Erdemir posts record profit and production in 2004

Erdemir posts record profit and production in 2004

In a meeting held today, Turkish integrated steel producer Erdemir's Chairman Recai Berber, CEO Kerim Dervisoglu and Isdemir General Manager Atamer Giyici announced financial results for the twelve-month period ended on December 31, 2004, and spoke about Erdemir Group projects. Mr. Berber disclosed that Erdemir alone posted a net profit of $463 million, while the net profit of Erdemir Group –Erdemir, Isdemir, Celbor, Erdemir Logistics, Erdemir Steel Service Center, Erenco, Erdemir Romania, and Erdemir Mining– reached $589 million. The group recorded an operating profit of $631 million. Erdemir produced 3'616'000 tons of steel products in 2004. Adding the 2'157'000 tons produced by Isdemir, the total production of the group amounted to 5'773'000 tons. Cold rolled steel production in 2004 increased 16.7% from 2003, while hot rolled steel production decreased 7.3%. Group officials attributed the reduction in hot rolled steel production to their focusing on cold rolled products as they are more profitable, high in demand and value-added. Mr. Berber also talked about various projects being undertaken by Erdemir Group. He expressed that they will conduct investment programs to increase the annual capacity of Erdemir to over 5 million tons. He then added that a $2 million-investment to convert Isdemir from a longs producer into a flats producer had been initiated. Erdemir Group targets flat production of 7 million tons by 2007, and 10 million tons by 2010. In line with Erdemir's plans, such flat capacity will replace excessive long capacity in general. Apart from capacity expansion plans, Erdemir initiated several investment programs in 2004. In order to promote local mining, Erdemir entered the sector through the acquisition of Div-Han. Erdemir changed Div-Han's name into Erdemir Madencilik San ve Tic AS. Erdemir Madencilik currently supplies pellet to Isdemir and is working on projects to improve pellet quality. The mine aims to produce some 1.2 million tons of iron ore annually. This investment holds great importance for the steel industry of Turkey, especially at a time when raw material prices have peaked. Moreover, Erdemir established Erdemir Logistics to improve service quality. The company initiated the “Train Ferry Project”, which connects Erdemir to the national railways, in November 2004. In order to reduce transportation costs, Erdemir also acquired Yarimca Porselen Sanayi ve Ticaret A.S and established Erdemir Gaz Sanayi ve Ticaret A.S to supply natural gas more affordably. Mr. Berber also revealed that in the light of rising raw material costs and freight rates, price increases will probably start to show their impact starting in the second quarter.