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While the profits may appear slightly “touched” compared to the same period last year, there is no cause for concern. In fact, the financial performance of the steel giant “Makstil” in the country is quite solid, especially considering the challenging conditions under which it was achieved. Additionally, the company is undergoing a significant phase of new investments aimed at ensuring stable business operations in the future.
In the first half of this year, “Makstil” reported a net profit of 2.5 million euros, reflecting a 17% decrease compared to the same timeframe last year.
The company provided a detailed explanation to the investor community regarding the factors leading to this decline in profitability. They noted that during the first half of the year, global economic development began to show very slight signs of improvement, yet it remains fragile due to high inflation, increased costs, and heightened geopolitical uncertainties, along with strict monetary tightening. As a result of these factors, the growth in global steel demand continues to be weak. The market situation in the EU is stable, with high order levels, although there has been a slight decline in steel prices since the beginning of the year. Public projects remain predominant in this market, with a significant change in distribution across countries compared to last year. Sales of steel in Germany have decreased due to recession, while Italy’s market remains stable, and Eastern European countries are experiencing growth. In Turkey, collection of receivables is challenging due to inflation issues, yet the industry is stable, particularly in shipbuilding. Sales in CEFTA countries are consistently increasing, especially in Serbia, primarily within public projects.
As a significant regional producer of hot-rolled thick plates, “Makstil” generated revenues of 66 million euros in the first half of this year, with 99% of this income coming from sales. However, revenues have decreased by 5%, primarily due to a reduction in sales volume from processing agreements.
In the first six months, the company’s expenses totaled nearly 59 million euros, with production costs constituting the largest share, accounting for 91% of total expenses. Compared to the same period in 2023, expenses have also decreased by 5%.
The profit before taxation for the reporting period stands at 2.75 million euros, marking a 17% reduction compared to the first half of 2023, while the net profit is recorded at 2.5 million euros.
The decrease in profit is mainly attributed to the reduced sales realization from processing agreements and increased depreciation costs resulting from activated investments in the past period, as stated in the explanation.
The company has invested over two million euros in the first half of the year to maintain the operational readiness of installed equipment, enhance workplace safety, and modernize part of the facility to improve the casting process.
The company’s loan obligations amount to 32 million euros, which reflects a 12% reduction since December 2023, resulting from the net effect of new withdrawals and the repayment of due installments from credit lines, according to the company.
The steel production plant will continue to operate continuously in the upcoming period, as the supply of imported raw materials remains steady.
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Impact of the Russo-Ukrainian Conflict on Production
The ongoing Russo-Ukrainian conflict has imposed challenges on various sectors, but the production at the Valavnica facility remains steady. This stability is primarily attributed to a robust volume of orders received. For the third quarter, a slight increase in the prices of lime is anticipated, a trend expected to extend into the fourth quarter of the year.
Transport Operations and Challenges
Transportation logistics, particularly for truck services, are functioning smoothly. However, there have been occasional delays in rail transport, mainly caused by a shortage of locomotives. Despite these hiccups, transport costs have remained stable, influenced by a downward trend in oil prices.
Investments and Future Plans
The Valavnica facility is poised to make significant investments aimed at alleviating bottlenecks and adapting to client demands. Company representatives have shared optimistic expectations regarding developments in the near future.
Positive Developments at Makstil
In positive news, Makstil has announced enhancements to employee benefits, including the provision of private health insurance. Additionally, they have implemented a wage increase and issued vacation bonuses for their employees.
