis had a global impact, except in countries such as China and Turkey. The global crisis resulted in the dissolution of many banks, loss of funds for various groups of people, and the closing down of many companies. Fewer contracts led to the dismissal of employees in many factories and also to material financial losses. In our company we began to implement cost-saving anti-crisis measures relatively well ahead of time. As soon as we noticed the first signs of the crisis in the US we immediately launched crisis management by taking many cost-cutting measures in all business activities. The financial plan was set to reflect the 50% utilisation of Železiarne Podbrezová’s production capacities. In 2009 we reduced the headcount by approximately 800 employees. The results of operations for the period represented a loss of more than EUR 6 million. Nevertheless, it is important to emphasise that all measures adopted as part of crisis management were the right step and thanks to them we were able to mitigate the impacts to the lowest possible level. For two months our company ran on a four-day workweek; in September and October we gradually returned to three shifts and a five-day workweek. And at the end of the year we were able to hire new employees as we concluded an increasing number of work contracts. From the aspect of achieved results of operations (loss) 2009 can be considered unsuccessful. But we see the adopted cost-cutting measures as a very positive step. The results for the first quarter of 2010 confirm this and based on our assumptions for this year we predict positive results of operations that could exceed EUR 5 million. Dear Shareholders, When evaluating our results of operations the Board of Directors often mentioned that during the good times it is necessary to make reserves for the bad. The bad times came and we have to state that the crisis is not over yet. Even this year many companies’ operations will be affected. The impacts, however, will be less severe for the companies that are well managed and sufficiently prepared for bad times as they have prerequisites to achieve very good results. I am convinced that one day 2010 will be remembered in our company not only as the year of our 170 th anniversary but also as the first successful year after the start of the global financial and economic crisis. I would like to thank to all our suppliers, customers, financial institutions, business partners and employees for their cooperation in 2009. I believe Železiarne Podbrezová will continue to be one of the flagships of the Slovak economy. Ing. Vladimír Soták Chairman of the Board of Directors General Director Ž E L E Z I A R N E P O D B R E Z O V Á 3