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Year results and future plans

On the eve of the year finish we have discussed to General Director PrJSC «Dneprometiz» Mr. Alexandr Sergeyevich Yakushev about results of expiring year, plans for 2018 as well as the company new owner and possible changes with regard to this event. Our interview will be started also with this issue.

— Good day, Alexandr Sergeyevich. Whether really TAS group of companies became the company new owner?
— Good afternoon! At the end of October of the current year TAS group of companies has really implemented the transaction of acquisition of Dneprometiz. It was preceded by audit of our company and then shareholders have made the decision on transaction.
— What is the interest of new shareholder in reacquisition of the company, as Dneprometiz already had been a part of TAS group?
— Yes, really, from 2001 up to 2006 TAS group of companies owned the company. But considering the strategy of non-core assets operating at that time and existence of the favorable offer from «Severstal Metiz», the owner has made the decision to sell the plant. Besides, in pre-crisis time, as far as I understand, there were enough interesting projects for capital investment and development. Resurgence of interest to metalware production is caused by the fact at the moment in Ukraine in metallurgical industry and metal working there is a small amount of steadily working companies having the prospect of further development, therefore Dneprometiz, as the largest company in metalware subsector, has again come into the view of TAS group.
-How stable is the operation of the company currently? What indicators does the company finish the current year with?
— Within the current year our company worked steadily, showing good loading of capacities. In 2017 we will make and sell more than 85 thousand tons of metalware, at the same time, EBITDA (income minus taxes, percent and depreciation) will make about 3,0 mln. dollars, and profitability of this indicator – about 7%. We will sum up the results after New year, but with confidence it is possible to state this year we finish with rather quite good indicators.
At the same time it is important to note that the current year for us was rather difficult. Serious challenges have been connected with supply of the main raw material – wire rod. Since the beginning of year deliveries from Metinvest group in Donetsk region have been stopped, at the end of the first quarter the Dniprodzerzhynsk Iron and Steel Works (DMK) has been stopped. AMKR (Arselormittal Kryvyi Rih) remained the only national producer within nearly half a year.
— And if Severstal did not help with supply of own raw materials at this time?
— We have received the insignificant quantities of a wire rod from Severstal only on market environment, but within summer months when raw materials were in deficiency, we generally imported it from EVRAZ company (Novokuznetsk) and MMK (Magnitogorsk). Start of production of DMK has defused tensions, but at the same time, our main supplier, both in view of quantities and an assortment was and there is AMKR.
— How the management of the plant has reacted to return of TAS to business management? What was reaction of customers and suppliers?
— Heads of divisions have reacted rather quietly. It didn’t become for anybody a surprise, within the last three years Severstal had been selling the company. Besides we understood that growth prospects are real only with the new owner. As for clients and suppliers, our relations have not changed. Dneprometiz is keeping a position of reliable and responsible partner.
— And what are plans of the new owner concerning to company development,
company staff?
— At the moment we have developed the investment program the forthcoming 2 years. It has a variety of projects with rather deep maturity. The program has already conceptually approved. Today it is talked about preparation of implementation of early biddable projects with due date in 2018 and fine tuning of the projects with planned realization for 2019. The owner is interested in company development, motivates us to speed up of the investment decisions adoption.
-Could you describe in detail about this?
— I think at a coordination stage it is premature, but in general I can tell that the direction consists in increase of production quantities with the bigger embedded value, at obligatory preservation of volumes in our traditional product range. Investing in advanced processing, we are definitely not going «to grant» less difficult, but mass products to competitors. Also close attention should be paid to the company infrastructure, localization on the plant site of new productions as connected with metal working, and other directions is possible.
Anyway, we will have a lot of work in direction of the technical development.
— Alexandr Sergeyevich, how do you forecast the next year in view of volumes, loading of production divisions depends on it and the salary of the main production personnel of the company?
— The next year we are going to increase the production volumes. The purpose – almost 90 thousand tons per year at EBITDA of 90 million UAH. In the current situation it is rather ambitious goal, but we are aimed at achievement of these indicators.

Indicator

2016 (fact)

2017 YEP*

2018 BP**

Product Sales , tons

88646

85467

89157

EBITDA***, mln. Dollars

3,2

2,9

3,1

 * — year exit plan; ** — business plan; *** — income minus taxes, percent and depreciation

A crucial role is the correct organization of production, timely providing with main raw materials and of course the proper attitude of all personnel towards the orders implementation.  In the existing conditions we have no right for mistakes or negligence, the client dissatisfied with quality or delivery time «is instantly intercepted» by competitors, and ALL employees of the plant lose in such situation!

— How is the situation with preservation of personnel of the plant, it is no secret, many manufacturing enterprises feel the staff shortage in result of workers outflow from the country?
— Of course, we too feel negative impact of these processes, but thanks to rather correctly developed personnel policy we do not lose number of staff. The major factors influencing stability in this question are constancy of company operation, strict performance of total complex of the social guarantees described in the labor contract, a possibility of career development and respectable salary. Most of our workers have the preferential health insurance, obtain material support on recovery and recreation. In cases the worker has faced necessity of obtaining material support, for example, on carrying out surgery, the company does not stand aside.
  — The average salary on 01/12/2016 – 6741,87 UAH; on 01/12/2017 – 8297,96 UAH;
  — The average salary of wiredrawers on 01/11/2016 – 10422 UAH; on 01/11/2017 – 11979 UAH;
  — Maximum salary of the main occupations: 21 thousand UAH – wiredrawers; 13,5 thousand UAH – galvanizers; operators of cold-heading machines      – 15,3 thousand UAH;
  — Award percent for galvanizers on 01/12/2016 – 45%; on 01/12/2017 – 55%.
  — Average percent of salary increase at the company following the results of 2017 – 16,1%.
And the most vital issue which concerns our employees is salary increase. Here we try not to drop behind the tendency of gradual increase of employee income in Ukraine, and concerning the main occupations – we move priority rates. I think the mainstream personnel have already felt it. It is important that this view is shared by the owner of the company. Maintenance of worthy level of personnel motivation is a really one of the key purposes for us.

— And in conclusion, what will you wish to company personnel on the eve of New year?
— I would like to wish to all employees workers good health, happiness and wellbeing. Love and prosperity to your families, fruitful and interesting work. Mutual understandings and supports in teams. Let New year will bring only joy and good luck.

With coming New year!

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Contacts

  • Dneprometiz
    49081, Ukraine, Dnipro, Slobozhanskyi Avenue 20
  • +38 (098) 164-40-04
  • sale@dneprometiz.com
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