In the first nine months of this year, Otelinox Targoviste, a producer of special steel, controlled by Korean company Samsung, logged losses standing at 7.38 million RON (more than 2 million euros). This result comes amid 25% lower sales as compared to the same period last year.
In the first three quarters of 2004, Otelinox generated net income worth 11.3 million RON (2.75 million euros).
Turnover derived by the company in the first nine months amounted to 92.6 million RON (53.8 million euros), down from sales worth 136.3 million RON (89.5 million euros) in the same period of last year.
The company''s representatives could not be contacted for comment on these figures.
The sales slump is primarily due to the low demand for ''long'' products, as well as ''flat'' products, which are facing an unfavourable market this year, according to a report the company sent to the Stock Exchange. The low demand, in combination with a steady supply of steel on the market, generated a significant decrease in retail prices on the domestic market.
Also to blame for the poor results is the effect of the depreciation of the domestic currency against the dollar and the euro, which led to smaller revenues per tonne of product by over 10%.
Consequently, the company cut production in a bid to slash operating expenses. Raw material expenditures, accounting for 50% of total expenses, were thus more than 30% lower. Instead, personnel expenses rose by about 6%.
The lower steel prices have this year harmed all market players. 2004 saw record high production levels registered by steel producers, bolstered by the high demand on the market, and particularly by the high prices for steel.
However, in 2005 this market saw a decline that was felt even at the level of major global producers, which announced production cuts. Part of the Romanian plant''s production is destined for export, mainly in Europe, where the company''s revenues come from the sale of ?"flat'' steel products, given that the company is the only producer from the former socialist states in the region, on this sector of the market.
The company last year posted turnover worth 41.6 million euros, amid net income standing at 2 million euros, three times higher than in the previous year.
andrei.chirileasa@zf.ro
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