Annual Report 2011

In2011,steelbloomsandseamlesshot-rolledandcold-drawnsteeltubesaccountedfor99%oftheCompany'stotalproduction. Other products represent a supplementary product range. In 2011, we produced and sold 2,623 tonnes of butt welding elbows and 109 tonnes of butt welding reducers. These products are imported from Asia to Europe for very low prices; this fact raises doubts about their production by Železiarne Podbrezová a.s. under economically-viable conditions in the future. The issue of production efficiency has also been discussed for several years regardingtheproductionoflarge-diameterweldedtubes;weproduced1,397tonnesofthisproductin2011,whichisadecreaseof46.7%comparedto thepreviousyear.Thisshowsthatthemarketdemandreduceseveryyear. REPORT BY THE BOARD OF DIRECTORS ON THE BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2011 AND INFORMATION ON THE BUSINESS PLAN 14 Steel blooms Seamless hot-rolled steel tubes Precision seamless steel tubes Welded tubes of large diameters Precision welded tubes Butt welding elbows and reducers Secondary metallurgy Company store (1) (2) Total 367 816 183 100 50 907 1 381 26 2 637 2 259 608 126 - 132 815 118 714 47 389 1 397 200 2 732 2 215 351 305 813 72 335 111 747 73 072 1 803 121 4 929 4 017 505 268 529 27% 42% 27% 1% 0% 2% 1% 0% 100% Production Tonnes Slovakia Tonnes EUR ’000 - 10% 24 617 461 19 257 3 568 326 0 124 530 351 27 275 245 18 593 6 265 418 0 263 986 505 281 196 132 354 99 457 43 821 1 071 200 2 607 1 685 0 241 254 72 090 93 154 66 807 1 385 121 4 666 3 031 0 Export - 90% Tonnes EUR ‘000 (1) Secondary metallurgy – semi-finished goods from seamless and welded tubes, hydraulic and pneumatic tubes. (2) Retail of seamless and welded tubes and butt welding elbows. Production and Sale of the Main Products in 2011 Development in Total Sales by Geographical Structure (Revenues in EUR thousand) Slovakia Czech Republic Other EU countries Other European countries Other exports Total sales 35 653 66 608 165 601 6 467 12 433 286 763 34 273 63 613 185 304 10 396 11 822 305 409 15 766 17 959 87 275 10 912 3 328 135 239 28 551 39 868 128 216 10 750 8 894 216 280 2007 2008 2009 33 970 45 970 174 127 15 687 5 77 275 52 0 4 2010 2011 Ž E L E Z I A R N E P O D B R E Z O V Á A . S . Tonnes EUR ‘000 Share in sales Total Sales of Products In2011,therewasamoderaterecoveryinthesalesoftheseamlesstubescuttings.Wesold2,068tonnesofthisproducttoourcustomers.Therewasalso animprovementinsalesofhydraulictubes:weproducedandsold147tonnesofthisproduct. The quality management system for the serial production of spare parts used in the automotive industry focused mainly on the meeting the ISO/TS 16949 standard requirements and the application thereof to the Company's conditions. Supervisory audits according to ISO 9001:2008, VDA 6.1 and ISO/TS 16949:2009 standards were successful; we have defended the certificates confirming that the production processes are audited and in line with therequirementsoftherelevantstandards. In 2011, we sold products, merchandise and services to our customers in the total amount of EUR 275,525 thousand, of which exports exceeded 87%. Therewas a growth of 27.4%compared to the previous year. However, the 2008 sales level was not matched; it was short by 9.8%, especially due to the lowersellingpricesofproducts. The geographical structure of sales did not significantly change in the previous year. A dominant market segment continued to be EU countries in the followingsequence:Germany,CzechRepublic,Poland,Italy,andHungary.