The results of our last fiscal year did not match those of our previous year, which was positively impacted by extraordinary gains, but it still corresponds to
a respectable return on equity.

The Joint Venture with Novolipetsk showed lower returns due to the impact of the relining of the Blast Furnace of Carsid (with consequent purchase of expensive slabs) and the poor results of Farrell due to the slim margin we experienced between the cost of imported slabs and the prevailing market for flat-rolled in the USA. The Joint Venture continues implementing its ambitious plan of upgrading its products portfolio, with the relative significant investment program.

Our Italian beam business recorded its best year ever, with encouraging signs of continuing positive fundamentals for the product also in the current year. Significant investments are being implemented in the Company, with the view to increase steel and rolled product volumes, widen the product mixing, reduce operating costs.

Our trading business continues showing remarkable positive results and, even more important, is making significant positive moves towards strengthening the organization and the strategic approach.

If the recently announced letter of intent signed with Nucor of the USA to Joint Venture the Italian section business, eventually materializes in a final agreement, we will have completed our goal to consolidate the future of all our steel making companies through alliances with major global players. Managing a 50-50 Joint Venture company is definitely more challenging than just owning it 100%, but it gives the industrial units a broader strategic position with the consequent access to the know-how and synergies that the alliance with these groups brings.

The Joint Venture with I.S.D. on trading (which also includes two manufacturing units) has now reached the fifth year of existence with full satisfaction of both partners.

The diversification program develops as planned, and we are very confident that in few years it will start showing its positive impact on our results.

I am very grateful to the managers and all employees of the Group that have responded in an incredible positive way to the external and internal changes. Without such positive response neither the alliances, nor the diversification plan could have been materially possible.

I am reasonably positive that the Group strategy is the correct one in view of the changes occurring in the industry, and all Duferco’s Stakeholders should benefit as a consequence.

Bruno Bolfo