Arcelor Mittal Galati, Romania's biggest exporter, last year made more than 200 million dollar (502 million RON) net profit, a record level for the last four years. However the plant might cut production to half or even one third of what it used to be, as a result of the crisis.
In 2007, the steel maker posted 2.86 billion-dollar (6.95 billion-RON) turnover.
The bad market conditions have driven the Indian management of the plant to operate one of the biggest restructuring operations in Romania's history. When it is completed, about 1,800 of the 2,100 people that volunteered to have their names put on the redundancy list could leave the company.
The year 2008 was both good and bad for companies in the steel industry, with steel makers witnessing high demand and record prices for steel and steel profiles in the first nine months, only to see the market plunge in the last three, which seriously affected the business of the Romanian plants, Arcelor Mittal Galati included.
The price of steel on the London Metal Exchange has stabilised at about 300 dollars per tonne over the last few moths, three times lower than in mid last year, when a tonne of steel would sell for more than 900 dollars.
Not only prices went down significantly, but also the demand for steel, given the poor sales of cars and homes, the main sectors that the plant caters to, both on the domestic and on the international market.
"I can tell you that Arcelor Mittal Galati made a hefty profit last year, of more than 200 million-dollars. The first nine months of 2008 were outstanding, both in terms of demand and in terms of high prices, after which came the decline, though it did not affect the overall situation too much. The situation is more serious this year," stated Petru Ianc, director general with the Economy Ministry, specialising in steel industry.
The 2008 profit of the plant held by world's biggest steel group, Arcelor Mittal, was approximately 50% higher than the year before, when it stood at 133.6 million-dollars (324.7 million-RON).
However, Petru Ianc says that the owners of Arcelor Mittal Galati, anticipate production to reach 2.5-3 million tonnes this year, down to almost half of the last three years' average, about 4.5 million tonnes.
The management of Arcelor Mittal Galati could not be reached for comment on the information yesterday.
The data provided by the management of the steel maker to union members are even more pessimistic and indicate a decline to one third of the output this year, that is to 1.5 million tonnes.
The leader of the main union of the company's employees, FSS Metarom, says Arcelor Mittal Galati's output fell by about 60% at the beginning of this year compared with the same time of last year, to about 350,000 tonnes.
The production decline made the management of the biggest plant in the country to resort to a voluntary redundancy programme, in exchange for high bonuses, which the employees rushed to accept.
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