METALLURGICAL company Kremikovtsi plans to invest up to 40 million euro this year to boost its efficiency and expand abroad to become a leading producer in the Balkans, the company said on April 3.
Kremikovtsi plans to bid on April 13 to purchase through privatisation a galvanised steel plant in Kosovo, which has an annual capacity of 100 000 tons, in an attempt to become the top producer in the region for the product.
The company bought a Serbian pre-painted sheet steel plant, Lemind, for 1.4 million euro in February and doubled its annual capacity for pre-painted metals to
72 000 tons, Kremikovtsi executive director Valentin Zahariev said.
"Our investment intentions are becoming more aggressive. We plan to expand in the region to secure a dominant position," Zahariev told journalists. He said that, with the Lemind plant, the company would be the dominant producer of pre-painted steels in the Balkans.
Kremikovtzi, which is 71 per cent owned by Finmetals Holding, said it plans to boost efficiencies and increase end-products output from 1.18 million tons in 2004.
The surge in global steel prices helped the company increase revenues from end-products by 30 per cent to 883 million leva last year, in spite of a 14 per cent fall in its raw steel output to 1.43 million tons.
The decrease was due to the closure of one of its three blast furnaces under an agreement with the European Union. A further fall in output was likely in 2005 as the mill plans a six-month overhaul of one of its furnaces, Zahariev said.
This year the company's priority inside the plant is the general overhaul of Mill 1700, which will cost about 20 million leva and is expected to take between six and eight months. Another priority is the completion of a continuous casting facility that will absorb an investment of three to four million leva this year.
The continuous casting production was planned 20 years ago but it was impossible to implement the project due to financial difficulties, the privatisation of the steel works and some other problems in the industry, Zahariev said.
Due to the repair of some basic facilities, it is not planned to increase the production of the steel works this year.
The investments made since 1999, when the steel works was privatised, already total 488 million leva, while the investment commitment in the privatisation contract is 250 million leva, Zahariev said.
The company posted a net profit of 80 million leva last year, compared with 120 million leva in 2003, which was then achieved mainly due to a revaluation of its assets. Its earnings before interest, tax, depreciation and amortisation rose to 163 million leva from 18 million in 2003.
Kremikovtsi management said the company had reduced its outstanding debts to 227 million leva and was continuing talks for a strategic partnership with Indian steel giant Ispat Industries.
A representative of Ispat Industries, owned by billionaire Lakshmi Mittal's Global Steel Holding, has already had a seat on Kremikovtsi's board of directors since August last year and Bulgarian-language media have speculated that the steel firm will acquire the 71 per cent stake owned by Finmetals Holding for at least $300 million.
Zahariev declined to comment on the possible takeover, but said Finmetals were discussing joint operations in logistics and supplies with Ispat Industries.
Pramod Mittal, one of the owners of Global Steel, as well as the company's representative on the management of Kremikovtsi, Alok Gupta, were not present at the news conference on April 3.