Ljubljana, Monday, 18 April 2016 - Operating results of the SIJ Group in 2015 and the proposal on dividend payment
In 2015, SIJ - Slovenian Steel Group generated sales revenues of EUR 664.8 million, which is six percent less than in 2014, an operating profit before depreciation and amortisation (EBITDA) of EUR 63.5 million and a net profit of EUR 10.7 million. The Group continues to maintain high profitability, as the EBITDA margin is still at a high 9.6 percent and is significantly - a few percentage points - above the average of the global steel market. In 2015, the SIJ Group began a new investment and development cycle (ending in 2020) and therefore recorded a 19 percent increase in investment spending, which amounted EUR 56.8 million.
The financial year was marked by harsh external circumstances, especially extreme fluctuations in commodity markets, which were particularly apparent in the second half of the year. Thus, in the autumn of 2015, the price of nickel, one of the key references for the pricing of steel products, reached its lowest level in the past ten years. In addition, the operating results were significantly affected by one-off negative events, namely the replacement of the entire IT system in Acroni and three major stoppages of production processes due to technical failures. The SIJ Group estimates that the negative impact of these one-off events on the EBITDA amounts to EUR 7.7 million.
The steel industry is certainly facing a number challenges, which are not only a result of fluctuations in commodity markets, but also a result of large surplus production capacities in a number of regions, as well as in the segment of standardised products for mass markets. The export of cheap steel products from China and India is on the rise, which in Europe is generating additional pressure on the price competitiveness of mass producers. However, it should be noted that the SIJ Group is practically not present on such mass markets. "In the meanwhile, our operations are more than stable, our production capacities are completely full, and our business continues to expand. The operating results that we have achieved in the adverse external circumstances outlined above bear witness to the global competitiveness of the SIJ Group and the flexibility of its business model, which allows us to quickly adapt to market conditions. The results also clearly confirm the correctness of the set development strategy until 2020, which puts even more emphasis on niche products with high added value. In these segments, we will continue to increase production capacity in order to move further up the chain of added value,", commented the operating results the Chairman of the SIJ Board Anton Chernykh.
The SIJ Group continues to increase the share of exports in the structure of sales revenues, which in 2015 amounted to as much as 87.3 percent; the highest growth in exports was again recorded in the US market, where the Group exported EUR 62 million worth of products, which already exceeds ten percent of the total exports. Germany and Italy remain key markets.
Igor Malevanov, Member of the Board for Finance and Economics in the SIJ Group, added: "The one-off negative events had a significant impact on the achieved EBITDA. Excluding the impact of such one-off events, the EBITDA of the Group SIJ amounted to around EUR 71.3 million, with an EBITDA margin of around 10.7 per cent, which is fully comparable with the 2014 results taking into account of the external circumstances. In addition, the negative one-off events and the consequent loss of EBITDA are the main reason for a reduction in net profit, which thus does not reflect the real operational competitiveness of the SIJ Group, which remains profitable also in 2015, an extremely difficult year for the steel industry. Although the net financial debt (NFD) increased slightly - by EUR ten million or four per cent - due to investment activities in the steel business division, the NFD/EBITDA ratio amounted to 3.6 (excluding the investment in Perutnina Ptuj), which is a reflection of the financial strength of the SIJ Group and allows us to continue with the implementation of the strategy of financing sources diversification."
At today's session of the SIJ d.d. Supervisory Board, the Supervisory Board confirmed the annual report of SIJ d.d. and the SIJ Group for 2015, as well as the Board of Directors’ proposal on the usage of the company's distributable profit. This amounted to EUR 34.3 million as at 31 December 2015, while the Board of Directors and the Supervisory Board propose the General Assembly attribute part of the profit for 2015 (EUR 5.8 million) for dividend payments.
The SIJ Group is the largest Slovenian vertically integrated metallurgical group, whose products occupy leading positions on the European and global niche steel markets. The Group consists of five business divisions, 23 subsidiaries in Europe and the US, and around 3,400 employees. In 2015, the SIJ Group generated sales revenues of EUR 664.8 million, an operating profit (EBITDA) of EUR 63.5 million and a net profit of EUR 10.7 million. The share of exports in the structure of sales revenues increased by 1.1 percentage points to 87.3 percent, ranking the SIJ Group as one of the largest exporters in Slovenia.
Dr. Denis Mancevič, Director of Corporate Communications