Slovakia's largest steel mill, VSŽ Holding, said on May 28 it expected a significant profit increase in 1998, adding that it had posted a net profit of 262.7 million Sk ($7.63 million) for the first four months of the year.
"The figures for the first four months of the year allowed us to set a half year estimate even higher than the full year result for 1997," said VSŽ spokesman Jozef Marko, adding that the company expected a net profit of 600 million Sk for the first half of 1998. Last year, VSŽ posted a net profit of 595 million Sk after 1.3 billion in 1996.
Both the January to April figures and the half-year estimate had been calculated according to Slovak accounting standards, Marko said. "Profits have been accelerating since the beginning of the year, as we posted 111 million for April alone. We recorded increased demand for our products this year at higher prices," he added.
The company lost 700 million Sk in 1997, citing unfavorable currency developments. VSŽ pays for raw materials in U.S. dollars and sells its products mainly for Deutsche marks.
The company also attributed last year's drop partially to its previous financial management team, which had allowed significant losses to pile up in the first half of 1997. VSŽ made major management changes last February.
At the May 21 AGM, company shareholders raised the dividend on 1997 profits to 20 Sk per share from the originally proposed 15 Sk. The proposal to increase the payout was made by Hutník a.s., a VSŽ employee company which controls around 10% of VSŽ shares, and was accepted unanimously.
"I believe that this new dividend is more appropriate given last year's results," said Hutník's Jaroslav Gruber. "Results from the first quarter of this year also indicate that the 80 million crowns taken from the development fund to pay this increase will be compensated adequately," he added.
In the first quarter of 1998, VSŽ posted a net profit of 151 million Sk compared with 45 million in the same period last year.
VSŽ plans to streamline its operations by cutting the number of subsidiaries from 121 to seven main subsidiaries and four others under them.
VSŽ is the second most heavily capitalized share on the Bratislava Stock Exchange (BSE), accounting for 24% of the official SAX index's capitalization. The share price has fallen by more than 50% since the beginning of the year, from around 680 to 281 Sk on May 27.