Erdemir Group announces $223 million profit
Erdemir Group announced 2005 first-half financial results. In the first six months of 2005, the production of the company was recorded as 1'882'000 tons, up 4.2 percent against the corresponding period of 2004. Total production of the group amounted to 3'835'000 tons. The sales of the company were recorded as 1'628'000 tons, while consolidated sales were registered as 2'949'000 tons. The company's net sales revenue increased to $1.11 billion (TRY 1.496 billion), up 29.8 percent from the first half of 2004. Consolidated sales revenue of the group was recorded as $1.525 billion (TRY 2.55 billion), up 21.3 percent against $1.257 billion recorded in the first half of 2004. The operating profit of the company in the first half of 2005 was recorded as $215 million (TRY 290 million), up 42 percent against the previous year. Operating profit of the group was recorded as $177 million (TRY 238 million). Erdemir's first-half net profit increased over 34 percent to $207 million (TRY 280 million) year on year. Erdemir Group's net consolidated profit in the first half of 2005 was recorded as $223 million (TRY 300 million). Commenting on the results, Erdemir officials said that the financial success of the first half was not achieved through the help of market conditions, but rather as a result of the company's stability policy implemented by the management. The same can be said for the previous year as well. Erdemir management went on to explain that long product producer Isdemir did not achieve the same performance due to the market conditions in the first half, despite its cost-reduction efforts. Management also drew attention to the importance of the project regarding Isdemir's conversion from being a long products producer to a flat products producer, following Erdemir's takeover of Isdemir. It was also stressed that Isdemir, being an integrated plant, could not be so aggressive due to the higher costs of raw materials such as coal and iron ore. However, due to the decline in scrap prices, the manufacturing costs of electric arc furnaces decreased. Erdemir General Manager, Mr. Fadil Demirel, pointed out that the proportion of long product capacity to flat product capacity in Turkey is currently 85 percent to 10 percent. He underlined the necessity of this reversing this proportion such that it is in the form of 60 percent flats and 40 percent longs. Mr. Demirel also commented on Turkey's steel consumption per capita, which is still lower than that of developed countries. He said that total steel production in Turkey should be around 15-16 million tons so that Turkey could reach the 350-400kg per capita consumption of developed countries. It was reported that the first stage of Isdemir's conversion project and modernization investments will be completed by 2007, and that the second stage will be completed by 2009. The fact that Isdemir is scheduled to start slab production in 2006 will eventually reflect on the balance sheet positively. Therefore, it is forecasted that Erdemir will focus on the production of cold rolled sheet and coated sheet, which are value-added products. One of the goals of Erdemir is to increase its sales to automotive sector. In line with the statistics, supplies to this sector have increased from 5.6 percent to 17.7 percent since 2002. Moreover, Erdemir plans to increase its shipbuilding plate production to 500'000 tons, following the completion of its plate mill by the end of this year. The investment in shipbuilding plates, which Erdemir produced only 50'000 tons in 2004, will be in accordance with the new shipyards and will focus on both meeting local demand and exports.