Situation in 2001

In spite of the global recession on the steel markets in 2001 the state in the Czech Republic was less serious.
The general economic situation in 2001 was from the point of the domestic steel consumption view relatively prosperous. The GDP raised about 3.7 %. The main two consumer branches were the very pillars of positive steel consumption development. The industry output has shown the growth 7.2 % and the construction branch even 10.3 %. In spite of it the forecasts for the next two years will be influenced by the actual world economy weakening (for the Czech economy above all the expected recession in Europe, Eurozone respectively). The growth in 2002 will remain upon the 3 %. That reflects the fact that the Czech economy finds itself on the rising phase of the economic cycle. As the main factor for the economy growth is the sector of gross fixed capital formation. This will support the steel consumption further.
So the sales' troubles could be expected more from the side of export possibilities.

OUTPUT

Source: Statistics of Hutnictvi zeleza (Steel Federation)
Note: As already was reported, the Steel industry was not able to run the capacities in 2000 of full load, so in 2001 was no need to restrict the output in comparison with 2000. In December the main producers cut back the output markedly.

* Local currency has been converted into US dollars for past years at an exchange rate ruling at the beginning of September. For 2001 an exchange rate of US$ 1.00 = CZK37.478 has been applied (stand in August)

The main debt given the steel industry was the fact that the foreseen process of restructuring was running behind the schedule and at the best will have been largely finished by the end of the 2002.
The output in 2001 was 2.6 % higher than in 2000, but at the Q4 there was a great fall of it. The delivery quotas into the inland were 1.1 % higher than in 2000 and export increased by 10.9%.
The number of employees fell by 10% and labour productivity raised by 17%. The half-year was the very turning point in profit development (to the plus profit achievement). The steel industry as a whole achieved book profit 3.2 billions CZK. There have been some companies finding themselves in financial troubles and some of the companies struggled with a lack of operation capital.
Financial analyses made in 2001 reflect the urgent need to realise the proposed steps of restructuring. The ways of the entrance of the strategic partner into the single companies combined with a organisation coupling is the way for resolving the state. The assistance of the state is a inevitable condition being confirmed by Restructuring study elaborated by EuroStrategy Consultants.