Annual report 2012

ŽELEZIARNE PODBREZOVÁ A.S. 14 Wemade several technological changes to the tube rollingmill in 2012. Within the wolfram boiler steel project, we launched a control system for the heating of the Giwep carousel furnace in the second half of the year, which will optimise the natural gas consumption and even out the temperature of the heated block in cross-section. In the second half of the year, we started working on the optimisation of the push bench composition programme. On 5 September 2012, we performed the first rolling on mandrel rods from tool steel, which was conditional on the implementation of a new lubrication system and the greater cooling of mandrel rods during their transport back to stabilisation. The newmandrel rods will improve the quality of the inner surface of rolled tubes and reduce the technological downtime associatedwith changing sets ofmandrel rods. We produced 47 955 tonnes of precision cold-drawn tubes in 2012, which is a decrease of 5.8% compared to the previous year. From the above quantity, we sold 45 901 tonnes directly to external customers andwe processed the rest using division in short pieces or during the production of hydraulic tubes. The first half of the year in the case of the whole precision tubes product range, especially the exchanger tubes product range, was characterised by a sufficient number of contracts, which led to recruitment of new employees. On the other hand, in the second half of the year, the precision tubes market started to show effects of the continuing economic crisis and we were forced to change the work schedule from uninterrupted to a five-day schedule. In the product range of cold-drawn zinc- coated tubes, 2012 was the first year that the new galva- nisation line produced during the whole period in three-shift operation. We produced a total of 961 tonnes of zinc-coated tubes, which is an increaseof 83.7%compared to2011. In the tube drawing mill, we optimised the extremely-difficult production and heat processing of thick-walled tubes for the manufacturing of shock absorbers for the automotive industry during the year. We also successfully verified the production and testing of ribbed tubes for heating devices, which may open thedoor tonewmarkets in thenear future. Continuously cast steel blooms, seamless hot-rolled tubes and precision cold-drawn tubes comprised 99% of the total productionof ŽeleziarnePodbrezová a.s. in2012. Other products - butt welding elbows and reducers, large- diameter welded tubes, cut and hydraulic tubes comprised a supplementary product range. In 2012, we produced 2 526 tonnes of butt welding elbows and 96 tonnes of reducers. We introduced economic measures in the elbow production centre to eliminate uneconomic production. In the product range of large-diameter welded tubes, we produced 918 tonnes of products in 2012, which is again a decrease compared to 2011 and the trend leads to the gradual termination of this production. In the cut tubes product range, we produced 1 983 tonnes, which is also a decrease compared to the previous year. We produced 102 tonnes of hydraulic tubes. 368 754 193 887 47 955 918 0 2 622 2 085 - 616 221 Steel blooms Seamless hot-rolled steel tubes Precision seamless steel tubes Large-diameter welded tubes Precision welded tubes Butt welding elbows and reducers (1) Secondary metallurgy (2) Company store Total 111 261 127 968 45 901 907 24 2 623 2 152 304 291 140 57 772 120 158 70 316 1 061 30 4 627 3 866 428 258 258 22% 47% 27% 0 .5 % 0% 2% 1 .5 % 0% 100% 382 16 180 2 391 341 0 100 366 304 20 064 199 15 911 4 287 406 0 206 719 428 22 156 Production Tonnes To t a l S a l e s o f P r odu c t s PRODUCTION AND SALE OF THE MAIN PRODUCTS IN 2012 110 879 111 788 43 510 566 24 2 524 1 786 0 271 076 57 572 104 248 66 029 654 30 4 421 3 148 0 236 102 T onnes EUR '000 Share in sales Slovakia - 9% To nnes E UR '000 Export- 91% To nnes E UR '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. ANNUAL REPORT 2 012 REPORT BY THE BOARD OF DIRECTORS ON THE BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2012 AND INFORMATION ON THE BUSINESS PLAN