Metallurgy has its own cycles in which good years alternate with weaker ones
The summer period tends to be problematic for the movement of products, as several warehouses in southern Europe are closed for a longer period. However, our sales representatives had to develop increased activity already in June, when the slump in consumption was fully manifested and the decline in sales of our products was related to it. How was the first half of the year in our company and what does the situation look like today? We also talked about this with the member of the Board of Directors and the Sales Director of ŽP a.s., Vladimír Soták Jr.
Half a year is behind us, which in many areas was different from last year. How it was from the point of view of business for ŽP a.s.?
In the first five months of this year, the situation was stabilized, our order filling and shipment of finished products was at the level of 2022. However, this does not mean that all production facilities were fully utilized. In the segment of precision tubes, we noticed a decrease in sales already in the fourth quarter of last year, and this slightly decreasing trend continued this year as well. In June, the decline in the consumption of final products was fully manifested across the entire spectrum of industries, resulting in a decline in sales not only of precision pipes, but also of steel and rolled tubes. In the segment of tube bends, the situation remains stable, the volume of orders has not changed.
What do you consider to be the main reasons for this situation, compared to last year’s successful season?
First of all, I must say that the results from last year were historically the best and will certainly not be repeated in the coming years. They enabled us to more than double our investments in technology compared to a normal year from previous periods and prepare a reserve for increased electricity and gas prices. We know from experience that the economy and the metallurgical industry in particular have their own cycles and good years alternate with weaker ones. That is why we are trying to prepare our company for such periods with investments from our own resources, with which we support increasing labor productivity and thus competitiveness on a global scale. The causes themselves have a global character and are always a combination of various factors. The sharp increase in inflation and interest rates from last year has a significant impact on reducing consumption and production in most countries of the world.
Does the current situation force us to change the price lists?
We continuously adjust the prices of our products on a monthly basis, depending on the price of steel scrap, other input raw materials and the development of the market from the point of view of demand and competition,while I expect their stabilization in the coming months.
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