Annual report 2016

ANNUAL REPORT 2016 • Železiarne Podbrezová a.s. 37 CONCLUSION The steel industry in Europe and globally faces an un- certain situation. Production capacity underutilised to a great extent, relatively low oil prices and cheap imports of steel products from China exert very high downward pressure on sales prices of steel products. The market position of Železiarne Podbrezová a.s. as a Slovak manufacturer of seamless steel tubes is neg - atively affected by higher energy prices compared to competing manufacturers in Europe and also by im- ports of rolled tubes from Ukraine. After unfavourable development in 2015, 2016 was for Železiarne Podbrezová a.s. one of the most difficult years in the modern history, and as regards the price level of steel products, 2016 was worse than the crisis year of 2009. In 1Q 2017, we have seen a recovery in de- mand and a moderate increase in the prices of steel products, which creates an optimistic outlook for the year provided that the situation stabilizes and demand and selling prices do not weaken. Despite the uncertainty caused by current excess pro- duction capacities in the steel industry we believe giv- en the global development of urbanisation, the devel- opment of shale gas extraction, and continually high demand from the automotive industry, the steel tube production industry need not fear for its future. The Company’s Board of Directors considers the 2016 results to be positive despite the stated circumstances. They represent a success for Company management and all the employees, the entire working team includ - ing all the employees of subsidiaries. Perhaps the greatest success in 2016 was the profitable sale of the subsidiaries in the Czech Republic. The eco- nomic benefits of investments in upgrading the tech - nological equipment of the steel mill and rolling mill for seamless pipes in previous years are also import- ant from the long-term perspective. The optimisation of rolling resulted in additional savings in input raw materials, which was ultimately reflected in a reduc - tion in costs of the production of seamless hot-rolled tubes and precision cold-drawn tubes. These savings were a major source of a lower operating loss than that planned in 2016. The 2016 profit amounted to EUR 36 235 thousand. Earnings per share amounted to EUR 15.2. Therefore, we propose that the General Meeting again approve the payment of dividends to shareholders from Retained earnings from previous years. Subsidiaries and associates also actively contributed to the consolidated results of Železiarne Podbrezová a.s. Sales revenues from the consolidation group amounted to EUR 329 031 thousand. Owing to the above reasons, the Company’s revenues and performance in 2016 were below the levels of pre- vious years. However, the Company remains a guaran- tee for co-operating small and medium-sized entrepre- neurs in the region. The relatively adequate utilisation of production capacity enabled the Company to main- tain employment and the income of the inhabitants of the region. Železiarne Podbrezová a.s. retained its position as the largest employer and remained a guar- antor of social security in the Brezno District and in the Banská Bystrica region as a whole. Thanks to its great flexibility, Železiarne Podbrezová a.s. maintains its competitive advantage in the indus- try and is ready to react dynamically to new business opportunities. The Board of Directors of Železiarne Podbrezová a.s. wishes to express its gratitude and appreciation to all colleagues, as without their contribution, these re- sults could not have been achieved. We would like to extend our thanks to our suppliers, customers, banks and financial institutions, and to all our business part - ners for their cooperation. We hope our good business relations will continue to develop successfully in the future. We thank you for your trust. Approved by the Board of Directors’ decision on 24 May 2017 REPORT BY THE BOARD OF DIRECTORS ON BUSINESS ACTIVITIES, ASSETS, AND FINANCIAL PERFORMANCE IN 2016 AND INFORMATION ON THE BUSINESS PLAN