The construction / infrastructural sector in the EU and in Italy, in particular, remains very weak with a low level of demand, especially for medium-big size beams, the Company’s main product. In Italy, the demand in 2014 was more than 50% lower than that of the pre-crisis level and shows a further reduction in demand over 2013.
Despite the market situation, the Company increased its turnover by 15% compared to the previous year, primarily as a result of the higher volume of shipment to the Extra European Union countries and to the increase in the Italian market share. This result was achieved thanks to the Company’s stronger competitiveness that ensured a reduction in industrial costs and improved efficiency, despite low utilization of its production capacity.
The Giammoro rolling mill project continued to produce and develop new big-size special profiles for track shoes of earth-moving machines in order to enter more profitable markets, diversifying its production in the non-construction sector. The output of these products doubled in 2014 compared to that of 2013.
The San Giovanni plant reported positive operating results in 2014 as well, despite the difficulties faced in the after-market products for yellow machines. This positive outcome was the result of its flexibility and capability to seize market opportunities.
The constant reduction in the metal margin between selling prices and the costs of scrap per ton and a nonoptimal equipment utilization at the Giammoro plant negatively affected the economic margin of the Company.
Shareholders continued to support the Company in 2014 through equity contribution in order to strengthen the financial position of the Company and partially to finance the completion of the Group’s strategic investment projects. The result is a better Debt/Equity ratio compared to 2013, despite the negative result of the Company.
Some investments were carried out to improve the rolling mill at the Giammoro plant and to enlarge the range of production of special profiles. Investments relating to ecology and safety have been put in place as well. Specific programs relating to safety and empowerment were maintained in 2014, with the attention of personnel at all levels of the organization being focused on a greater sensitivity and sense of responsibility.
In the first months of the new fiscal year, the Company recorded a slight improvement in its economic margin, thanks to the increased metal margin and the higher activity volume. No significant changes were recorded in the market conditions, even though a weak recovery in the construction sector by 0.9% is expected in Italy in 2015.
There should be a more appreciable improvement if the market shows signs of recovery and the pressure on prices slows down.