Annual report 2017

2017 ANNUAL REPORT Železiarne Podbrezová a.s. 3 INTRODUCTION OF THE CHAIRMAN OF THE BOARD OF DIRECTORS In the recent years, there have been several major changes at the ŽP GROUP. The funds received in 2016 from the sale of ŽĎAS, a.s. and TS Plzeň a.s. allowed us to reduce our financial dependence on banking institutions. The situation in the steel market has improved and was very good especially in the second half of 2017, which was reflected in the increasing prices of our products. This positive trend has continued. As we met our production and sales plan, we were able to significantly increase the wages of our employees. What is the reason for our success? Železiarne Podbrezová has hundreds of small and medium-sized suppliers and we also have a very stable network of our customers. These factors have undoubtedly supported our success. We have a high-quality staff collective that has been built up over the decades, supported by the training of young professionals at our private secondary professional school. The proactivity of our trade companies, sales and production staff and everyone involved in company activities has also contributed to our success. Although our financial dependence on banking institutions is minimal, we have very good relationships with these institutions, and the level of our communication is high. Železiarne Podbrezová a.s. now has a 12% share in hot- rolled and cold-drawn tubes on EU markets. There are very few Slovak producers that have achieved such a share. This success can be attributed to our flexibility. We offer thirteen types of continuously cast steel billets on the market and we sell the steel produced in excess of our consumption on EU markets. The above share was achieved thanks to the excellent results of our Spanish subsidiary, TRANSMESA. ŽIAROMAT a.s., our subsidiary based in Kalinovo, also had solid results. The Železiarne Podbrezová Group employs over four thousand employees in Europe. In 2017, we laid very good foundations for the 2018 results. Employees of the HR Department successfully recruited sufficient staff required to expand production, although the quality of workers on the labour market was far from ideal. In the future, therefore, we will have to seek new workers abroad. A positive factor in 2017 were the operations of our subsidiaries, which provided input materials, especially steel scrap, our basic raw material. We were also successful in R&D projects undertaken by our subsidiary, ŽP Výskumno- vývojové centrum s.r.o. The attention we pay to our younger generation, at the professional school and postgraduates, and by increasing the qualification of our employees, makes our company stronger and well prepared for its production tasks in 2018 and beyond. We are convinced that we will be a successful company on European and global markets in the future. The steady growth in electricity and gas prices compared to the prices paid by our competitors in Germany, the Czech Republic and across Europe is a concern. It is a matter of concern to us that the Slovak government is still not aware of who comprises the backbone of the Slovak economy. Our healthandsocial security contributions aremore than 10% higher than the EU average. In 2017, we used Club 500 as a platform to communicate with Slovak politicians and explain that if we want Slovakia to be a competitive country far into the future, we need to pay more attention to industrial companies. It is not fair that manufacturing companies were not entitled to claim EU funds earmarked for Slovakia but they will have to contribute to their repayment. Dear business partners, thank you for your very good cooperation and your support. I am sure that our good cooperation and communication will continue in the future. I would like to thank all our employees, including those at our subsidiaries. I am proud that Železiarne Podbrezová a.s. has highly-skilled employees which guarantee our success in Slovakia, Europe and globally. Ing. Vladimír Soták Chairman of the Board of Directors Chief Executive Officer