The Company, executing the strategy of expanding the value-added product mix outside the construction sector, completed the investment for high quality steel (SBQ) production at the San Zeno steel shop, totally supported by shareholders’ equity contribution. During the last months of the fiscal year, some trial orders received from Italian and German customers have been successfully dispatched. A significant increase in the volume of SBQ production and shipment is expected in 2015, according to the product and market diversification strategy adopted. The goal is to reach a product mix of 50% of common steel and 50% of specialty products in 2016.
Despite the negative economic situation in Italy and the weak improvement in the EU, the Company succeeded in increasing its activity, both at the San Zeno steel shop and at the Pallanzeno rolling mill, thanks to the increased shipments of semi-finished products (+34% on FY 2013) and special profiles and angles (+16% on FY 2013). Taking advantage of market opportunities, the Company raised the volume of production through a wide range of semi-finished and finished products, as well as through the flexibility of its equipment. The Pallanzeno rolling mill continued to show progress on value-added products, through the development of new profiles of production as well as improvement in quality and customer services. However, the increase in 2014 was lower than expected, due to the reduction in the activity of some main customers. Traditional beam products recorded a slight increase, growing in the Italian market share over the last year. This was despite the construction sector remaining in a negative cycle.
The operating margin has been negative, but it recorded an improvement over the last year, notwithstanding the constant reduction in the metal margin between the beam sale price and scrap price and the start-up costs incurred by the Company for new equipment at the San Zeno steel shop.
The investments during 2014, totaling more than 22 million, were primarily connected to the completion of the installation of new equipment for SBQ products at the San Zeno steel shop and the straightening of lines at the Pallanzeno rolling mill in order to improve customer services. Other investments were carried out to improve environmental conditions and implement safety measures.
Specific training programs have been successfully completed in both plants with the aim of improving quality processes / products (SBQ) as well as creating safety conditions and related safety awareness of the workers.
The new strategic investment, completed in 2014 at the San Zeno steel shop, will allow the Company to diversify its production thereby entering new and more profitable business segments, resulting in a positive impact on economic margins. Further improvements on profitability could materialize if the expectation for an economic recovery in 2015 takes place and the pressure on metal margins, recorded in 2014, decreases.