INVESTORS

Results 2015/2016

Gianpietro Benedetti
2015 / 162016 / 172016 / 172016 / 17
Group
Results
Group
Forecast
Forecast
Steelmaking
Forecast
Plantmaking
Revenue
2,508.42,350 / 2,500650 / 7501,750 / 1,850
EBITDA
211.4210 / 23065 / 75150 / 160
Order book
2,8142,700 / 3,200150 / 2002,500 / 3,000
millions of €

Dear Shareholders,
Customer and Colleagues

A lack of substantial investments in steel-making plants worldwide has characterised the financial years 2014/15 and 2015/16.
As a consequence we are facing a decline in sales of new plants, which has weighed down the results of this financial year and may adversely affect next year’s results as well.

We believe that during this period the more developed economies have entered a “new normal” phase and the developing ones are still deterred from investing by the low per-barrel price for oil, which is limiting their financial resources.

read more
 

 Therefore, the trend for today’s economy is likely to be similar to the one that characterized the decades from 1970 to 2000, i.e.:

 

— 1955: Worldwide steel consumption of around 350 Mtpy.

— 1970: Driven by the powerful increases in economic growth that followed World War II, steel consumption soared to 750 / 800 Mtpy in 15 years.

— 1970 - 2000: The economy in general, and therefore steel consumption as well, remained almost unchanged (800 / 850 Mtpy), at first because of the oil crisis (which started in 1973), and then as a result of the dissolution of the Soviet Union. In practice, it was a new normal period that lasted 30 years.

 

During such a period, a significant help for plant makers came from state-controlled economies that would invest regardless of market considerations (Soviet Union, China, North Africa, some countries of Latin America). Today, those countries also are subject to market principles and consequently follow the general trend.
It should be noted that from 1970 to 2000 the average oil prices remained around 20 USD per barrel.

 

— 2000 - 2009: The “new normal” was interrupted by the growth of the Chinese economy, which propelled world steel consumption from 800 / 850 Mtpy to 1,650 / 1,700 Mtpy in less than 10 years.
At present, there is nothing comparable to the boost provided to the world economy by that explosive growth of the Chinese market.
In the specific case of the steel sector, it is expected that most part of investments, even in China, will be focused on the revamping of existing plants in order to improve them in terms of OpEx, quality and environmental impact.

 

It is reasonable to assume that the present “new normal” period could last for at least 5 / 6 years. During this time, GDP will be probably around 1.0 / 2.5% for the more developed countries and, considering the higher figure of developing countries, the world average GDP could be between 2.8 and 3.5%.
An improvement in economic conditions could be provided by oil prices rising up to around 60 / 70 USD per barrel.

To make an already difficult market situation even worse, in addition to the “new normal”, in the latest two years the world’s steel makers have suffered from the fierce competition presented in their home regions by steel products exported below cost from Chinese, Russian and Ukrainian producers.
In spite of this scenario, which is objectively difficult and has had no precedent in the past 50 years, the Danieli company is rapidly gearing up to face this new trend and has been able to maintain a reasonable profit and good net financial position for the year.And, this has been accomplished while maintaining high levels of investment for research and for the acquisition of technologically attractive companies. To be specific:

 

Plant Making

— Acquisition of FATA Hunter to solidify our aluminium technology portfolio and presence in the market, and of FATA EPC to expand our turnkey plant supply capability.

— Investments in Danieli Automation to set up a new product line - Danieli Digit Metallic (DIGIMET): Big Data, Factory 4.0 and robotics.

— Strengthening and expansion of Danieli Germany.

 

Steel Making

— Our objective of 800 M Euro sales was not reached (600 M Euro) due to the weak market (i.e., “new normal”), however EBITDA remained around 10%.
Investments in the Rotoforge process have received a positive feedback from the market, and indicated good prospects for growth.

— Investments in metallurgical research for new products are ongoing.

 

As far as technologically relevant achievements are concerned:

— In China a new order was acquired to develop a new-generation thin slab rolling plant under a Danieli patent, called DUE (Danieli Universal Endless), which will result in an increase in our share of cold strip rolling and processing complexes.

— Danieli Automation: first orders received towards Factory 4.0.

— In the steel-making segment, our customers continue to qualify the Rotoforge products.

 

These are the facts recorded for the year 2015/16. However, the future is now and, bearing in mind that this “new normal” period could last for at least the next 5 / 6 years, we will have to improve:

 

— Our per capita productivity.

— Our drive for innovation, even with contributions from outside the company, e.g., start-ups, research centres, Italian and foreign universities.

— Our pursuit of acquisitions aimed to expand the Group’s technological portfolio.

— Our implementation of “lean thinking” principles, in order to act more rapidly, in a leaner and therefore more competitive way, and thus, ultimately, to improve our service to the customer.

 

The Board thanks the Danieli Group team for their enthusiasm, dedication and passion in their work. Their energy and positive attitudes are critical factors to maintaining our success, constant progress and expansion, and on top of this, the ability to innovate. These attributes cannot be bought or learned, but have been built into the company’s character since the beginning, and have come to be our most valuable, intangible asset. We also thank our customers whose innovative spirit makes them true partners in our quest to beat records and to do things better, in order to remain front runners.
Finally, we wish to thank our shareholders who allow us to reinvest more than 95% of our profits into the company to finance growth and innovation.
We like to believe that not only do this approach and vision stand for trust, but also for motivation in sharing with the Danieli team our pride in continued improvement, keeping us a step ahead.

 

Gianpietro Benedetti

Chairman & CEO

Danieli Stock Price
20 Minutes Delayed Data
Market Status: Closed
Last Trade Price: 21.90
Change %: +0.27
Date - Time Last Trade 9/21/2017 - 5:35pm
Opening 21.75
Day High 22.06
Day Low 21.61
52-Weeks High 23.73
52-Weeks Low 15.60
50 Days Performance % -0.44%
200 Days Performance % -0.50%
Isin Code IT0000076502
Exchange Code dan.mi
Segment Standard (Class 1)
Sector Industrial Goods & Services
Danieli Risparmio Stock Price
20 Minutes Delayed Data
Market Status: Closed
Last Trade Price: 15.85
Change %: +0.17
Date - Time Last Trade 9/21/2017 - 5:36pm
Opening 15.55
Day High 15.95
Day Low 15.49
52-Weeks High 17.02
52-Weeks Low 11.24
50 Days Performance % -0.53%
200 Days Performance % -0.12%
Isin Code IT0000076486
Exchange Code danr.mi
Segment Standard (Class 1)
Sector Industrial Goods & Services

For the dissemination and conservation of published regulated information, the company adhered to the centralized storage mechanism, called “SDIR & Storage”, which can be consulted on the website www.emarketstorage.com, and managed by BIt Market Services S.p.A. with registered office in Milan, Piazza Affari 6, authorized by CONSOB with resolution No. 19067 of November 11, 2014.